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 Republic of Maldives comprises 1,190 islands in 20 atolls spread over 900 km in the Indian Ocean. Maldives attracts over 1.2 million tourists annually. Tourism is the growth engine for the economy and accounts for approximately 70% of gross domestic product (GDP). The tourism sector’s contribution to the economy is split between direct (30%) and indirect (70%) via transportation, communication, and construction sectors. Tourism will likely continue to drive the economy with the government of Maldives promoting the construction of new island resorts.
Total GDP is approximately $3 billion. GDP growth averaged 6% during the past decade and has helped lift Maldives to middle income country status. However, in 2015 the GDP growth rate slowed to 1.5% according to the World Bank. (Maldives government claims a 2015 growth rate of 4.8%; however, the government has not provided documentation on its methodology for determining this rate.) Tourism contracted as the growth in tourist visits fell and average stays decreased. Per capita GDP, estimated at over $8,000, is the highest in South Asia. However, there is significant income disparity as many Maldivians do not benefit from the revenue generated by the tourism industry and have few job opportunities.
The World Bank projects economic growth will rise to 3.5% in 2016, but Maldives faces significant fiscal problems. Public debt remains very high and the International Monetary Fund (IMF) has recommended Maldives undertake fiscal consolidation through expenditure control. In 2010, the IMF withheld a loan facility due to Maldives’ failure to take sufficient steps to reduce the deficit. According to the Maldives Monetary Authority (MMA), the external current account deficit widened to about $400 million in 2015, or 13% of GDP. The IMF says tourism revenues may be underreported, suggesting the current account deficit may be overstated.
Maldives welcomes foreign investment, although the ambiguity of codified law acts as a deterrent. Historically, Maldives has been a small market with limited investment and business opportunities for U.S. companies. Although trade and investment have been liberalized, the Maldivian business community is small and close-knit, so new market entrants may find it difficult to make contacts. Companies report that foreign exchange shortages are affecting business, but the black market premium has narrowed due to an increased supply of foreign exchange.
There is limited foreign investment other than holdings of hotel brands operating in Maldives.
Are you interested in researching or pursuing U.S. export and/or business opportunities in the Maldives? Please contact William Humnicky, 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.