Sunday 9 December 2012

The Male muddle : Politics vs corporate


How unfortunate it is to see that political establishments are hitting hard at the business of corporate-giants. You get a contract sponsored by sovereign Govt. of the country and later the apex court concerned simply terminates it regardless of the huge loss the private enterprises involved go through with.
It seems that not only in India but globally internal politics of respective nation is encroaching upon the territory of its global economic relations which are supposed to be dealt with independently. Economic relations must never get tainted by the petty interests of politics, opposite of which just happened in Maldives.
The earlier Govt in Maldives in the president-ship of Naseed enters into a concession agreement with GMR-MAHB to develop the Male International Airport. After a coup d’état, the new Govt. formed in the stewardship of Waheed annuls the same contract calling it illegal and this $500 million airport-deal simply goes into vain. The similar incident has happened in India as well when 2G-spectrum allocations had been negated by Supreme Court jeopardizing the interests of corporate including foreign companies such as Telenor , Sistema, Etislat etc.
In June 2010, the Maldives government, the Maldives Airports Company Limited (MACL) and GMR-MAHB Consortium signed a tripartite concession agreement to develop and run the Ibrahim Nasir International Airport at Malé, the capital of the island nation. According to this agreement GMR group levied Airport Development Charge on departing passengers, the revenues earned through this process went to the Maldives Govt. Later this practice was found illegal by a local court. Seeing that, the then president Nasheed allowed the GMR to deduct the amount of ADC from the overall revenues it used to share with the Govt. Bone of contention appeared when the changed Govt. of Waheed found out that it owed GMR about $3.5 million.
 In the guise of xenophobia he contended to expropriate the tender from GMR and won the case in Singapore Court.  It is notable that GMR-MAHB consortium has made the largest-ever FDI investment in Maldives and Male airport is a top growing airport in the region. Given these facts and that IFC, a financial body of World Bank was involved in the bidding process through which GMR had won the tender; it is wondrous how the new Govt. in Maldives called it an unfair agreement. The whole incident clearly manifests the anti-Indian sentiment spread in the neighboring island.
On one hand, GMR-Maldives spat is technically a win-win situation for the Maldives and on the other; it brings complex repercussions for India. Strategically Maldives is an important neighbor archipelago for the country. Given the geographical position of Maldives and its recent brew with India, China with all its might would try to make a footing in this region to counter balance India. Hence it is a challenge for Indian Govt. to keep Maldives in good humor while achieving justice for its company. Highly likely it is that GMR will appeal in International Trade Court against the Singapore court verdict which would further stress diplomatic  machinery’s new mission to handle Male. The test is not actually for GMR but for Indian Govt. as to how it would help this b’lore based enterprise to incur its losses at the same time keeping the strategic relationship with the island intact.


1 comment: