Worried about the poor sovereign debt rating of Maldives negatively impacting its highly lucrative tourism industry, a private sector initiative is being led by Maldives Islamic Bank to help keep this island nation’s resorts viable and continue attracting high-yield guests.
The bank’s managing director and CEO, Mufaddal Idris Khumri, told IFN Investor this Muslim-populated nation’s domestic financial resources are limited and explained that much of the Maldives’ resort development is financed out of Sri Lanka.
Seeking to avoid any potential cross-border cashflow chokehold, while also ensuring the expansion and diversification of funding sources, Mufaddal is leading a campaign to create a privately-run Shariah compliant fund with global access.
“This fund to support resorts in Maldives can be handled by a recognized foreign entity with a higher credit rating because this is a private sector initiative.” As yet, no external entity has been identified.
Once such a fund is established, Mufaddal expressed confidence that other nations would be more amenable to opening the cash pipeline needed for both greenfield Maldives resort developments as well as upgrades to those already operating.
“That is the main reason to have the fund as Shariah compliant, to add the extra layer of confidence for investors. Few, if any, would have doubts about the viability of the Maldives tourism sector over the long-term if our resorts remain world-class.”
Planning for Maldives Islamic Bank to directly handle administration of this fund’s outflows to resorts, thus keeping it out the government’s purview, Mufaddal said the relevant ministries and local authorities have expressed support for this independent initiative.
“We have begun discussions and if everything goes according to plan, we could see this Shariah resort fund up and running by the middle of 2025.”
While Maldives Islamic Bank is prepared to provide the seed capital for this fund’s establishment, Mufaddal is eyeing the Middle East, plus South and East Asia as the main financial resources that could potentially be tapped.
