04 JUL 2019
Tourism ministry makes new regulation on extension of construction period and deferment of rent and fines under agreements for development of tourist establishments
The Ministry of Tourism has published on 2nd July 2019 a new regulation on the extension of construction period.
The Ministry of Tourism has published on 2nd July 2019 a new regulation on the extension of construction period, and deferment of rents and fines under agreements for development of tourist establishments (‘the Regulation’). The purpose of the Regulation is to grant leeway to those parties that are unable to accomplish construction milestones under such agreements made with the government. The Regulation is applicable to agreements for the lease of lands, islands, and lagoons.
Leaseholders are eligible to apply for two remedies under the Regulation. The first remedy is an extension of the period for construction stipulated in the lease agreement made with the government. If successful, such an application would allow additional time to develop the property and deferred commencement of operations. Secondly, leaseholders can also apply to defer payment of unpaid rents and fines under a lease agreement.
As per the Regulation, the Ministry of Tourism has the discretion to extend time for completion of certain phases of a project or completion of a project in its entirety. In doing so, following considerations will be taken in to account.
The applicant has proposed to complete at least one phase of the development project upon the government granting extension;
The work plan outlines project milestones that have been completed and proposed to complete during the new construction period;
Payment of prescribed amount in Schedule 1 of the Regulation to the government as corporate social responsibility of the leaseholder.
Upon approval of extending the construction period by the government, overdue rents and fines can be deferred until expiry of the new construction period or commencement of operations, whichever occurs first. Rents and fines deferred under the Regulation or a previous regulation will be paid over the course of the lease, starting after a maximum of 5 years from the commencement of tourism operations.
An existing tourist facility closed down for reconditioning and upgrade can also apply to defer rents for the duration of such works. The Regulation allows a 2-year period for reconditioning and upgrade, which may be extended subject to satisfactory completion of 50 percent works in the proposed work plan. Rents deferred for such purpose are to be paid in quarterly installments within 2 years from the date of expiry of the approved period for reconditioning and upgrade.
Applications made to the Ministry of Tourism for extending construction period prior to the Regulation coming into effect will be assessed based on the new criteria. If the construction period under an existing lease agreement has expired and where the leaseholder has not sought an extension, an application must be lodged within 30 days after the effective date of the Regulation. Applications made after 30 days will be contingent on leaseholder’s agreement to pay rents and fines as deferred under the Regulation.
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