opportunities for capital market growth
TRANSCRIPT
Opportunities for
Capital Market Growth
View of Stakeholders
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GDP increased to 5.3 bn from 42.4m in 1980Maldives GDP
GD
P U
S$
0
750,000,000
1,500,000,000
2,250,000,000
3,000,000,000
3,750,000,000
4,500,000,000
5,250,000,000
6,000,000,00019
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
1720
18
5.3 billion
42.4 million
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157 countries have GDP more than 5 billion
COUNTRY GDP ($ BILLION) RANKINGIndonesia 1,042 16Thailand 505 25Singapore 364 34Pakistan 313 40Bangladesh 274 42Sri Lanka 89 65Bahrain 38 98Nepal 29 102Jamaica 16 121Mauritius 14 128Monaco 6 150Liechtenstein 6.2 151Guam 5.8 152Maldives 5.3 157
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GDP/capita was $200 in 1978 now $11,890 GDP Per Capita
0
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Nepal Bangladesh Philippines Sri Lanka Thailand Maldives Malaysia
GD
P/C
apita
US$
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Maldives close to reach high income status ($12,475)
COUNTRY 2018 GDP/CAPITA
Seychelles 16,434
Hungary 15,939
Poland 15,424
Croatia 14,896
Romania 12,301
Costa Rica 12,026
Maldives 11,890Argentina 11,653
Russia 11,289
Malaysia 11,239
Mauritius 11,238
Judith Maxwell
Social cohesion involves building shared values and communities of interpretation, reducing disparities in wealth and income and generally enabling people to have a sense they they are engaged in a common enterprise, facing shared challenges, and that they are members of the same community”
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“
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High disparities in wealth and income
• 8.2% poverty according to national poverty line ($5.50 a day UMI)
• 15% unemployment rate
• Women involvement very low
• 2/3rd jobs are in public sector
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High debts and high corruption
• Huge misalignment between growth sectors and job aspirations
• High level debt and large volume of external loans and guarantees
• Large volume of external loans and guarantees on non - concessional
terms
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Extreme dependency on a single sector
INDUSTRY GDP SHARE
Toursim 24.5
Transport and Communciation 12.3
Wholesale and Retail Trade 8.4
Public Admin 7.4
Construction 6.8
Real Estate 6.6
Financial Services 4.4
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Maldives is the country most reliant on tourism
COUNTRY % OF GDP RANKING
Maldives 38.92 1Seychelles 25.74 5
Bahamas 19.23 6
Fiji 14.09 11
Malta 14.08 12
Cambodia 13.72 13
Barbados 13.13 14
Croatia 11.0 18
Jamaica 10.48 20
Thailand 9.82 21
Phillipines 8.70 23
Iceland 8.63 25
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Resorts contribute 20% of GDP
0
6
12
18
24
30
2010 2011 2012 2013 2014 2015 2016 2017
0.70.80.80.810.90.80.9
2.4
1.11.21.110.91.21.1
21.220.821.6
23.424.323.9
24.424.4 24.3
22.723.6
25.2
26.425.7
26.426.3
Tousim shareResortsOther accommodation F&B
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Direct revenue from tourism is MVR 7.1 billionTourism Revenue
0
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
7,000,000,000
8,000,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
TGSTGREEN TAXTOURISM ADMIN FEELAND RENTTOURISM TAX
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Tourism industry has 50,905 beds in 911 properties
Guest Houses
582
Resorts
164 36,887
Beds
Beds
9,537
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Industry contributes MVR 4 billion as TGSTTGST Revenue
KADH
BAA
NLHDh
RGDh
GAHA
LSV
ThMale' City
MSh
FHDh
Gn
0
160,
000,
000
320,
000,
000
480,
000,
000
640,
000,
000
800,
000,
000
960,
000,
000
1,12
0,00
0,00
0
1,28
0,00
0,00
0
1,44
0,00
0,00
0
1,60
0,00
0,00
0
142,167284,8388,118,5568,206,1919,079,42822,191,27223,388,56038,208,47448,064,75348,408,59867,413,87768,428,39186,928,357110,486,371
194,306,903239,806,308
296,412,957364,309,382
465,017,819467,573,953
1,520,384,953
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Tourists pay MVR 580 million as Green TaxGreen Fund
KAdh
BAALhR
DhN
GDhV
GAMale' City
HASL
HDhShThMF
Gn
0
20,8
00,0
00
41,6
00,0
00
62,4
00,0
00
83,2
00,0
00
104,
000,
000
124,
800,
000
145,
600,
000
166,
400,
000
187,
200,
000
208,
000,
000
78,220125,5371,476,4681,626,3932,680,4792,915,4023,358,4607,090,3667,950,5009,581,6859,731,62410,128,28710,844,573
22,734,70225,799,718
32,594,18938,496,613
47,078,67549,846,474
71,830,843206,981,751
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Monthly green tax collection is MVR 72 million
0
22,500,000
45,000,000
67,500,000
90,000,000
Jan Feb Mar Apr May Jun Jul Aug
72,087,857.92
49,994,500.66
56,458,210.29
77,664,065.39
83,605,456.0883,176,441.5279,732,723.8378,248,271.57
TOTALResortsHotelsGuesthouses Liveaboards
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Trust
Maldivians have shared values & trust tourism
Public Perceptions indicate
Reciprocity Belonging
Inequality Unfairness Lack of Ownership
However, perceptions of
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Perceptions of different groups
• Inequality in top managerial positions
• Inadequate wages
• Unfairness in service charge
• Unfairness in access to finance
• Unfair competition
• Location disadvantages
• No benefits to community
• They cause damage to environment
• Women’s participation
• Monopoly
• Restricted access
• Unfair prices
STAFF INVESTORS
SUPPLIERSCOMMUNITY
Tourism Stakeholder Views
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How has the finance sector served the industry?
