In the event that the work on islands and lagoons leased for tourism is not completed within the required time-frame, the Ministry of Tourism has formulated a regulation allowing the period to be extended by making additional payments to the government.
According to the regulation gazetted by the Ministry of Tourism last Thursday, if the work is not completed within the grace period given to develop an island or lagoon leased for tourism in its lease agreement, the ministry will have the discretion to extend the period subject to certain conditions. One of those conditions is that the leasing company agrees to the matters specified in that regulation.
The matters to be agreed upon are specified in Article 2, Paragraph (b) of the regulation. They are:
- Completing the work of the place and commencing operations within the extended period, or if it is a place developed in phases, completing the work of at least one phase.
- Paying USD 100,000 to the state and fulfilling corporate social responsibility (CSR).
- Depositing money into the Tourism Trust Fund at the rate determined in the regulation as CSR expenditure, or spending on a development project in a manner determined by the ministry.
According to the new regulation, even with these conditions, extensions to the grace period will only be granted to places where construction work has already commenced. The regulation also states that for an island, the construction completion period will be extended by a maximum of one year, while for a lagoon, it will be extended by a maximum of two years.
If 50 percent of the work is completed when the extended period granted under the regulation expires, the ministry will have the discretion to review and verify the matter before extending the period further.
When extending the period to complete projects commenced on islands and lagoons leased for tourism under the new regulation, extensions for projects involving more than one phase will require increased payments based on the number of phases.
Extensions for phases will be granted provided that the work of the first phase has been completed. When extending the period for subsequent phases after completing the first phase, a payment of USD 300,000 is required for a project with two phases, and USD 400,000 for each additional phase beyond two phases.
