Settling foreigners in the Maldives: what we need to think about

This piece looks at the residency programmes on which the Rasmalé project and the SEZ township projects (two such projects are under way) are built.

In it, I share my view on residency programmes and the reasons that led me to that conclusion. Residency programmes have been talked about for years. My view remains that while they are an economic tool a small country like the Maldives will have to use at some point on the ladder of development, the Maldives has not yet reached the point where it can use this tool. It is not ready.

I am not opposed to the residency model as an economic activity. What I oppose is doing it now. 

Summary of the section below: Residency by investment is the settling of wealthy foreigners in a country. It is done for two main reasons: to bring foreigners' capital, or money, into a country, and, in countries with small populations, to grow the population in as short a time and as quickly as possible.

Although it runs under different names in different countries, the model being run is essentially residency by investment: a foreigner who invests a certain amount in a certain thing is granted residency in that country. Visas given this way are commonly called investor visas, golden visas or residency visas. The Organisation for Economic Co-operation and Development defines the model as investment-linked migration.

Wealthy foreigners are brought into a country to achieve two main goals.

The first is to bring their money, or "capital", into that country. Take one of the Maldives' atolls, for example. Laamu atoll has plenty of land. Suppose the Laamu council made an agreement with a foreign company to build 500 villas somewhere in Laamu for foreigners' residency. And suppose it agreed that 10 per cent of the money from selling the villas would go to the Laamu council.

First, investment will come to Laamu for this project. If 500 villas are sold at US$200,000 each under the agreement, the Laamu council will receive US$10 million. On top of that, those 500 families will need places to serve them: shops that sell food, cafés to eat in, schools to send their children to, salons to cut their hair and trim their beards. The money that comes in from all of this is the capital that is so badly needed.

The second purpose is in the short term to grow the population of places that do not have enough people for economic activity. Many political leaders who back this model reportedly do so for this reason. Take Laamu again. In 2022, the total population of Laamu's inhabited islands (including foreign workers) was 15,152. It is now 15,543. The population projected for 2035 is 15,926.

That means the population is projected to grow by only 383 by 2035. The same is true of the whole country, but let's leave that for another piece. In any case, the population of Laamu's inhabited islands is set to grow by 383 over the next ten years or so. If the 500 foreign families in the residency project I described bought villas and moved to Laamu, at five people per family, Laamu's population would grow by 2,500. The Maldivian population of Laamu will not grow that much even over the next 20 years.

So a residency programme is one way to increase the population living in Laamu atoll in the shortest possible time. The same holds for the country as a whole. The government's goal is to add a population of 35,000 foreigners to Rasmalé. And the long-term plan is believed to be to run similar residency projects in different regions of the Maldives and raise the country's total population to one or two million.

Given the rate at which the Maldives' population is growing, there is no other way to reach one or two million in a short time. There is no disputing that. One must also accept that the easiest way to grow the population is with a residency model. What I find hard to accept is that the top priority right now should be growing the population, even if it means settling foreigners. What I struggle to accept is whether the Maldives is ready to do this. Let's turn to the reasons in the second part.

Summary of the second part: The people we are seeking to settle in the Maldives are foreigners many times wealthier than ordinary Maldivians. The imbalance in purchasing power will be very large. As a result, Maldivians will be left serving those foreign residents as slaves, going to work for them. There are still no institutions that can protect Maldivians' interests and safeguard them. The tourism industry makes this clear.

Before summarising the main reasons, we need to know what kind of people we are trying to settle in the Maldives. Even leaving aside residents, there is no shortage of foreigners in the Maldives even now. One in every four people living in the Maldives is already a foreigner. But they are migrant workers employed here. The people we are trying to bring in to populate this place, with residency visas and residency, are not labourers. They are not people who will work in jobs. They are the wealthy. They are people many times wealthier than ordinary Maldivians.

