The Republic of Maldives is a chain of about 1,190 coral islands spanning across an area of 90,000 sq. km in the Indian Ocean. The islands occur in twenty six natural atolls, but for easy administration the country is divided into 19 "atolls".
According to the results of the Population and Housing Census, 1995, the population of the country is 244,644 and is growing at the rate of 2.75%. There are 200 inhabited islands of which twenty-five have more than one thousand inhabitants. The most populous of the inhabited islands is Male', the capital and the centre of commerce. The population of Male', which is growing at a faster rate than the rest of the country, stands at 62,973 (1995 census).
Policies for economic development
The Maldives has always maintained liberal and pragmatic economic policies and encouraged growth in sectors such as fisheries and tourism, offering comparative advantages to the country. Strategies are worked out to spread the benefits of such growth to the outer atolls by providing an essential social infrastructure. The government's fiscal and monetary policy, while ensuring attractive investment opportunities for domestic and foreign investors, focuses on a phased program of domestic resource mobilization. The national currency, the Rufiyaa, is not pegged to a trade-weighted basked of currencies. Thus foreign currency rates fluctuate to market demand.
Such flexible and realistic policies have contributed to the successful growth of the economy in the past and can be expected to continue to do so.
During 1995, the gross domestic product (GDP) grew at a rate of 7.2%. The GDP was estimated at Rf 1,359.4 million in 1995 (at 1985 constant prices) which amounted to a per capita GDP of Rf 5,453.7.
The sectors of the economy which have contributed most significantly to the GDP of the country are fisheries, tourism, shipping, agriculture and industries.
FIsheries
Fishing is the main traditional occupation of the people and also the principal means of livelihood. In order to realize the potential of this sector, the government is implementing a number of development projects to increase fish production and export. Measures are being taken to tap the vast marine re-sources of the country and to this effect the government has established a 200-mile Exclusive Economic Zone. Also, a Fisherman's Day is being marked on the 10th of December every year to highlight the importance of fishing and the role of fishermen in the economic life of the country.
The predominant methods of fishing are pole and line for Skipjack and trolling for surface fish such as little tuna, frigate mackerel, wahoo and jacks. The traditional fishing vessel is the sailing boat but from the 70's the government has launched a program of modernizing the fishing fleet through mechanization. In the past, the Maldives exported fish primarily in the form of dried and smoked tuna called "Maldive Fish" to Sri Lanka. However, in 1971, when Sri Lanka reduced the purchase of "Maldive Fish", there was a strong need for diversification of the market and adoption of alternative methods of fish processing. Today, the country exports canned, frozen and salted fish to the Far Eastern and, European markets as well.
The fisheries sector accounts for 11.0% of the GDP (1995) and it is the second most important source of foreign exchange.
Tourism
Tourism has been the most dynamic sector of the economy during the last ten years. The country's wealth of natural assets such as the white beaches, the variety of marine life and the scenic beauty of the islands provides the main attraction for the tourists. Since the establishment of the first resort in 1972, 73 (1995) resort islands have now been developed. Tourist arrivals in 1995 numbered over 324,311.
Although most of the tourists originally came from the countries of Western Europe such as West Germany, Italy and France, new markets are now being tapped in East Asia and Australia. As a result the industry is becoming less seasonal.
The tourism sector contributed about 18.4% to GDP in 1995 and is the biggest earner of foreign exchange.
Shipping
The national shipping line which is operated by Maldives National Ship Management Ltd. handles 95% of the country's imports. Since the mid-60's the industry's surpluses have been an important source of foreign exchange. However, this sector has been adversely affected since 1982 by a number of external factors including the stagnation in world trade, the Iran - Iraq war and the adoption of the UNCTAD "40:40:20 Resolution" which restricted the share of third-country carriers. Therefore to minimize losses, the shipping line is being consolidated and its operations have been streamlined.
Agriculture
Despite the physical limitations such as lack of cultivable land, unfavourable climatic conditions and poor soil, a variety of food and cash crops is grown. Crops such as coconut, breadfruit, mango, papaya, lime, banana, pumpkin, water melon, taro and chili have considerable economic value. Agriculture is mostly a supplementary source of income. Given the growing demand for agricultural produce, there is a need to increase production and organise agriculture on a commercial scale.
The main market for agricultural produce is Male' and the tourist resorts. Large quantities of vegetables, fruits, meat and poultry products are imported, draining valuable foreign exchange. Hence, the government is taking measures to encourage and improve agriculture in the country. Such measures include coconut rehabilitation, pest control, provision of extension services and maximum utilization of uninhabited islands.
Industry
Industry in the Maldives consists of a traditional and a modern sector.
The traditional sector consists of boat building, mat-weaving, rope-making, black-smithing, handicraft and other-cottage industries. This sector employs a considerable number of women and accounts for about a quarter of the work force. Its linkage with other sectors of the economy such as tourism, transport and construction has further strengthened this sector. While the traditional industries continue to flourish, there are also a number of new industries coming up.
The main activities in the modern sector include fish canning, manufacturing of garments, production of PVC pipes, washing powder and bottling of aerated water. Other enterprises such as boatyards, transport services, electrical and mechanical workshops, carpentries and brick-making units are also significant.
The size of the domestic market, shortage of skilled and semi-skilled manpower, non-availability of raw materials and difficulties of transportation characterize the constraints of industrial development in the country. It is recognized that the development of the industrial sector is important to meet the growing demands of the economy. Therefore, foreign investment is highly encouraged for initiating mutually beneficial investment projects. The industrial sector accounts for about 13.3% of the GDP.
It is expected that with the development of transport, communication and other infrastructural facilities, the economic base of the country will be further broadened.
The value of the Maldivian Rufiyaa (MRf) is determined by the daily demand and supply at the Post Office Exchange Counter established by the Maldives Monetary Authority on 1st March 1987.
Exchange rate (April 1996): MRf 11.72 = 1 US dollar.
Infrastructure is well developed in telecommunication with its state of the art facilities. Telephone ownership is high in the capital and in the tourist islands. Apart from the capital most of the Southern Atolls now have full telecommunications facilities and before the year 2000 services will be expanded to include all the inhabited islands.
Being a nation of islands, the main mode of transportation is water taxis. Light aircrafts, seaplanes and helicopters are in operation making all islands easily accessible. There are 5 airports including 2 airports that can accommodate wide bodied aircrafts.
The main commercial port is in Male’, Good harbour facilities exist in the Southern most island, Gan a former British RAF base.
Electricity and power generations are currently provided by the public sector to densely populated islands. In other areas private electricity is used.
Maldives has a relatively good social infrastructure in areas such as education, health and housing although with economic expansion a high demand exists for continuous improvement of such services. The Government has so far invested heavily in these areas especially in primary and secondary education as a long-term growth objective.
You are assured of:
Address:
THE FOREIGN INVESTMENT SERVICES BUREAU
Ministry of Trade and Industries, Male' 20-02, Republic of Maldives
Tel: (960) 328754 - Fax: (960) 323756