Small and medium-sized enterprises are currently "suffocated": MP Abbas

Member of Parliament for the Velidhoo constituency, Mohamed Abbas, has stated that small and medium-sized enterprises (SMEs) are currently "suffocating."

During Sunday's parliamentary session, Abbas Hussain addressed the government-proposed amendment to the Goods and Services Tax Act, introduced by Kulhudhuffushi North MP Mohamed Dawood. Abbas cautioned that any changes affecting the tourism industry must be approached with extreme care, noting that competing destinations such as Bora Bora and Mauritius have adopted the Maldivian resort concept and are currently attracting higher tourist arrivals than the Maldives.

Abbas stated that despite PNC members' defense claiming the amendment does not constitute a tax hike, the change will cause significant disruption to existing resorts in the Maldives. He emphasized that such amendments should not be proposed without considering travel agents, global regulations, and international legal frameworks. Furthermore, Abbas noted that making such a decision is not in the best interest of the country.

The Maldives is currently in a state of extreme vulnerability. Honorable Speaker, the nation's economy is deteriorating day by day, and our productivity levels continue to decline steadily.

Mohamed Abbas

Abbas questioned whether it is prudent to target global travel booking platforms under the current circumstances, rather than implementing reforms to ensure that the capital of foreign investors—who account for 80 percent of the Maldives' tourism industry—circulates through local banks.

The reality today is that while the Maldives boasts nearly 300 resorts—or at least well over 200—and close to a thousand guesthouses, these establishments are struggling to maintain even a 50 percent occupancy rate. Mr. Speaker, due to the ongoing conflicts in Eastern Europe, Western Europe, and the Middle East, the Maldivian tourism industry is facing a severe upheaval. We operated our guesthouses for years without ever seeing occupancy drop below 60 percent, yet today’s reality, Mr. Speaker, is that rates have plummeted to a mere 10 or 15 percent.

Mohamed Abbas

Abbas cautioned that any decisions affecting the tourism industry must be approached with extreme care, noting that tourists are already subject to numerous taxes under various categories.

Furthermore, Abbas noted that the Maldivian people are currently struggling to make ends meet and that ongoing development projects have come to a standstill. He added that, for various reasons, small and medium-sized enterprises today find themselves in a state of "suffocation."