I find it hard to believe the US$5 million the government gives as the baseline price at which Rasmalé villas will sell. Still, let's go with the government's figures. The government estimates that around 7,000 residential villas will sell for an average of US$5 million, so the price of those villas alone comes to US$35 billion. That means the "combined wealth" of the 7,000 families, or 35,000 people, planned to populate Rasmalé will run to many billions of dollars. The GDP of the entire Maldives has not yet reached US$10 billion. So it is important to keep in mind how much money, and how wealthy a group of people, we are talking about as we move forward. That is because the reasons I believe the time for this has not yet come are tied to it.

The second point to keep in mind is that the purpose of residency is for foreigners to bring their families to the Maldives and settle here. A group that settles will need the basic services it is entitled to: schools to send their children to, shops to buy things, parks to play in, hospitals to go to when they fall ill, and places to go and things to do for entertainment. A group would come to settle in the Maldives only if the Maldives were better in every way than where they live now. Whether that can be achieved is another debate. But we must understand that once this is done, we cannot tell them after 99 years: "Off you go now." We must also know that many children will be born in Rasmalé within those 99 years. So we must recognise and accept that the foreign families who migrate and settle in Rasmalé, or anywhere else in the Maldives, will have rights and freedoms.

To answer this question, we need to look at the administrative state Maldivians are in today and the state of the Maldives' administration.

Let's look at the general state of Maldivians today. The Maldives' GDP does not reach US$10 billion. Per head, that works out at around MVR16,000 (US$1,040) a month on average. Students have to protest twice a year because their scholarship money hasn't come through. When we fall ill, we have to go running after NSPA and Aasandha [the social protection agency and the state health insurance scheme]. To get the medicines on a prescription, we have to tweet. To travel abroad, we have to go from place to place bowing and scraping for dollars. To pay US$5 for Netflix or Shein (everyone except Shumba), we have to wake up at sunrise and sit there pressing the button. In the south, the power goes out twice a day; in the north, the water is cut off every now and then. Maldivians are still in a very bad way when it comes to meeting even the most basic needs. Maldivians' spending power, or purchasing power, is very low. The ordinary person does not live. They merely stay alive. They stay alive by taking a soft loan from the Bank of Maldives, by getting MVR2,500 from Hassan to pay back later, and by hiding from Mohamed, not answering his calls because they still can't repay the money they borrowed from him. By the time the rent and the bills are paid, as people in Addu would say, there isn't a "kehakas" left in hand.

Next, let's look at the state of the system that runs the country. Given the political situation and the culture, a person with knowledge and good judgement cannot get to run anything. There is still no environment, and no one, to make policy by examining both sides of an issue on the evidence. Those in power have to appoint political activists who don't know even the ABC of the field. Every government so far has been run for the benefit of the 10,000 to 15,000 people who revolve around the ruling party. There is no room here for "people-centric" policies, and there isn't a single politician who even knows what that is. The administrative system is still run the way it was in the 1960s. The entire system, from the very top to the very bottom, has ground to a halt, sick with the disease of corruption. The system serves money, power and political influence.

Then there is the Majlis, which the law calls the People's Majlis. There is no one there who represents the people. There is no one there who will hold the government to account. There is not a single member who will speak a word or do a thing to put the people's rights first and advance the national interest. The entire Majlis has staged a rebellion against the people. What rebellion is that? Members elected to the Majlis to represent the people, amending the constitution on their own initiative, giving up the independence they need to represent the people, and the decision to choose to become the slaves of parties, what is that, if not a rebellion against the people and against the system?

Then there is the judiciary. There is nothing to say about the judiciary.

So, to sum up, we are a financially destitute people living in a systemically weak country. We have no government that will serve the people, no Majlis that will hold the government to account and a judiciary the people do not trust, and our basic needs are still not met.

In this situation, with us here as we are, what happens when a group that is financially well off, whose spending power is many times greater than ours, settles here?

To put it in one sentence: we will then have to be their slaves.

