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Sunday, October 24, 2021

Explained: The significance of India’s $228 million social housing projects in Maldives

Severely congested with little scope to expand in the capital, the current Maldives government was prompted to consider decentralisation and the development of other inhabited islands.

Written by Neha Banka | Kolkata |
Updated: September 25, 2021 7:56:01 am
The High Commission said that the virtual signing ceremony was attended by Maldives’ Minister of Economic Development Fayyaz Ismail, Maldives’ Minister of Finance Ibrahim Ameer and Indian High Commissioner Sunjay Sudhir.

Maldives state-owned Fahi Dhiriulhun Corporation Thursday signed loan agreements with India’s state-owned National Buildings Construction Company (NBCC) and JMC Projects (India) Ltd, to develop 4,000 social housing units in Hulhulmalé (phase 2) island. India’s state owned Exim Bank extended buyer’s credit of approximately $228 million for the construction of these housing units.

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The signing of this agreement comes weeks after the Maldives government officially inked a deal with Mumbai-based company AFCONS, for the construction of the Greater Malé Connectivity Project (GMCP), a $500-million infrastructure project which is the largest-ever by India in the Maldives. India has been making significant investments in various development projects in the archipelagic state.

 

What is this about?

The contracts for engineering, procurement and construction (EPC) were signed between Fahi Dhiriulhun Corporation and India’s state-owned National Buildings Construction Company (NBCC) to develop 2,000 social housing units, while India-based JMC Projects has been contracted to develop 2,000 additional units. On its website, the Fahi Dhiriulhun Corporation said that it primarily focuses on constructing low-cost housing projects in the country.

According to a statement issued by the High Commission of India in the Maldives, under these two projects, 2,800 units each comprising three bedrooms and three toilets, and 1,200 units, each comprising two bedrooms and two toilets will be constructed. The High Commission said that the virtual signing ceremony was attended by Maldives’ Minister of Economic Development Fayyaz Ismail, Maldives’ Minister of Finance Ibrahim Ameer and Indian High Commissioner Sunjay Sudhir, along with representatives from Exim Bank, Fahi Dhiriulhun Corporation, NBCC and JMC Projects.

Why is it important?

Close to 40% of the entire population of the Maldives lives in Malé, the capital city, that has an area of approximately 8.30 square kilometres, making it one of the most densely populated cities in the world, according to research by the South Asia Center at the University of Pennsylvania. Severely congested with little scope to expand in the capital, the current Maldives government was prompted to consider decentralisation and the development of other inhabited islands by equipping them with civic facilities like hospitals and necessary institutions that would incentivise people to relocate to other islands, reducing the burden on Malé.

Social housing is an important requirement in the Maldives because in addition to housing shortage, high rent prices are a major challenge for ordinary people in the country. According to a report by the Maldives Financial Review published in June 2021, the country’s 2019 Household Income and Expenditure Survey showed that “households in Malé on average spent 35% of their income on rent; however the poorest households can wind up paying over 68% of their incomes on rent. This is largely due to increases in rent prices, which, on average, have increased by more than three per cent between 2015 and 2019.”

The development of social housing units in the country is not recent, however. The construction of flats for social housing was initiated by the Maumoon Abdul Gayoom government in 1990 with financial assistance from China.

In its National Housing Policy of 2008, the Maldives government stated that the policy would prioritise ensuring “a decent home for every household in the country”. The policy also outlined that social housing “was to be made available for households whose circumstances and socio-economic situation are such that their needs are beyond the market, such as the poor, disadvantaged and vulnerable groups, women and single-headed households and those affected by disasters and displacement”.

What is the context in terms of bilateral relations?

This is a part of India’s developmental assistance project in the Maldives, said Dr. Gulbin Sultana, a research analyst at the Manohar Parrikar Institute for Defence Studies and Analyses, whose area of research includes the Maldives. During the Yameen government that lasted between 2013 to 2018, China was heavily involved in similar developmental projects in the country. “Since the Solih government came to power (2018), India has been involved in several developmental projects, both big and small. I see this as part of that,” said Sultana regarding the development of social housing projects in the Maldives.

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Affordable housing has become an important election issue in the country and one of the top priorities of the current government. “This will help the Solih government fulfill its election promise of providing affordable houses, just like the several other projects. But since people will be direct beneficiaries, if this project is delivered well, India may earn some goodwill,” said Sultana.

In 2023, Maldives will hold presidential elections and in 2024, it is scheduled to hold parliamentary elections. Regardless of which political party comes into power in the upcoming elections, it is in India’s interests to demonstrate to the citizens of the Maldives that it can meet deadlines.

Over the past few years, social housing projects in the Maldives have been scrutinised because of allegations of corruption and because of issues related to poor governance in the country, Sultana explained. Faced with anti-India sentiment and rhetoric flamed by local groups and political factions in the country, it is in New Delhi’s best interests to ensure that its projects steer clear from any controversy that may arise.

Under the Solih government, since 2018, relations between India and the Maldives have been visibly warm. According to recent data provided by the Indian government, India’s financial assistance to the Maldives, including loans and grants for various infrastructure and development projects, exceeded $2 billion, in line with its ‘Neighbourhood First’ policy to strengthen ties with Malé.

During the tenure of the Yameen government, New Delhi had looked on in concern as Beijing increased its influence thanks to the PPM being openly pro-China. Following the election of President Solih in 2018, India has been able to further strengthen its bilateral relations with Maldives.

 

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