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How can the capital market contribute to the industry?
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Financing tourism industry • Handful of pioneers
• Limited rooms
• No industry knowhow
• USD 30,000
• biddings started in early 90s
• Borrowings from domestic & foreign banks
• Bank loans (full, partial), syndicate loans
• Investments around $10 - $15 million
• Supplier credit, tour operator advances,
dive school advances
• High demand but limited supply of rooms
• USD 3-4 million investments
• Tourism expansion to other zones
• Local & regional banks not able to support
• Lack of financial intermediaries
• Investment increased $30 to $50 million
PHASE 1: SAVINGS PHASE 3: BANK LOANS
PHASE 4: FDIsPHASE 2: FOREIGN PARTIES
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By end of phase 4
International Management Companies
Extensive Industry Experience
Strong Financial Strength
Marketing and Sales Strength
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Post financial crisis
• Banks and individual investors became very cautious
• Stringent measures - industry distress
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Competition is at global highest levels
• No access to finance for local owners
• Experienced investors forced to exit (Rainbow, Athamaa, ADK)
• Local investors who developed struggle to manage
• Local pioneers not able to operate at competitive levels - forced to sell
• Local managers not competitive to join international management
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Investments beyond US$ 100 million
• Blackstone bought TMA for $ 98 million in 2013 and sold after 4 years $500 million
• Cross Roads - Singha Estate - USD 300 million (phase 1)
• Ithaafushi - USD 350 million - Waldorf Astoria
• Raffalhuhuraa - Pontiac Group - USD 500 million - Capella Hotels
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Resort trade is in playfield of billionaires
COUNTRY SALE VALUE US$ RANKING
Cheval Blanc Randheli 214 Abu Dhabi
Conrad Msalidves 190 Black Stone
Finolhu Maldives 90Seaside Hotels and Resorts
(German)
Dust Thani 63 DREIT
Zitahli 31 Roxy Pacific Holdings
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How can the capital market contribute positively to economic growth and development of tourism industry?
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Listing of Resorts
• International listed companies
• Industry local stakeholders ready to list
✦ To raise capital
✦ People’s share
✦ Contemporary solution
✦ Sustain company
• MTDC listed - bad experience lead to loss of confidence
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Public trusts and invests in tourism
INDUSTRY RAISED (MVR MILLIONS) YEAR
MTCC 314 2007
Ooredhoo 421 2017
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Challenges & OpportunityListing of Resorts
• Governance structure - family and friends businesses - consensus
• Opportunity - First generation sentimental businesses
• Size & liquidity
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Industry Stakeholders
• Tour operators
• Travel agencies
• International airlines
• Airports
• Domestic carriers
• Accommodation providers(resorts, guesthouses, boats)
• Food service providers
• Suppliers
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Debt InstrumentsOpportunity
• Bond/Sukuk
✦ Construction and staff costs
✦ Working capital
✦ Soft renovation
✦ Full renovation
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Next Steps
International investors
Technology solutions
Human capital / financial intermediaries
Market development
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Technology Solutions
• Internet @ Application Driven
• Easy access
• Fintech solutions
✦ access to credit (crowd funding platforms, bond issuing)
✦ startup market with block chain security
✦ post trade services
✦ life cycle management, data analytics, value added services
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Participation of Funds
• Pensions Fund invests in tourism
• Green Fund gets listed
• Incentives for listed companies
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Staff belonging and engagement
• Maldives Executive Tourism Management School
• Maldives Tourism Employees Fund
• Superannuation Funds - Pensions Fund
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Pensions Fund as a lead investor
• Pensions In 2018 MPAO collected MVR 1.1 billion
• MPAO collected MVR100 million in August 2019
✦ Private companies deposited MVR 58.8 million
✦ Government agencies and state companies deposited MVR 41.1 million
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Innovative, modern public education
• Awareness campaigns through TV, Radio, Social Media
• Implement online financial capability and literacy course for young people
Thank you