Summary: This section looks at what will happen when a group many times wealthier than ordinary citizens is brought in and settled among a financially destitute people living in a systemically weak country, with no government that will serve the people, no Majlis that will hold the government to account, a judiciary the people do not trust and basic needs that are still not met.

In a transaction between a financially well-off person and a financially poor one, how it ends depends very much on how badly off the weaker party is. A person who cannot meet their basic needs has little leverage. They have to do what they are told and accept whatever wage they are given. A person who is financially comfortable does not have to go along with whatever they are told. Going by the figures the government has drawn up for Rasmalé, it wants to settle 35,000 millionaires there. When the combined financial power of those 35,000 people outweighs that of all the other Maldivians, and their spending power is many times greater than Maldivians', what arises is a "purchasing-power imbalance". Bring a group many times wealthier than its members into a society that is small in population, financially weak and living hand to mouth, and settle them there, and the gap in spending power between the two groups living in one place will widen enormously. The end result is that those financially powerful incoming residents will easily be able to move into every corner of the economy.

Even before any foreigners have become residents, we can already see how things work when institutions are weak. The fruit and vegetable trade at the market is controlled by people from one foreign country. People from a foreign country have moved into the Maldives' construction sector and already control a very large share of that business. On Maafushi, Guraidhoo and other islands, many foreigners are already running guesthouse businesses in Maldivians' names. In such business dealings, many Maldivians go with the foreigner because the price he offers is better than a Maldivian's. Ordinary Maldivians cannot compete. That is what happens when the gap in spending power is wide. The laws are there. The regulations are there too. But even now, these things are not being stopped. This is the second reason. We are trying to bring in and settle a group of foreigners whose spending power is many times that of ordinary Maldivians, while this country still has no institutions that will, or can, protect Maldivians' interests. When I started writing this piece, every cabinet minister in the government was dining with the head of Eagle Hills, the partner in the Rasmalé deal. That is the shameful state of our country's institutions. Ordinary Maldivians do not believe these rulers will put Maldivians' interests first. Beyond that, given how the Maldives' political system works, few Maldivians would deny that it is a system money can buy influence in, where things get done the way the moneyed want.

So on one hand, Maldivians' financial situation is that dire. On the other, this country has no robust institutions, trusted by the people, that can protect Maldivians' interests. In this situation, with us here as we are, settling wealthy foreigners would bring benefits to a few but far greater permanent harm to many. These are the two main reasons why I believe the time to do this has not yet come.

As an example, let's look at the industry our economy depends on: tourism. What is the role of Maldivians today in an industry built on a model of tourism unique to the Maldives, one that Maldivians themselves designed? Of more than 100 resorts, Maldivians today own around 20 per cent. Apart from the Maldivian resort owners of that 20 per cent, every Maldivian working in the industry works for some wealthy foreign individual or company. The owners are foreigners. Maldivians are "slaves". Year after year, Maldivians' power in this industry has gone down, and it is still going down.

Tourism ended up like this because of the very second reason set out above: because there have been no governments that put the interests of Maldivians and the Maldivian nation first. There has been no government that accepted, or accepts, the importance of expanding Maldivians' role in the industry. There has been no government that made it a priority to protect or grow Maldivians' "capital". What we see in tourism today is the result of making it the top priority to sell off as many islands and open as many resorts as possible, as fast as possible, in "my five years". Instead of prioritising the work needed to give Maldivian owners a chance in this field, and instead of spending the time it needed, the quickest and easiest route was taken. There may have been short-term gains, but the lasting damage is now far greater.

There is no doubt that foreign money and foreign investment are needed. But we must also accept that a balance has to be kept between Maldivians and foreigners. We must think about how to keep Maldivians' share from falling below a certain level. If the Maldivian government does not protect Maldivians, no one else will. Instead, what we saw was the whole industry slipping out of Maldivians' hands in the rush to speed things up. This is where tourism ended up, with all of today's laws, regulations and institutions in place. If the residency programme is started in the same rush, it will end up exactly the same way. But unlike in tourism, those who gain the upper hand in residency will be residents who live here alongside us.

