Since its establishment in 2006, Mazlan & Murad Law Associates has quickly risen to the top tier of the Maldives legal sector ,specializing in business and banking legal counseling. Both partners of the firm have been in law practice in the Maldives since the year 2000. Today, the law firm counts among its clients most of the country’s banking and aviation market and has positioned itself as a preferred partner with foreign investors.
How do you describe the business environment for foreign investors in the Maldives?
I see opportunity for foreign investment in every sector in the country, particularly in the tourism, real estate and service industries. There are, however, considerable challenges with bureaucracy and governmental procedures that delay the attribution of simple licenses and permits for business development. This applies not only to foreign investment but to investment in general. The Maldivian society is quite small, and that comes with natural issues. Knowing the right people, a business license or a permit from a government Ministry can be just one phone call away. If we follow the official routes however, it can take months. This is a chronic problem in the country, and I think that even with the change in government, the problem will persist. People don’t really see it as an issue, but as a part of the culture, which makes improvement all the more difficult.
On the other hand, this does not have to be a problem for some foreign investors. In some instances, local authorities see foreign investors as “big fish”, and give preference to their requests, sometimes without even looking at their actual applications.
Where do you identify the biggest transparency issues in the judicial system?
The court system and the Prosecutor General (PG) presents very concerning problems. It doesn’t matter if one is local or foreign. Many of the judges are highly connected to and dependent on certain branches of the political power or influential businessmen. Judges and the PG have been known to take decisions based on the interests of those in power, rather than focusing on the evidence at hand. This is most recently seen after the presidential elections of 2018 when the Supreme Court started overturning its own decisions made during the previous government and the PG started refuting her own arguments in politically motivated cases, which were prosecuted a few months earlier. How could one make sense of these? Within such a legal framework, corruption is bound to exist. It is extremely worrying that the most senior judges and the PG are making a mockery of justice.
Successive governments have talked about reforming the court system. However, I don’t think we can simply reform We need the people at the highest levels in the court system to be completely replaced for anything to change in this system and that includes the Supreme Court. We need to replace this culture of lack of respect for the judicial institutions and the rule of law.
We are naturally hoping for the best, and this government has given strong signs of wanting to counter the issues of lack of transparency in the judicial system, but we are still waiting to see concrete action. We expect the government and the new parliament to be sincere on their promise for real change to the judiciary.
How competitive is the Maldivian legal and tax system to attract investment?
The legal framework is there to promote business, however, implementation is lacking and the processes need to be optimized. From a taxation and legislation point of view, the Maldives has a very competitive tax regime. Taxation works on a simple system where corporate profit is taxed at 15 percent, and 6 percent is applied as goods and services tax and 12 percent for tourism related goods and services. There is also a flat rate Green Tax of $3 for guest houses and safari vessels and $6 from resorts and hotels. If deployed correctly, this system offers very interesting opportunities for investors, with a beneficial tax rate and a relatively high yield for investments when compared to other countries in the region. Particularly at a time when the government appears to cut down on big infrastructural developments to benefit other sectors of society, like education, foreign investment is more relevant than ever for the country’s development.