New Foreign Investment Bill to Overhaul 45-Year-Old Foreign Investment Act
The Maldives Government has proposed a new foreign investment bill that may come into effect in less than a month’s time. Proposed in this second session of parliament, it is now undergoing review in committee stage.
The idea behind the bill of 39 pages and 45 provisions is to repeal and replace the 45 year old Foreign Investment Act of 1979 with a more contemporary legal framework.
One fundamental aspect of this new law is to actively promote Maldives foreign investment opportunities globally, with the Ministry of Economic Development and Trade taking the lead.
Investment Areas
From a foreign investment perspective, opportunities in the Maldives are available in respect of all areas except those that are closed under the law. Of all areas permitted, some are freely open for foreign investors and the other is permitted with conditions.
The Minister of Economic Development and Trade is to publish in the government gazette areas closed for foreign investment and areas that are permitted with conditions / restrictions. This notification is to be reviewed every three years.
Restricted Areas
The determination of restricted areas for investments is to be motivated by certain factors provided in the bill: national security; impact on industry competitiveness; extent of local strength in the industry; extent of need for foreign investment to propel growth; contribution to long term growth; extent of human resource development and potential for job creation.
No further foreign investment is to be allowed in any closed area. However, if there is already an active investment in that area – the investment can proceed till end of the current license.
Who Can Apply?
Foreign nationals; foreign companies (held entirely by foreign nationals or with locals); foreign companies re-registered in the Maldives; joint venture arrangements (between foreign and local); foreign associations; and any legal entity created in any other country.
Licensing Process
The licensing process is to include four broad processes: application and grant of an initial no objection certificate; completion of formalities and requirements by the applicant; grant of license; and signing of the foreign investment agreement.
The bill contains details on the sequence of regulatory processes and required documentation.
A good deal of the bill deals with provisions on the foreign investment license, what it should contain, and how it can be renewed, suspended or revoked.
Foreign Investment Agreement
In addition to the licensing provisions, the bill also speaks on the elements to be included in any foreign investment agreement signed by a licensee of a foreign investment.
According to the bill, a foreign investment agreement is to include details such as – details of investment; activities permitted to be carried out in pursuance of the investment; period of agreement; novation of investment; land related matters; compliance with law; obligations toward environmental protection; obtaining requisite approvals from government agencies; repatriation of capital and proceeds; tax and financial obligations; dispute resolution mechanisms, and anti-corruption clauses;
Investor Protection
Chapter 4 of the bill is important for investor protection. It speaks of fair and equitable treatment being afforded to investors; provides for repatriation of capital and proceeds of investment; deals with the issue of expropriation - how it can be done in limited exceptional circumstances - and what will not amount to expropriation; and finally it speaks on mattes of compensation.
Stay Informed
Investors are advised to closely follow the revised laws, regulations carefully and understand the new requirements. Our team of experienced attorneys is here to help. Contact us for a consultation.
