THE POLITICS OF DOING BUSINESS ABROAD

By Research Desk
about 12 years ago

By Ruma Dubey

Everything, almost everything which the Indian Govt does is with a keen eye on the international community. It does not want to do anything which will irk the FIIs and their ilk. Thanks to that fear, at least something gets done!  Many justify this obsession with ‘wanting to always look good’ for the FIIs as a necessity for a developing economy like India to grow. If that is true, if FII and FDI money is required to boost the GDP, how come, Maldives, whose population is 0.03%of India, did not care about ‘hurting’ sentiments when it very unceremoniously showed the door to GMR?  But at the same time, when India is putting every other decision on the backburner, concentrating only on FDI, one needs to wonder whether, we will ever have the gumption to show a foreign company the door because the people were being overcharged?

Last week, Maldives Civil Aviation Authority informed GMR that its licence to operate the airport will turn invalid after Dec 6 and the immigration department stated that it will not renew visas and work permits for employees. 

Everything was going hunky dory since GMP won the bid in 2010 to operate and expand the Male airport and the agreement was signed by the then President – Mohammed Nasheed. Well, he had to resign in Feb’12 in what he has described as a coup. He is facing charges of abuse of power. People were as such miffed with the payment of an Airport Development Charge (ADC) fee of $25 per passenger. The right-wing extremist party, Adhalaath party has been protesting against this fee the loudest. Another opposition party, Divehi Quami Party filed a civil case blocking GMR from collecting ADC. So collection of ADC stopped and to keep up with the tenets in the contract made to GMR, the Govt had to pay up, so Mr.Naseer offered to pay the ADC from the government’s share of concession fee. Thus from being a revenue earner for the Govt there, it became a money loser. And the colloquial final nail in the coffin was when Mr.Nasser was ousted in Feb and a coalition of Opposition parties took charge.  Opposition from people grew stronger and the ADC issue went to international courts. It went for arbitration to Singapore courts and it got an order to restrain Maldives Airports Company Ltd, the Maldive Govt’s airport company from going to a civil court in Maldives. But courts apart, the opposition to GMR got onto the streets and it became a battle against an “Indian” company. So much public support was galvanized that GMR was finally given the ultimatum last week.

This is all extremely disturbing and makes one wonder whether companies, when setting up such huge infra projects abroad, are protected from political upheavals. Surely an ugly battle will now be fought in international courts. But at the same time, it raises a few questions.

1: Is India today paying for its past; we are getting what we did to Enron? Weren’t they also unceremoniously shown the door?

2: Mr.GM Rao, was not able to read the happenings and allowed it to boil to this extent? Just as the CEO of Enron worked out a plan with Bal Thackrey then, couldn’t Mr.Rao have also talked himself out of this? When the first revolt broke out, Mr.Rao did not have the foresight to see where this could head?

3: Allegations of corruption are also being made. While we do not know the truth, how many of us can say with 100% conviction that everything had been transparent and there could be no corporate governance issues? India is corrupt to the core hence this is one issue, where one is not guilty until proven.  

4: Isn’t this the inherent risk when one invests in less mature, emerging economies? And in that context, isn’t investing in India, which has a myriad of political parties calling the shots, extremely risky today?

Surely, this is a blow for GMR but can we take this one deal and completely sever our ties with Maldives? Certainly not! In a global environment, even the smallest of the countries is an essential partner for growth.

We as Indians really need to introspect about the way in which we do our business. The telecom sector is today one big mess. And within our own country, Tata’s were shown the door from West Bengal.  Thus one example cannot become a generalized statement about investment in Maldives.  One GMR should not be allowed to erode those ties. Doing business in another country, making profits while managing to survive in its politics is like survival in the jungle. Is that how foreigners feel when they come into the great Indian jungle?