Parliament Passes New Law Regulating Leases for Uninhabited Islands and Lagoons

The Maldivian Parliament has passed a government bill introducing a comprehensive legal framework to govern the leasing of uninhabited islands and lagoons. The legislation, submitted by Thinadhoo North MP Saudulla Hilmy on behalf of the administration, replaces the existing Maldives Uninhabited Islands Act to establish clearer procedures and circumstances for land and water utilization. Under the new law, the President retains the authority to designate uninhabited islands and lagoons for specific uses. These categories include tourism, fisheries, agriculture, industrial, economic, and social purposes, as well as designated State or special-purpose uses. A significant shift in governance empowers local councils to manage the leasing of islands within their jurisdictions, except for those earmarked for tourism and industrial purposes. For lagoons, the ministry responsible for the specific designated purpose will oversee the leasing process. The bill defines strict eligibility for applicants. Commercial leases are open to sole proprietorships and companies or partnerships registered in the Maldives, including re-registered foreign entities. For non-commercial purposes, leases may be granted to any Maldivian citizen, registered business, or registered association. Lagoons may now be leased for medium- and large-scale industrial activities, aquaculture, or economic projects requiring a minimum investment of USD 64,851. For islands designated for a specific purpose, the initial lease term is set at 21 years, with a maximum total duration of 50 years following any extensions. Islands not yet designated for a specific purpose can be leased for a maximum of five years, with a possible five-year extension. To ensure compliance, the law introduces steep penalties: violations on short-term five-year leases can incur fines up to USD 32,425, while violations on long-term leased islands or lagoons may reach USD 64,851. The Ministry of Finance will determine the acquisition fees and rent for these leases. The law ensures continuity for existing lease agreements, which remain valid but must now adhere to the new statutory provisions, excluding established payment procedures. The bill was passed with 47 votes in favor and 12 against.