Foreign Direct Investment Policy

` ަރާގްނައ 2020 ީރަވުރުބެފ 11 – 1441 ާރިޚާއްލަދާމުޖ 17 :ުޚީރާތ 25 :ުދަދައ 49 :ްމުއިލޮވ Foreign Direct Investment Policy ްސީފޮއ ެގާޔްއިރޫހްމުޖްލުސީއަރ ިދެއ ްށަމުނިދްށޮކުޢިއާޝ ިއަގުޓެޒެގ ްއަތުލޫސުއ ިއާކަތުދިއާވަގ • ުގަމުނާފުރުކަތުޑޮބ .ެވެށައ legalaffairs@po.gov.mv ީނާވްއުނޮފ ެޖްއާރިހެވިދ ،ެލާމ 3336102, 3336211 :ުނޯފ 3310274 :ްސްކެފ www.gazette.gov.mv :ްޓިއަސްބެވ ްޓެޒެގ ެގުރާކުރަސިހެވިދ 25 :ުދަދައ 49 :ްމުއިލޮވ c Ministry of Economic Development Male’, Republic of Maldives Foreign Direct Investment Policy 1 Summary This is the approval guidelines for requests for Foreign Direct Investments (FDI) in the Maldives. 2 Authority This policy is issued and implemented by the Ministry of Economic Development under the powers vested in it by Act No: 25/79 [Maldives Foreign Investment Act]. 3 Key words FDI, Approval, MED, Foreign Investment, Foreign Investor, Foreign Portfolio Investor. 4 Policy History This is a new policy that consolidates existing practices in part and introduces new policy changes in other part. 5 Application This policy applies to all applications and requests for foreign investment approvals. Both existing companies with foreign shareholding and new applicants are required to apply for a foreign investment approval prior to engaging in any new business activity apart from the activities stated in the existing Foreign Investment Agreements. 3 ްޓެޒެގ ެގުރާކުރަސިހެވިދ 25 :ުދަދައ 49 :ްމުއިލޮވ 6 Background Ministry of Economic Development is the key Government agency responsible for attracting FDI in the Maldives. It is our aim to create an enabling environment for FDIs to supplement capital formation, technology and employment. 7 Document Control This document is created, amended and controlled by the Ministry of Economic Development. 8 Endorsement Date 8.1. Endorsed on 6th February 2020. 8.2. See Section 20. below for Effective Date. 9 Next Review Date 31 December 2020 to reflect prevailing economic conditions. 10 Policy Objectives 10.1. Increase greater transparency, predictability, certainty and consistency in the foreign investment approval process. 10.2. Provide for increased efficiencies in the approval process. 10.3. Determine areas closed for FDIs; requiring joint venture partnership with Maldivians for FDI Approvals; and areas open for 100% FDIs. 11 Scope This Policy applies to all inbound requests and applications for FDI approval made by any person who is defined as a foreign investor. 12 Who is a Foreign Investor? 12.1. For the purpose of this policy, the following shall be deemed a foreign investor: (a) A foreign national; or (b) Foreign Companies & Partnerships: (i) owned 100 percent by foreigners (ii) Joint ventures having a stake by both Maldivians and Foreigners; or 4 ްޓެޒެގ ެގުރާކުރަސިހެވިދ 25 :ުދަދައ 49 :ްމުއިލޮވ (c) Following types of businesses registered in the Maldives: (i) Partnerships registered by foreign nationals or entities (ii) Companies with foreign shareholdings (iii) Companies re-registered under Section 94 of Maldives Companies Act; or (d) Any Maldivian or Foreigner that submits a Foreign Investment Proposal. 12.2. Any foreign individual or a legal entity with foreign shareholding who aims to invest in securities including shares, government bonds, corporate bonds, convertible securities, investments funds etc. are considered as Foreign Portfolio Investors (FPI). A Foreign Portfolio Investor investing in any entity through an electronic or physical platform, regulated by the Capital Market Development Authority or the Maldives Monetary Authority is considered as a Foreign Investor. For the purpose of this clause, any person eligible to open an Inward Investment Account (IIA) in a bank licensed by the Maldives Monetary Authority is also defined as a Foreign Portfolio Investor. 12.3. All Foreign Portfolio Investors are required to seek a FPI registration with the Ministry of Economic Development. 13 Available Routes 13.1. “Automatic” Route refers to the guaranteed approval process for applications that meet following qualifications: (a) the application reflects a commitment to meet the investment requirement or investment threshold stated in Annex 1, during the first 5 (five) years; and (b) the applicant meets the shareholding percentage stated in Annex 1. 13.2. “Government” Route refers to the approval process for applications in respect of which due to certain sensitivities involved in the sector, industry or proposed investment, an automatic approval may not be guaranteed, and approval of stakeholder agencies of the Maldives Government may be obtained to grant FDI approval. 