The plan to merge Fahi Dhiriulhun Corporation (FDC) into the Housing Development Corporation (HDC) has been put on hold amid concerns the move would only add more liabilities to the books of HDC, which is already carrying a high debt.
President Dr. Mohamed Muizzu’s cabinet had announced the decision to merge several state-owned enterprises (SOEs), including HDC and FDC, as well as Maldives Airports Company Limited (MACL) and Regional Airports Company Limited (RACL), back in September last year.
The merger of MACL and RACL is already in progress, with the latter’s liquidation process set to start soon.
When questioned about the progress of merger of SOEs, Mohamed Anas, the president of the Privatization and Corporatization Board (PCB), told Sun that the merger of HDC and FDC is currently on hold as the board assess the decision.
The decision comes amid concern over the potential challenges a merger would cause HDC.
Anas noted that the HDC is already carrying high debt, and expressed concern the merger would only worsen the situation.
“HDC is already carrying a high debt, and a merger would add further liabilities to its books. This would also make access to new financing more challenging,” he said.
He also noted that a merger would divert HDC’s focus from its core mandate - which now is urban development – to social housing – which is the FDC’s main focus.
“And HDC can concentrate on its core mandate of urban development, whereas a merger may once again divert its focus towards social housing,” said Anas.
“So, we are doing the assessment and will be submitting a paper to the PO [President’s Office].”
Anas added that the initial decision by the cabinet wasn’t to officially merge the two companies, but to make FDC a subsidiary of HDC, and then assess the benefits and challenges before making a final decision.
The HDC was established in 2001, during former President Maumoon Abdul Gayoom’s administration, to develop the artificial island of Hulhumale’ and run social housing initiatives to address the Maldivian capital growing housing crisis.
But in 2019, then-President Ibrahim Mohamed Solih established FDC, a separate SOE dedicated to social housing initiatives not just in Male’, but across the Maldives.
The move had sparked criticism, with many questioning the need to create two separate SOEs with a similar mandate.
But with the establishment of FDC, HDC had moved away from social housing to focus on urban development.
The HDC has racked up huge debt over the years to fund its projects. The situation worsened following the Solih administration’s decision to give away HDC’s biggest asset, land in Hulhumale’, under the ‘Binveriya’ social housing scheme.
And in a surprising move in August, the incumbent administration awarded projects to the FDC that fall completely outside its core mandate of social housing; construction of classrooms in schools in the atolls.
Back in 2024, President Muizzu’s administration had also decided to make Fenaka Corporation – an SOE that is heavily in debt – a subsidiary of the State Trading Organization (STO). However, the plan got dropped two months later.
The dissolution of companies operating at a loss as well as the merger or acquisition of companies operating at a loss with and by more profitable ones is part of a SOE reform agenda announced by President Muizzu’s administration, aimed at cutting costs.
However, the latest weekly fiscal report released by the Finance Ministry shows the government has spent MVR 1.24 billion on SOEs as of August 28 - marking an excess of MVR 865 million or 229 percent from the budgeted figure for this year.