The leaders whom the Maldivian people entrusted with working on their behalf went in their suits, sat with a foreigner, beamed at the vision in the rendered videos and drawings on show, and clapped until their shoulders gave out. Picture that vision, those scenes. The tall buildings they showed may well be built. Beautiful villas and a yacht marina may well be built. World-class schools and hospitals may well be brought in. Giant shopping malls and restaurants may well be run. The people's land has been handed over for free to do all of this. But in the scene they showed, where do you – the ordinary Maldivian reading this – fit in? What is your role in this picture? Will you be in the villa watching the sunrise, or a room boy making up the villa's bed? Will you be in the shopping mall doing business, or a sales girl serving the people who come to shop? Will you be on the yacht drinking a coffee, or tying up the yachts when they come in? Will you be eating at the five-star restaurant there, or a waiter serving the people who come to eat? Will your children go to that fine school? When you fall ill, will you be able to go to that fine hospital? I don't need to answer any of these questions.

Summary: This section looks at the arguments some people make against this thinking, and at the examples of Singapore and Dubai.

I have also shared these thoughts with some politicians. They usually raise two points against them. The first is that it is only through projects like these that Maldivians can be made a comfortable, self-sufficient people. For example, they say Rasmalé would bring in twice as much tax as before. And once that money starts coming in, they say, the government will have the chance to make the people financially well off.

Read on the surface, this may sound reasonable and even easy to accept. But it needs to be thought through deeply, at the level of the system. We need to look at what happened in the past and what is happening now. Can the tax money the Maldivian state receives now pay for the services Maldivians must be given? Do Maldivians have the financial independence and financial comfort they ought to have? The Maldives is not a poor country. It is a relatively rich country. The state's revenue has grown by many billions over the past 20 years. But the services the public receive have not improved to the same extent. Nor have the ordinary person's living conditions changed to that degree. There is no financial independence and no financial progress.

When the Maldivian government had revenue of MVR20 billion, Maldivians lived hand to mouth, with nothing left to do anything else once the rent and bills were paid. Now the government receives twice that, MVR40 billion a year, and Maldivians are still living hand to mouth, with nothing left for anything else once the rent and bills are paid. So when the government's revenue rises to 80 billion, will this situation change in any way? It will not. When it got 20 billion and now that it gets 40 billion, a certain group benefited. When it gets 80 billion, that same group will benefit. Not the ordinary Maldivian. The ordinary person will still have to live hand to mouth. Why? Because the real problem is less the revenue coming in than corruption and the mismanagement of money. The Maldivian government's revenue is being poured into a bucket that is cracked all over.

No matter how much water you pour into this bucket, it will not fill up. It will fill up only once the holes are plugged and the leaking stops. With these leaks, even if every remaining island, lagoon and reef is sold off, the ordinary Maldivian will see no real benefit. So before the remaining large areas of land and lagoon are sold off, before projects like residency are started, and before major agreements are signed that cannot be changed later and will stand forever, these things need to be fixed first.

Second, they bring up the examples of Singapore and Dubai a great deal. In short videos and reels made by newly set-up "media" outlets, young people talking about Rasmalé can be seen bringing up Singapore and Dubai a great deal. Those young people may not know that Singapore and Dubai did not get to where they are today because of residency alone. They may not know about the many other things that were done there. They may not know that the rungs that had to be climbed in the race for development were climbed in the order they had to be. So, long as this piece is, before concluding we need to take a very brief look at Singapore and Dubai.

After gaining independence, the very first thing Singapore did, in 1960, was to pass a tough law to stop corruption: the Prevention of Corruption Act. Besides making strong laws against corruption, Singapore began 66 years ago to strengthen its system of government, close every door that opens the way to corruption and strengthen its institutions. Then, from 1960 to 1968, Singapore gave top priority to "public housing and citizen ownership".

