The People’s Majlis has passed a Government-backed bill to amend the Decentralisation Act, introducing new measures aimed at strengthening council accountability, safeguarding public resources, and ensuring fair competition for private businesses.

The amendment bill, submitted by Fuvahmulah South MP Ibrahim Hassan, was reviewed by the Parliament’s Decentralisation Committee and passed with the support of 45 lawmakers and seven members voting against it, on 6 August, 2025.

Key changes include restrictions on council activities during the final year of their term. Councils will now be prohibited from hiring permanent or contractual staff, leasing land, buildings or lagoons, or initiating unplanned development projects without prior approval from the Finance Ministry and the Local Government Authority (LGA). The move is intended to prevent politically motivated decisions and protect public funds during the transition period between council terms.

The bill also places tighter controls on council finances. All accounts must be managed in line with Finance Ministry regulations, and councils are required to submit bank statements upon request. State funding for councils will be calculated after deducting any overdue payments owed to the Government.

In a significant change, local authority companies formed by councils will be barred from engaging in business activities already conducted by private individuals in their jurisdiction. These companies may only undertake projects that are essential for local infrastructure and require an investment exceeding MVR 10 million. Any operations that do not meet these criteria must be discontinued within 90 days of the law taking effect. Councils will also be restricted from charging rent for land or buildings allocated to providers of essential public services. 

Funadhoo MP Mohamed Mamdooh said the proposed amendments to the Decentralisation Act are designed to strengthen local governance, protect small businesses, and ensure councils remain accountable. He highlighted concerns about council-run companies encroaching on private enterprise and councils deviating from public development plans in their final year for political gain. According to MP Mamdooh, the changes will address these issues by enforcing clearer boundaries and returning power to the public, rather than weakening decentralisation as critics claim.