Former President and opposition Maldivian Democratic Party (MDP) Chairman Mohamed Nasheed has warned that requiring resorts to convert 40 percent of their US Dollar earnings could push businesses toward bankruptcy and cause wider economic damage.

Parliament approved the amendment to the Foreign Exchange Act on Wednesday, raising the mandatory conversion requirement from the previous 20 percent.

The original government-sponsored bill proposed that resorts either convert USD 500 per tourist or 20 percent of their revenue.

The bill was returned to committee for further amendments following its initial review before lawmakers approved the revised requirement.

Nasheed said forcing resorts to convert a substantial portion of their foreign currency earnings into Maldivian Rufiyaa could undermine the financial viability of resort businesses.

He warned that resort closures could lead to significant job losses and negatively affect businesses that rely on the tourism sector.

He had previously described the proposed 40 percent conversion requirement as a threat to investor confidence and the long-term stability of the tourism industry.

The policy follows an announcement by Maldives Monetary Authority Governor Ahmed Munawar that the central bank planned to require resorts to deposit 40 percent of their US Dollar earnings through local banks.

The Maldives Association of Tourism Industry (MATI) has also expressed concern over the policy, particularly the requirement for resorts to place a substantial portion of their foreign currency earnings within the domestic banking system.