14 Service Benchmarks Standard service benchmark for applications submitted under the two routes are as follows: (a) Automatic Route: 2 (two) working days (b) Government Route: 5 (five) to 14 (fourteen) working days 5 ްޓެޒެގ ެގުރާކުރަސިހެވިދ 25 :ުދަދައ 49 :ްމުއިލޮވ 15 Requirement for Approval 15.1. A Foreign Investor interested in investing in the Maldives has to obtain Foreign Direct Investment approval, either through the ‘Automatic’ or ‘Government’ route before engaging in any business activity establishing a ‘lasting interest’. 15.2. Any ‘body corporate (registered in the Maldives in which a foreign individual or an entity holds shares and is interested in carrying out a new business activity apart from and in addition to what has been approved by the Government), is required to obtain Foreign Direct Investment approval for the new business activity(s) either through the ‘Automatic’ or ‘Government’ route. 15.3. A body corporate interested in raising finance from the public shall ensure that any offer for sale or offer for subscription, is restricted to the shareholding percentage permitted under the FDI policy. 16 Who can invest in Maldives? A Foreign Investor whose application satisfies the approval requirements found in this Policy can invest in the Maldives. 17 FDI entry requirements 17.1. A Foreign Investor interested to invest in any business activity for which approval is given through the Automatic Route should meet the requirements stated in Annex I. Investments can be made by the Foreign Investors in the body corporate registered in the Maldives only to the extent of the percentage of the total authorized capital as specified in this FDI policy. 17.2. A Foreign Investor interested in any business activity for which approval is given through the Government Route should meet the terms and conditions stipulated by the Government from time to time. Investments can be made by Foreigner Investors in the capital of a body corporate registered in the Maldives only to the extent of the percentage of the total authorized capital as approved by the Government from time to time. 17.3. Any Foreign Investor interested in any business activity that is not stated in the classification is required to seek Government approval. 17.4. Any Foreign Investor proposing to conduct multiple business activities are required to maintain the lowest foreign shareholding percentage amongst the class details approved and shall ensure that the lump sum initial investment requirement is met within the first 5 (five) years. 6 ްޓެޒެގ ެގުރާކުރަސިހެވިދ 25 :ުދަދައ 49 :ްމުއިލޮވ 18 Mandatory Business Registration 18.1. All Foreign Investors are required to register their business in the Maldives. 18.2. As per the law no. 18/2014 (Business Registration Act), Foreign Investors may register their business either as a Company or a Partnership. Applicants choosing to re-register their company under the Law no. 10/96 (Maldives Companies Act), shall ensure that the approved class details from the Annex 1 permits 100% shareholding by foreigners. 19 One stop service As the key agency responsible for providing a one stop service to all Foreign Investors, the Ministry of Economic Development will seek relevant approvals from line Ministries and other agencies. These approvals exclude permits and licenses issued by line Ministries and other regulatory agencies after Company / Partnership registration. 20 Effective Date All New Applications 20.1. From 11th February 2020, all applications for foreign investments shall be subject to this FDI Policy. All Existing Agreements 20.2. All existing foreign investments registered under the Foreign Investment Act shall be required to comply with the terms and conditions of this FDI Policy, either: (i) upon expiration of the current term of foreign investment license/approval as specified in the Foreign Investment Agreement; or (ii) upon the expiration of an extension granted by the Ministry, where such extension shall not extend beyond 31st December 2025; (iii) in case where a term is not specified in the foreign investment license/approval, on the expiry of 5 (five) years from the date of this FDI Policy. 21 FDI Application Process 21.1 All foreign investors are required to submit an application form to seek an approval from the Ministry. 21.2 Application form and supporting documents are prescribed on the Ministry’s business portal www.business.egov.mv 7 ްޓެޒެގ ެގުރާކުރަސިހެވިދ 25 :ުދަދައ 49 :ްމުއިލޮވ 22 Administrative Fee An administrative Fee of USD 5,000 (United States Dollars Five Thousand) shall be paid to Maldives Inland Revenue Authority (MIRA) by all approved applicants prior to signing the Foreign Investment Agreement. 23 Contact Address 23.1. All queries relating to Foreign Investments shall be directed to Foreign Investment Registration Unit. Walk-in meetings are available from 8:00AM to 2:00PM at Foreign Investment Registration Unit located at 4th Floor Velanage Building. 23.2. All Foreign Investment applications shall be emailed or delivered to the Foreign Investment Registration Unit of the Ministry of Economic Development. 23.3. All queries relating to this policy should be directed to following address or email: Address: Foreign Investment Registration Unit 4th floor, Velanage Building Ameer Ahmed Magu Male’, Republic of Maldives Phone: +960 333 3142 Email: fiu@trade.gov.mv Website: www.business.egov.mv ____________ 8 Annex I: FDI Entry Requirements Sector specific conditions ISIC Section Details Class Class Details Maximum Minimum initial Maximum Entry Route Section 1 Code percentage of investment duration of Foreign requirement for the Foreign Shareholding 5 years in US$2 Investment Agreement A Agriculture, Forestry A1 Crop cultivation and related service activities 100% 250,000 Upto 50 years Automatic and Fishing Approval A2 Forestry Closed N/A N/A N/A A3 Poultry / Animal production and related service 100% 1,000,000 Upto 50 years Automatic activities Approval A4 Aquaculture / Mari Culture 100% 1,000,000 Upto 50 years Government Approval B Mining and quarrying B1 Mining of sand Closed N/A N/A N/A B2 Extraction of crude petroleum and natural gas Negotiable Negotiable Negotiable Government Approval B3 Mining of metal ores Negotiable Negotiable Negotiable Government Approval B4 Other mining and quarrying Closed N/A N/A N/A B5 Mining support service activities Negotiable Negotiable Negotiable Government Approval B6 Bunkering Services Negotiable Negotiable Negotiable Government Approval C Manufacturing C1 Manufacture of fish products 75% 1,000,000 Upto 50 years Government Approval C2 Manufacture of agricultural products 75% 1,000,000 Upto 50 years Government Approval C3 Manufacture of other food products 100% 1,000,000 Upto 50 years Government Approval C4 Manufacture of beverages 100% 1,000,000 Upto 50 years Government Approval C5 Manufacture of textiles 100% 1,000,000 Upto 50 years Automatic 1 ISIC refers to International Standard Industrial Classification that has been customized for the purpose of this policy. 2 Foreign Investors are required to verify the amount of inward FDI (approved minimum initial investment) from their Audited Financial Statements annually in a prescribed format. Initial Investment value specified in this column means the minimum amount that should be invested by the foreign investor(s) within the first 5 (five) years or within an agreed period. Approval C6 Manufacture of tobacco products Closed N/A N/A N/A C7 Manufacture of wearing apparels 100% 5,000,000 Upto 50 years Automatic Approval C8 Manufacture of leather and related products 100% 1,000,000 Upto 50 years Automatic Approval C9 Manufacture of wood and of products of wood and Closed N/A N/A N/A cork except furniture C10 Manufacture of paper and paper products 100% 250,000 Upto 50 years Automatic Approval C11 Manufacture of coke (fuel) and refined petroleum Negotiable Negotiable Negotiable Government products Approval C12 Manufacture of chemicals and chemical products Negotiable Negotiable Negotiable Government Approval C13 Printing and reproduction of recorded media 49% 250,000 Upto 50 years Automatic Approval C14 Manufacture of basic pharmaceutical products and 100% 5,000,000 Upto 50 years Automatic pharmaceutical preparations Approval C15 Manufacture of rubber and plastics products Closed N/A N/A N/A C16 Manufacture of other non-metallic mineral products 100% 1,000,000 Upto 50 years Automatic Approval C17 Manufacture of basic metals 100% 1,000,000 Upto 50 years Automatic Approval C18 Manufacture of fabricated metal products, except 100% 1,000,000 Upto 50 years Automatic machinery and equipment Approval C19 Manufacture of computer, electronic and optical 100% 1,000,000 Upto 50 years Automatic products Approval C20 Manufacture of electrical equipment 100% 1,000,000 Upto 50 years Automatic Approval C21 Manufacture of machinery and equipment n.e.c. 100% 1,000,000 Upto 50 years Automatic Approval C22 Manufacture of motor vehicles, trailers and semi- 100% 1,000,000 Upto 50 years Automatic trailers Approval C23 Manufacture of other transport equipment 100% 1,000,000 Upto 50 years Automatic Approval C24 Manufacture of furniture 75% 1,000,000 Upto 50 years Automatic Approval C25 Manufacture of handicrafts and souvenirs Closed N/A N/A N/A C26 Repair and installation of machinery and equipment 75% 1,000,000 Upto 50 years Automatic Approval C27 Aviation Maintenance, Repair and Overhaul (MRO) 100% 1,000,000 Upto 50 years Automatic Facility Approval C28 Installation of equipment that forms an integral part 40% 1,000,000 Upto 50 years Automatic of buildings or similar structures, such as installation Approval of escalators and elevators C29 Other manufacturing (including boatbuilding etc.) 100% 1,000,000 Upto 50 years Government Approval D Electricity, gas, steam D1 Electricity, gas, steam and air