8 Sept 2017
Maldives: Market Profile
Major Economic Indicators
- Maldives is a small island state in the Indian Ocean, about 1,000km southwest of Sri Lanka. A middle-income country with a small population inhabiting some 200 of its 1,000 islands, Maldives relies on its tourism and fishery sectors for economic growth. About 70% of its population is involved in the fishery sector. Maldives gained full political independence from the UK in 1965, and became a republic rather than a constitutional monarchy in 1968.
- With the country endowed with a unique natural environment, the tourism sector accounts for about one-third of Maldives GDP and 20% of its employment. In order to diversify, the country is developing a Special Economic Zone (SEZ) in the hope of enhancing its off-port shipping, IT and financial services resources. Nevertheless, this low-lying country is already facing threats from rising sea levels and climate change amid continuing concerns over global warming.
- Maldives’ main exports comprise fish and related products (about one-third of total exports), which are dispatched primarily to Thailand, France, the US, Germany and Sri Lanka. Nearly all of Maldives’ goods are imported, as it lacks arable land and large-scale manufacturing resources. Foods, petroleum products and machineries come mostly from the UAE, India, Singapore, Malaysia and Sri Lanka. Generally, Maldives retains a positive external account balance, as its service account surplus (due mostly to tourism) more than offsets its trade deficit.
- Maldives acceded to the WTO in 1995, and it is also a member country of the regional South Asian Free Trade Agreement (SAFTA). The average applied tariff rate of Maldives is about 20%.
- Maldives is one of the countries along China’s Maritime Silk Road under the Belt and Road Initiative (BRI). In 2014, China-Maldives Joint Committee on Trade and Economic Cooperation held its first meeting in a bid to deepen bilateral trade and investment as well as tourism cooperation. In June 2017, China and Maldives completed their negotiations on a free trade agreement (FTA), after talks were first launched in September 2015. Because of the BRI and FTA, Maldives is hopeful that at least one million Chinese tourists will visit Maldives each year in the coming five years. In addition to inviting Chinese airlines to land in Maldives, the government is building a new runway at the Velana International Airport with Chinese loans and infrastructural assistance, which is expected to be completed in mid-2018.
- Invest Maldives is the government agency to promote and regulate FDI in Maldives. While all sectors in Maldives are open for FDI, the government has initiated a number of projects involving light manufacturing, tourism and finance. More information on the investment regulations and incentives in Maldives can be found on the Invest Maldives website.
- Maldives’s cumulative FDI reached US$3.22 billion as at end-2016 compared to US$2.13 billion as at end-2013. According to China’s Ministry of Commerce, China’s cumulative FDI in Maldives was US$2.37 million as at end-2015.
- Hong Kong and Maldives concluded an air services agreement in 2009.
More information on the Belt and Road countries’ economic and investment environment, tax and other subjects that are important in considering investment and doing business are available in The Belt and Road Initiative: Country Business Guides.