Business Times

Public servants in the Maldives highest paid in South Asia

Earn close to Sri Lanka Rs 100,000 a month

MALE - Private schools and private or private sector-managed, government health care facilities is the way forward for the Maldives, minimising the need to seek high quality education or health care in neighbouring countries like Sri Lanka or India, a Maldivian official said.

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Trying to curb the huge wage bill of the public sector is also a serious challenge, he noted.

“If we allow more private schools, it reduces the need for tuition. A lot of children go to schools in Sri Lanka or India. If there are quality international schools here it would be popular. In fact there is one and the waiting list for admission is 100-200 (sizable in small Maldives with a population of just over 300,000),” Mifzal Ahmed, Advisor on Investments at the Ministry of Economic Development told the Business Times during a recent interview in Male.

The Business Times spent a week earlier this month gathering information for a range of stories on the economy, healthcare, education, environment and the Maldivian efforts towards becoming the first country in the world to be ‘carbon neutral’. Carbon neutral is a phase where for every bit of carbon that is consumed in power, fuel or use of equipment that affects the environment, the same amount is produced through non-toxic, environment-friendly renewable energy sources. Coal power generation is not permitted in the Maldives because it’s a pollutant.

In health care, the new regime of President Mohamed Nasheed who came to power on the pro-democracy wave and was elected in November 2008 has brought in India’s Apollo Group to manage the main ADK hospital in Male. Bids have been called to run other hospitals with parties from Canada, India and Malaysia in the running. “These are all management contracts. It’s cheaper to run on management contracts than the government running these units,” Mr Ahmed noted.

“Maldivians are wealthy enough to pay for healthcare services. That’s why they go to Sri Lanka. Even for the simplest of things, they’ll buy a ticket, spend on accommodation and travel to Trivandrum or Colombo for these services.”

“Affordability? They’ll beg, borrow or steal to go there because the services are just not available here. The government however will continue to spend on health and education. We have not totally stopping funding,” he said. “The whole exercise is to make services efficient, of a quality nature and reachable.”
Mr Ahmed said soon after the 2008/2009 elections, a strong need for certain basic services arose. Some basic services were not available to many people while another priority was to make the government more efficient.

In the Maldives, the kind of political handouts came in the form of doling out jobs. Thus the civil service is now in excess of 35,000 which is 1/3rd of the working population – all working in the public sector.
When the Tsunami hit the Maldives and other countries, there was a jump in public spending, which Mr Ahmed acknowledged was understandable, and also a jump in public sector employment party due to pressure from the opposition (against then President Maumoon Abdul Gayoom).

“We had to rebuild at a time when there was cheap money available in the world. But we ended up importing inflation in 2005-06, resulting in a huge public sector wage bill.” Mr Ahmed said in 2004 the average civil servant monthly pay was 3,000 rufiya (about Sri Lanka Rs 27,000) while currently (after 2008) it is at 11,000 rufiya (nearly 100,000). “Critics of the former government say this was due to electoral pressure. Those who defend it say it’s a natural response to inflation in the economy,” he said.

Mr Ahmed said the former government was expecting revenue from 60 new resorts being built between 2004-2008, up from the existing 70-80 resorts.”But when the global financial crisis occurred, all these resort projects stopped. The revenue didn’t come in – and so we were left with a huge fiscal deficit,” he said. The Maldives deficit is around 30% of GDP.

He said under the privatisation programme, private operators of services (like transportation) are offered benefits like resort land, etc. Transport is the biggest problem and the main access to the 200 300-odd islands that are inhabited, of the archipelago of 1,100 tiny islands, is by boat.

“You have a few islands that have 1000 and over, a couple with 20,000, and the rest is 100 people, 200 people. The capital Male has 100,000. The population is very skewed.” He said the government is bringing in one of the most comprehensive social insurance schemes ever heard.

“Currently we are introducing schemes for the disabled, old age, the vulnerable. We have introduced a health scheme that would cut the cost of health to the ordinary person by 90 % with the government bearing the additional cost. Things have changed in how services are provided to the public. The government doesn’t mind paying for this as long as the quality of service is good. Directly subsidizing health care doesn’t work as it leads to waste,” he said, adding: “A private party coming in competing with other private parties creates competition, efficiencies. It works.”

Under the health insurance scheme the premium paid by the public is subsidized based on income levels. The higher the income, the higher the premium while at the very low end, the government pays the full premium. Under this, health care is free to the poor. Walk into any private hospital and the insurance scheme takes care of the cost for those who can afford.

He stressed the need to cut public expenditure saying if this is not done, the repercussions are enormous. The government, Mr Ahmed noted, is looking at transshipment, new ports while the tourism potential has still not reached its fullest. “We have luxury resorts but we don’t have adventure tourism, safari boats, diving. No international conference facilities. The conference industry is huge.”

He said in the next 10 years the Maldives is working towards being a middle income country where the basic needs of society are provided for. “We want to provide value for money to income earners and create a prosperous liberal Muslim country where human rights are protected, there is good gender balance and women’s rights are ensured. That’s the vision of this government.”

Sustainable development
Referring to climate change and sea level rise with projections that the Maldives will sink by the end of the century, Mr Ahmed noted that if the Maldives sank, so would half of Bangladesh and regions like downtown Los Angelos.

“In our case however we face total destruction as we don’t have any high land. We want to lead by example – we want to give a positive message on climate change. We don’t want to be all doom and gloom. We want to say the technology exists to solve these problems; it’s a matter of investing in these technologies. And we want to showcase these technologies in the Maldives and if any company is interested to invest in these environmentally-friendly technologies, by all means they could make the Maldives their poster chart (model).”

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