Paying the port in dollars they don't have

At Malé Commercial Harbour, a technical-sounding port tariff is quietly deciding who gets to compete in Maldivian shipping.

Container-handling charges at Maldives Ports Limited (MPL) are billed in US dollars. Most locally owned shipping companies, though, still collect their revenue in rufiyaa. That gap was once a manageable inconvenience. Since the Foreign Currency Act was amended on 26 August, tightening how foreign exchange can be bought, sold and priced, it has hardened into something closer to an existential threat for local operators.

When MPL reverted its stevedoring charges to dollars in April 2024, it was solving a real problem of its own. The port carries dollar-denominated debt and capital-expenditure obligations, from equipment purchases to expansion loans, and needed a dependable stream of dollars to service them. But in fixing its own balance sheet, MPL created a mismatch on everyone else's: it assumed every shipping line holds and moves dollars the same way. They don't.

Foreign mainlines such as CMA CGM, MSC and Maersk send a pro-forma disbursement account in US dollars to their Malé agent days before a vessel arrives. By the time the ship docks, the cash to pay MPL's bill is already sitting with the agent, sourced entirely offshore. That bill is US$195.50 for a 20-foot container and US$391 for a 40-foot one, before GST.

Locally owned carriers, among them Maldives State Shipping and Lily Shipping, work a completely different cycle. They earn in rufiyaa, or wait 30 to 90 days for a foreign principal to remit what it owes. Yet MPL still expects its dollars the moment a vessel discharges. Every call becomes a scramble to find hard currency that domestic banks, prioritising essential import transfers, simply don't have enough of to hand out.

Run the numbers on a routine call of 100 20-foot containers and the exposure is stark. At the official rate of MVR15.42, the stevedoring bill comes to MVR301,461 (US$19,550). At a parallel market rate of MVR22.10, the same bill costs MVR432,055. That is a jump of more than 43 per cent for identical cargo, identical charges and an identical company.

Local operators used to bridge that gap, unofficially, through the parallel market. The amended Foreign Currency Act has all but shut that door. Trading outside the official rate set by the Maldives Monetary Authority (MMA) now carries fines of up to MVR1 million for individuals and MVR5 million for companies.

The government isn't wrong that the black market needed reining in. But the same week the amendment tightened enforcement, President Dr Mohamed Muizzu's own tourism adviser resigned over a related measure, which doubled resorts' mandatory dollar-conversion quota. He told local media it wouldn't fix the underlying shortage. If a shortage this stubborn can't be solved by squeezing resorts, it won't be solved by squeezing the country's own shipping companies either.

The effect is already visible at the port gate. Lily Shipping issued a trade notice on 1 April 2024 in direct response to MPL's tariff change. It told clients that from that date it would accept only US dollars for freight collect shipments. That covered not just the ocean freight itself but, in the company's words, "all associated fees, including but not limited to freight charges." That wording is broad enough to sweep in more than freight alone, even if it stops short of naming delivery order fees outright. Importers are left to source dollars themselves. They also face dollar-billed surcharges that foreign lines pile onto freight to route around the MVR771 cap on delivery-order charges.

There's an irony here that the amended Act itself may now expose. The law's core rule bars charging Maldivian nationals for services acquired within the Maldives in anything but rufiyaa. It is the same principle used to shut down the parallel market. Read plainly, a dollar-only freight collect policy looks like exactly what that rule was written to stop. The exception would be if shipping charges fall under one of the exemptions that already let MPL itself bill in dollars. Nobody has publicly clarified which side of that line freight collect sits on. Until someone does, local agents are left guessing whether complying with MPL's dollar mandate has quietly put them on the wrong side of the law meant to enforce it.

None of this requires tearing up the Foreign Currency Act or scrapping MPL's tariffs. It requires recognising that a locally owned carrier and a foreign mainline are not the same kind of company, and shouldn't be forced through the same currency bottleneck.

A dedicated FX facility, run through the commercial banks, would close most of the gap overnight. It would let licensed local operators convert rufiyaa to dollars specifically for mandatory port charges. So would letting local carriers settle MPL's tariffs directly in rufiyaa at the official rate. That is the same privilege foreign lines already enjoy simply by having offshore access to dollars. The second option only works, though, if the MMA stands behind it by converting MPL's rufiyaa receipts into the dollars the port still owes its own creditors. Otherwise the shortage simply moves from the shipping company's books to the port operator's.

Neither idea protects local shipping from competition. Both simply stop punishing it for a currency mismatch it didn't create.

If the state is going to require a dollar payment from a company that earns in rufiyaa, the least it can do is build a legal way for that company to get the dollars. Right now, it hasn't.

Captain Abdulla Saeed became the first managing director of Maldives State Shipping when the state-owned shipping and logistics company was established in February 2020. He went on serve as managing director of the State Trading Organisation.