Doing Business in Maldives

How can we help you do business in the Maldives?

The economy of the Republic of the Maldives is based primarily on tourism and fishing; other key sectors such as construction, distribution, telecommunications, shipping, aviation and banking support these two primary sectors.  The small country may provide some markets for American companies and the U.S. Commercial Service and U.S. Embassy Colombo would like to help your firm discover the Maldives and the opportunities it may offer.

Background: The Economy

The Maldives has achieved substantial economic growth over the last several decades, and the current GDP totaled around $1.3 billion, or about $4,300 per capita in 2009, the highest in the region.  Real GDP growth averaged around 6% per year in the past decade except for 2005, when GDP declined following the Indian Ocean tsunami. 

In 2009, however, the Maldivian economy shrank by 4 percent.  The global economic crisis severely hurt the Maldivian economy through a fall in tourism receipts, external financing, and exports.  As a result, the Maldives is facing an acute currency shortage, curtailing normal business activities.  The fiscal situation also deteriorated sharply.  In December 2009, the International Monetary Fund approved a $93 million loan for the country.  The loan shores up reserves and will help smooth adjustment.  The Maldives Monetary Authority (Central Bank) expects GDP growth around 3.5% in 2010.

The government has plans to substantially downsize the government workforce (currently over 30,000 employees), change the tax system to direct taxes, and privatize many industries.  The government aims to move from being a service provider to a regulator, and to enhance the role of private sector. 

The Maldives imports most of its requirements, ranging from staple food to hotel supplies.  Annual imports are $850 million.  The trade deficit was $690 million in 2009. International shipping to and from the Maldives is mainly operated by the private sector with only a small fraction of the tonnage carried on vessels operated by the national carrier, Maldives Shipping Management Ltd.  Over the years, the Maldives has received economic assistance from multilateral development organizations, including the UN Development Program (UNDP), Asian Development Bank, and the World Bank. Individual donors--including Japan, India, Australia, and European and Arab countries (including Islamic Development Bank and the Kuwaiti Fund)--also have contributed.

Economic Sectors

Tourism:  Tourism is the key economic sector.  In recent years, the Maldives has successfully marketed its natural assets for tourism--beautiful, unpolluted beaches on small coral islands, diving in blue waters abundant with tropical fish, and glorious sunsets.  Tourism contributes 27% of GDP and brings in about $600 million a year.   In 2009, tourism was badly affected by the global downturn, reducing government revenue and foreign exchange earnings and driving the economy into recession.  The tourism sector is now beginning to recover, and the hospitality industry is seeing more tourists, and they are paying higher hotel rates.  Since the first resort was established in 1972, more than 94 islands have been developed, with a total capacity of some 20,000 beds.  The Maldives has embarked on a rapid tourism expansion plan.  The government has awarded tenders for the development of several new resorts.  Foreign hotel chains currently in operation include Hilton, Sheraton, Shangri-La and Four Seasons.  Several other top resort operators are hoping to enter the Maldives soon.  Holiday Inn opened in 2009 and a J.W. Marriott resort is under construction. 

Over 650,000 tourists (mainly from Europe) visited the Maldives in 2009. The average occupancy rate is about 70%.  The occupancy rate reached over 95% in the peak winter tourist season before the economic crisis.  The average tourist stay is 8 days.

Fishing:  This sector employs about 11% of the labor force.  The fish catch has recorded an unusually sharp decline over the past few years to about 100,000 metric tons in 2009, most of which was skipjack tuna.  As a result, contribution of fisheries to GDP has declined from 7% to about 3%.The use of nets is illegal, so all fishing is done by line.  About 40% of the fish catch is exported, largely to the European Union, Sri Lanka and Thailand.  Fresh, chilled, frozen, dried, salted, and canned tuna exports accounted for 94% of all marine product exports. Total export proceeds from fish were about $80 million in 2009.

Agriculture:  Poor soil and scarce arable land have historically limited agriculture to a few subsistence crops, such as coconut, banana, breadfruit, papayas, mangoes, taro, betel, chilies, sweet potatoes, and onions. Almost all food, including staples, has to be imported. Agriculture provides about 2% of GDP.

Manufacturing:  The manufacturing sector provides only about 7% of GDP.  Traditional industry consists of boat building and handicrafts, while modern industry is limited to a few tuna canneries, a bottling plant, and a few enterprises in the capital producing PVC pipe, soap, furniture, and food products.

Contact us:

Are you interested in researching or pursuing U.S. export and/or business opportunities in the Maldives?  Please contact Kenneth Kero-Mentz, Commercial Attaché (CommercialColombo@state.gov) at the U.S. Embassy in Colombo, Sri Lanka, for additional guidance and information about the programs we offer to assist you.  We invite you to also review our “Doing Business in the Maldives:  A Country Commercial Guide for U.S. Companies.”  Just click <here> (PDF 552kb)