MED brings outs new FDI Policy

Ministry of Economic Development (MED) has published a new foreign direct investment (FDI) policy consolidating some existing practices and introducing some new guidelines. The policy takes effect on 11 February 2020.If you are a foreign investor already in the Maldives or a prospective investor considering investing in the Maldives, here’s what you need to know:Scope of the policyThe policy applies to all new requests for foreign investment approvals. That includes prospective investors for new projects; and existing investors venturing into new projects/business activities.A foreign investor already in the Maldives with a valid license may also be bitten due to its investment category being either capped or closed by this new policy.Who is a Foreign Investor?

• foreign national;
• foreign entity owned wholly or partly by foreign nationals;
• local entity owned wholly or partly by foreign nationals; or
• re-registered companies.

Only a ‘foreign investor’ can invest in the Maldives. All foreign investors are required to get an approval from MED and register their business in the Maldives.Approval may be granted via an automatic or government route.

• The automatic route guarantees approval at the time of application if that application meets all requisite criteria and all documentation are in order – applications are processed within two working days.
• Under the government route, the proposal may need to be reviewed with other stakeholders and government agencies based on industry, sector or nature of investment – applications are processed within 14 working days maximum.

If an existing foreign investment is bitten by the cap or if the investment category is now a closed category, then the current investment may continue either until:

• the expiry of the current license;
• the end of 2025, if an exemption is granted; or
• a period of five years from the date of the policy, if there is no specific period for the license.

Certain areas remain open for 100% foreign investment, certain areas are open with a cap on equity ownership and other areas are entirely closed.For example, tourist resorts, tourist hotels and tourist vessels (with over 40 beds) are open for foreign investors. Picnic islands are a closed category. Guesthouses in approved locations are open for foreign investment with a cap of 49%.For more informationYou may view the policy here.You may also contact us if you wish to discuss the developments in this area and how they could affect your operations.