Maldives has cancelled its biggest foreign investment project, a USD 511 million deal with Indian firm GMR Group to develop its international airport, raising questions over the future of foreign investment in the islands renowned for luxury resorts.
The cancellation of the deal signed in 2010 follows President Mohamed Waheed's failure to renegotiate terms, sources close to president's office have told Reuters.
GMR, a subsidiary of Bangalore-based GMR Infrastructure Ltd , has been given seven days to leave the Indian Ocean island chain.
"It is cancelled by the cabinet on the instructions of the president. It was not a valid agreement," Imad Masood, the president's spokesman told Reuters late on Tuesday.
In a statement GMR said the cabinet's decision was "unilateral and completely irrational," as legal arbitration over the deal was currently in the Singapore High Court.
The Maldives Association of Travel Agents and Tour Operators (MATATO) which was in dialogue with GMR Malé International Airport to discuss its concerns on GMR’s engaging in various commercial activities that might bring adverse effects on local travel agents.
In a communication received by Traveltechie, it welcomes the decision of Maldives Govt. to cancel the contract & states that the association remains concerned with the increased prices of Tourist Counters, airline office spaces and other related services and facilities at the Airport. The current rents of the counters have been pushed up approximately by double from the previous ones.
Moreover, GMR’s getting into the business of ground handling of commercial aircrafts as well as private jets, thus narrowing down the chances for local agents to go ahead with this business, remains of great concern to MATATO. Recently they saw GMR take over majority of the retail businesses at the airport duty free thus adding to this concern.
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