conditioning supply Negotiable Negotiable Negotiable Government and air conditioning Approval supply3 D2 Renewable Energy projects approved by the Negotiable Negotiable Negotiable Government Government Approval E Water supply: E1 Water collection, desalination, treatment and supply Negotiable Negotiable Negotiable Government sewerage, waste Approval management and remediation activities E2 Sewerage Negotiable Negotiable Negotiable Government (these refers to Approval services only) E3 Waste collection, treatment and disposal activities; Negotiable Negotiable Negotiable Government materials recovery Approval E4 Remediation activities and other waste management Negotiable Negotiable Negotiable Government services Approval F Construction4 F1(a) Construction of buildings 65% 5,000,000 Contract Government (Single Contract Period Approval Value inclusive of taxes) F1(b) Construction of buildings (Government approved Negotiable Negotiable Contract Government projects) Period Approval 3 This section includes the activity of providing electric power, natural gas, steam, hot water and the like through a permanent infrastructure (network) of lines, mains and pipes 4 Construction means the performance of building, altering, addition to, subtracting from, improving, reconstruction, moving, excavating, reclaiming, wrecking or demolishing of any building, roads, bridges or other structure, project, development or improvement to real property or to do any part of thereof, including the erection of scaffolding or other structures. This section covers contractors, ie. Any person who in any capacity undertakes, offers to undertake, purports to have the capacity to undertake or submit a bid to or does himself or through others, perform construction and/or a construction manager who performs construction management services. This section also covers projects approved by the Government. F2 Civil engineering 65% Negotiable Contract Government (Contract value Period Approval required) F3 Specialized construction activities (includes Negotiable Negotiable Contract Government construction of roads, bridges, networks and other Period Approval infrastructure including projects approved by the Government) G Wholesale and retail G1 Retail trade Closed N/A N/A N/A trade G2 Wholesale trade of construction materials 75% 1,000,000 Upto 50 years Government Approval G3 Franchising5 in international Airports and approved 75% 1,000,000 Upto 50 years Government locations (including products & services) Approval G4 Wholesale trade in other sectors except G2 Closed N/A N/A N/A H Transportation and H1 Land transport services and transport via pipelines Closed N/A N/A N/A Storage H2 Sea transport services (including ownership of 49% 1,000,000 Upto 50 years Government vessels) Approval H3 Air transport services (including freight services) 75% 5,000,000 Upto 50 years Government Approval H4 Warehousing and support activities for 75% 5,000,000 Upto 50 years Automatic transportation Approval H5 Postal and courier activities Closed N/A N/A N/A H6 Logistics activities Closed N/A N/A N/A I Accommodation and I1 Tourist resort (inclusive of all services such as hotel 100% Negotiable Lease period Automatic Food Service activities management, operating guest shop, spa, dive center, Approval watersports, transfer service etc.) I2 Tourist hotel (inclusive of all services such as hotel 100% 1,000,000 Negotiable Automatic management, operating guest shop, spa, dive center, Approval watersports, transfer service etc.) I3 Tourist vessel (40 beds and above) 100% 1,000,000 Negotiable Automatic Approval I4 Yacht marina (development, operation & 100% Negotiable Upto 50 years Government management) Approval I5 Picnic island Closed N/A N/A N/A 5 Applicants are required to submit a duly executed letter from the franchisor providing details of the proposed Master Franchise Agreement or Regional Franchise Agreement or any other form of Franchise Agreement. Applications are accepted under this class detail if the proposed franchisor has multiple outlets in more than 1 (one) country. I6 Guest houses in approved locations (inclusive of all 49% 250,000 Negotiable Government services) Approval I7 Integrated Tourism (development, operation & 100% 1,000,000 Upto 50 years Automatic management) Approval I8 Food and beverage service activities6 Closed N/A N/A N/A (including Café, restaurants, bakeries and other eateries) I9 Other accommodation Closed N/A N/A N/A J Information and J1 Publishing activities 100% 250,000 Upto 50 years Government Communication Approval J2(a) Motion picture, sound recording and music 100% 1,000,000 Upto 50 years Automatic publishing activities Approval J2(b) Video and television programme production 100% 1,000,000 Upto 50 years Automatic Approval J3 Programming and broadcasting activities Closed