Between 1960 and 2000, the share of Singapore's population with housing of their own reached 92 per cent – people with a house or apartment of their own. Alongside this, important land laws were made and legal measures taken to stop land becoming the property of the wealthy. By 1984, a national savings framework had been drawn up. From 1995, Singapore made the list of the 10 least corrupt countries in the world on Transparency International's index, and it has held that position to this day. In the same period, Singapore also made developing Singaporeans its priority. The philosophy Lee Kuan Yew followed was this: "Economic development required upgrading the earning capacity of ordinary Singaporeans."

When countries bring in foreign investment, if their citizens lack the knowledge and training for the fields linked to those businesses, the public cannot make full use of that investment. In 1970, Singapore began opening industrial training centres. In 1979, a Skills Development Fund was set up. Having educated and trained ordinary people, Singapore set about developing its industry from 1980 to 1990. It also supported Singapore's small and medium businesses and helped them grow. When Singapore started residency by investment, income per head in Singapore was US$27,000. This is a very brief summary of what Singapore prioritised. The point to note is what Singapore put first. First, it put first building a robust system of government, free of corruption, that puts the people first. Next, it made building up its people the priority. Then its industries. Foreigners and foreign capital were brought to Singapore in that order. Singapore succeeded because it climbed these rungs in the order they had to be climbed.

Dubai's approach is different, but far more Maldivians will understand its situation far more easily. It's true: in Dubai, there are more foreigners than Emiratis. Among them, there is no shortage of foreign residents either. But the most comfortably off people in Dubai are the Emiratis. Emiratis are not working as room boys. Emiratis are not driving taxis. Emiratis are not working as waiters. Emiratis are not going around begging for medical care and other basic services. Dubai, too, began bringing in foreign residents and their capital only after meeting its own people's basic needs and making sure that its people were a comfortable, financially well-off people. When the golden visa was introduced in 2019, income per head in Dubai was around US$35,000 a year.

The examples of Dubai and Singapore prove one thing: the importance of following the natural order of the race for development. Countries such as Portugal, Greece and Malta, where residency programmes failed, teach the same lesson: skip the order of development and ordinary citizens will not benefit.

There are no shortcuts to development. So we must not get the order wrong. What the Maldives should put first right now is wiping out systemic corruption. After that, it should raise the basic standard of living of ordinary Maldivians and make the ordinary Maldivian financially independent. Once these things are put right, we may find a solution to the reasons why young Maldivians are having fewer children. What Maldivians must not do is settle people many times wealthier here while Maldivians are in such dire financial straits. What Maldivians must not do is make room for foreigners like that to settle here when there is no environment in which Maldivians' interests can be protected. What Maldivians must do is put first saving this country from corruption and decay, and doing what it takes for Maldivians to become a financially self-sufficient, financially independent people. If our development plan goes ahead in this order, it will pay off. But if it is left to governments that want to do everything in "my five years" in power, this will bring Maldivians no benefit, and the long-term damage could be far greater. The state we are in today is the result of decisions made yesterday; the state our children will live in tomorrow rests on the decisions we make today.

Large projects to settle foreigners are under way in Noonu atoll and Thaa atoll. Many Maldivians don't even know about them. What is being talked about now is Rasmalé. Beyond that, there is also talk of a former president trying to start a similar project in Laamu atoll. But there is no sign of this subject being debated from an informed, academic point of view. That is a great pity. With decisions this big being made and work on them under way, these are matters every Maldivian needs to think about. They are subjects university students need to debate. They are matters journalists need to write investigative pieces on. They are matters researchers need to study. They are matters all Maldivians need to think through and reflect on, setting their political views aside. We must not leave decisions this big in the hands of two or three political leaders; we must bring our own minds to bear on them.

Midhuam Saud is a commentator, blogger, and founder of The Commoners, an NGO that focuses on housing policy, tenant rights, and local affairs. This essay first appeared in Dhivehi on 11 October as part three of his Rasmalé Deal series. It has been translated and republished with the author’s permission.

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