MOT LAUNCHES NEW CP EXTENSION RULES
The most recent set of rules on Construction Period Extension and Deferment of Lease Rent (CP Extension Regulations) are now published by the Ministry of Tourism and Civil Aviation (MOT).
Official citation for the set of regulations are as follows: Regulations on Extending the Construction Period for Tourism Establishments with Incomplete Development or Redevelopment and Deferment of Lease Rent and Fines (Regulations No: R-80/2026).
Time of Application
They were published in the Government Gazette on 10 September 2026. The CP Extension Regulations took effect from the date of publication. So, 10 September 2026 is the critical date.
They repeal the earlier set of regulations on the subject and in existence since 2023 inclusive of all amendments brought to them from time to time thereafter.
Now, all fresh applications (and all pending applications) for CP extension will now be governed by the new CP Extension Regulations.
Scope of Application
The Regulations apply to all tourism properties placed in various stages of construction and development and yet to commence operations.
Any request for extension of the construction period is subject to the discretion of MOT and subject further to the processes outlined in the CP Extension Regulations.
Construction period is extended only for those establishments where actual construction and development works are initiated within the grace period provided in the lease agreement.
An application for construction period extension can be made only within the last 3 months of the grace period provided in the lease agreement.
Conditions of Extension
For MOT to grant a CP extension, the lessee ought to agree to the following:
1. To complete the construction and development of the property within the extension (and if the property is developed in phases, to complete the development of the phase in question within the extension);
2. To pay USD 100,000 as a fee;
3. To fulfil the corporate social responsibility either by making a payment as provided in the Schedule 1 to the tourism trust fund; or by financing a development project in a manner determined by MOT.
Please note that the USD 100,000 fee is consequential: it has to be paid within 30 calendar days (i.e. inclusive of public holidays) of being given conditional approval by MOT after reviewing the request for construction period extension. If the payment is not made within the period, the conditional approval will lapse, and MOT would have the option to revert to taking action as may be outlined in the lease agreement including MOT having the discretion to terminate the lease agreement.
Time extension takes effect
If CP extension is requested within the initial grace period provided in the lease agreement, the CP extension will take effect from the expiry of the grace period.
If CP extension is requested, after the expiry of the grace period, the CP extension will take effect from the date of submission to MOT of the application for construction period extension.
Extension in months
The extension is granted for a period counted in calendar months.
Maximum Extension
Where construction and development of a property are not completed within the grace period provided in the lease agreement, the maximum period of construction period that can be granted under the CP Extension Regulations shall be determined as follows:
· For an island or land, the maximum period of extension shall be 12 months;
· For a lagoon, the maximum period of extension shall be 24 months; and
· the shortest period of extension shall be 1 month.
Where more than 50% of the construction and development are achieved within the construction period extension so granted, the MOT has the discretion to extend the construction period, subject to inspection and verification by the MOT and declaration by the lessee.
Where less than 50% of the construction and development are achieved within the construction period extension so granted, the MOT has the discretion to terminate the lease agreement.
Deferment of Lease Rent and Fines
MOT has largely retained the erstwhile position on this subject.
MOT does retain the discretion to grant a deferment on the lease rent and fines otherwise payable during the construction period extension.
The lessee is given two options to pay back the lease rent and fines so deferred.
An interest free option: where the lessee pays in equal quarterly payments over a period of 5 years starting from year 3 and ending with year 8 from the date operating license is granted. There is no interest charged here, and there is a grace period of 2 years from the date of the operating license.
An interest-bearing option: where lessee pays in equal quarterly payments over the remaining years of the lease period starting from the 3rd year the operating license is granted. Here there is a simple interest of 3% a year, and payments begin after a grace period of 2 years from the date of the operating license.
Applying for CP extension
The application for construction period extension and deferment of lease rent shall be made via a prescribed form.
A board resolution evidencing company’s decision to seek construction period extension and deferment of lease rent must also be submitted.
Requirement for Work Plan
Once the construction period is extended, within 7 working days of signing the addendum to extend the construction period, the lessee is required to submit a work plan as provided below:
· The proposed opening date must be mentioned. The date must fall within the construction period, as extended.
· Where, development related documents have not been submitted already, or if they are to be revised, a proposed date must be specified to submit that documentation. Any failure can trigger MOT action according to the lease agreement.
· If there is an EIA Report issued by a government agency, the construction period identified by that agency shall be specified. If there is no such permit, or if the permit has lapsed, a proposed date to submit the report to that government agency must be specified.
· If a mobilization period is required, such period should be identified.
· The minimum period necessary to complete construction on the property has to be specified.
If a work plan does not contain above details, the MOT can ask the lessee to revise and resubmit the work plan within 7 working days.
Construction Permit
Construction permit is issued only when work plan is approved by MOT – a work plan is due for submission within 7 days of signing the addendum to extend the construction period.
Failure to complete within extension
Where the property fails to commence operations within the construction period, as extended, all lease rent and fines deferred until then shall become due and payable within 24 months from the end of the construction period, so extended.
MOT has the right to terminate the lease agreement if the payment is not settled within 24 months as indicated above.
The above processes will not apply if MOT grants the operating license to the property to commence operations within 15 business days of end of the construction period.
The CP Addendum
The construction period is extended via an addendum to the lease agreement and that addendum is to contain the following provisions, at a minimum:
· The period given in extension of the construction period;
· The period given in deferment of the lease rent and fines; and
· A term that states the MOT may take action against the lessee, terminate the lease agreement, without compensation, if the property fails to commence operations within the period provided in extension of the construction period.
Special Provisions on prolonged delays
Where a property has exhausted its grace period (initial construction period) or the extended construction period, and the property has remained without completion of construction and development for a protracted period, under the erstwhile CP Extension Regulations, the following special processes shall apply:
1. Where the construction period is ongoing for at least 8 years, there is no physical work of construction or development done, the total dues to the government in lease rent and fines exceed USD 10m – will not be provided additional time, and shall be subject to termination of the lease agreement in accordance with the relevant lease agreement.
2. Where the lease is at least 8 years old, the construction period is extended for more than 60 months excluding the grace period, and actual progress in construction and development is less than 15% – will not be provided additional time, and shall be subject to termination of the lease agreement in accordance with the relevant lease agreement.
3. Where the lease is at least 8 years old, the construction and development is ongoing, if there is an insufficient pace of work or work is stalled, MOT has the right to take action against the party in a manner consistent with the lease agreement.
If any of the properties involves a loan or mortgage, the mortgagee will be notified if the lease agreement is being terminated.
Any property whose lease agreement is terminated, shall continue to be liable to pay for the lease and fines associated with the property.