N/A N/A N/A J4 Telecommunications 100% 5,000,000 Negotiable Government Approval J5 Computer programming, consultancy and related 100% 1,000,000 Upto 50 years Government activities Approval J6 Information service activities 75% 1,000,000 Upto 50 years Automatic Approval K Financial and K1 Banking and financial service activities, except 100% 5,000,000 Upto 50 years Automatic Insurance activities insurance and pension funding Approval K2 Insurance, reinsurance and pension funding, except 100% 5,000,000 Upto 50 years Automatic compulsory social security Approval K3 Activities auxiliary to financial service and insurance 100% 1,000,000 Upto 50 years Government activities Approval L Real estate activities L1 Real estate activities 65% 5,000,000 Upto 50 years Government Approval M Professional, scientific M1(a) Legal activities Closed N/A N/A N/A and technical activities M1(b) Accounting activities 75% 250,000 Upto 50 years Government Approval M2 Activities of head offices; management consultancy Negotiable Negotiable Negotiable Government activities approval M3 Architecture and engineering activities; technical 75% 250,000 Upto 50 years Automatic testing and analysis Approval M4 Scientific research and development 100% 1,000,000 Upto 50 years Automatic Approval M5 (a) Advertising 60% 250,000 Upto 50 years Government Approval M5 (b) Market Research 100% 250,000 Upto 50 years Automatic Approval M6 Other professional, scientific and technical activities 75% 250,000 Upto 50 years Automatic Approval M7 Veterinary services 75% 1,000,000 Upto 50 years Automatic Approval M8 Photography & Videography Closed N/A N/A N/A N Administrative and N1 Rental and leasing activities (including lease of heavy Closed N/A N/A N/A support service duty machineries etc.) activities N2 Employment activities; Employment agencies, Closed N/A N/A N/A recruitment services N3 Travel agency, tour operator, reservation service and Closed N/A N/A N/A related activities N4 Security and investigation activities 75% 250,000 Upto 50 years Government Approval N5 Services to building and landscape activities Closed N/A N/A N/A N6 Office administrative, office support and other 75% 1,000,000 Upto 50 years Automatic business support activities Approval O Public Administration O1 Public Administration and defence; compulsory social Closed N/A N/A N/A and defence; security compulsory social security P Education P1 University, Colleges 75% 5,000,000 Upto 50 years Government Approval P2 Private schools 75% 1,000,000 Upto 50 years Government Approval P3 Computer training institutions 75% 1,000,000 Upto 50 years Government Approval P4 General tuition classes Closed N/A N/A N/A P5 Tuition services Closed N/A N/A N/A P6 Quran classes Closed N/A N/A N/A P7 Vocational and Technical Educational Institutes 75% 1,000,000 Upto 50 years Government Approval P8 Sports and recreation education 75% 1,000,000 Upto 50 years Government Approval P9 Engineering Schools (training and conduction of 75% 1,000,000 Upto 50 years Government courses related to aircraft engineering) Approval P10 Other education 75% 1,000,000 Upto 50 years Government Approval P11 Educational support activities 75% 1,000,000 Upto 50 years Government Approval Q Human health and Q1 Hospitals 100% 1,000,000 Upto 50 years Government social work activities Approval Q2 Residential care services 75% 1,000,000 Upto 50 years Government Approval Q3 Social work activities without accommodation 75% 1,000,000 Upto 50 years Government Approval Q4 Laboratory & Diagnostic services Negotiable Negotiable Negotiable Government Approval Q5 Physiotherapy clinics 75% Negotiable Upto 50 years Government Approval Q6 Clinics except physiotherapy clinics Closed N/A N/A N/A Q7 Other health activities (including specialized facilities) Negotiable Negotiable Negotiable Government Approval R Arts, entertainment R1 Creative, arts and entertainment activities (excluding 75% 250,000 Upto 50 years Automatic and recreation live music bands and DJs)7 Approval R2 Libraries, archives, museums and other cultural 75% 1,000,000 Upto 50 years Government activities Approval R3 Sports activities and amusement and recreation 75% 1,000,000 Upto 50 years Government activities Approval R4 Water sports activities 49% 250,000 Upto 50 years Government Approval R5 Dive Centers and Dive Schools 75% 250,000 Upto 50 years Government Approval 7 This does not prohibit foreign music bands, performers and DJ’s to perform during festive seasons and various functions organized in Maldives. S Other service activities S1 Activities of membership organizations Closed N/A N/A N/A S2 Repair of computers and personal and household Closed N/A N/A N/A goods S3 Other personal service activities or any other Negotiable To be To be Government business activity not stated in this list determined determined Approval