President Dr. Mohamed Muizzu has officially ratified a new Foreign Investment Law, marking a key step in modernizing the legal framework for foreign investments in the Maldives. The newly enacted law replaces a system that had been in place for over 45 years and aims to create a more transparent, secure, and investor-friendly environment to attract Foreign Direct Investment (FDI).
The law, which will come into effect three months from ratification, introduces several reforms designed to streamline investment processes and clarify the responsibilities and rights of foreign investors. It also ensures stronger security for investments, aligning with multilateral and bilateral treaties that promote and protect foreign investments in the country.
One of the key features of the new law is the requirement for all foreign entities or individuals planning to establish a business in the Maldives to obtain an investment license before commencing operations. This move is intended to regulate business activities more effectively and ensure compliance throughout the duration of their operations.
In addition, the law mandates the government to maintain transparency by publishing a list of business sectors that are either closed or restricted to foreign investments. This list will be created in consultation with the Cabinet and will include special conditions for investing in certain restricted areas. Factors considered when determining these restrictions include national security, the impact on local competitiveness, the presence of domestic businesses, and the need for foreign expertise in specific sectors.
The new law also addresses long-standing concerns from foreign investors regarding the security of their investments. It guarantees fair and equitable treatment, the right to repatriate profits, and assurance of fair compensation in cases of expropriation, which can only occur for specific public purposes or national security reasons.
Moreover, the law establishes mechanisms for investor complaints and remedies. Investors will have the right to approach the Ministry with concerns regarding administrative decisions, and these complaints will be reviewed by an independent committee to ensure impartiality.
An important aspect of the new law is the enforcement of existing bilateral and multilateral investment treaties. The provisions of these treaties will take precedence, providing a critical assurance for major investors looking to establish or expand their presence in the Maldives.
With these reforms, the Maldives aims to attract higher levels of FDI, contributing to economic growth and diversification. The changes are also expected to create new employment opportunities, enhance human capital, and position the Maldives as a competitive and secure destination for international investors.
