Maldives one of the world’s most economically-repressed countries: report

The Maldives has been ranked as one of the world’s most economically-repressed countries, in the 2011 Index of Economic Freedom report produced by the Wall Street Journal and Washington think-tank The Heritage Foundation.

The Maldives is ranked 154th out of the 183 countries ranked, a slight drop on last year but still significantly below the global and regional average, placing 34th out of 41 countries in the Asia Pacific region.

Economic freedom, as defined by the report, “is the fundamental right of every human to control his or her own labor and property.”

The Maldives scored well for several indices, including business, fiscal, trade and labour freedom, but scored poorly for government spending, corruption and property rights.

“The Maldives’ weaknesses include chronically high government spending, inefficiency of the outsized public sector, and widespread corruption,” the report observed.

The government’s role in the economy through state-owned enterprises – and employment of over a third of the country’s total labour force – was “crowding out private-sector activity.”

Furthermore, “public-sector graft remains a challenge for foreign firms operating in the Maldives”, while “bureaucracy can be non-transparent and prone to corruption. Dispute resolution can be slow, complicated, and burdensome.”

Minister of Economic Development Mahmoud Razee noted that with regard to corruption, “in the past the country has not had the institutions to monitor and provide transparency, but now the information is available. It’s the difference between having a dirty or a clean window – one lets you see inside to the full picture.”

Several companies investing in the Maldives – including Indian infrastructure giant GMR and Malaysian security technology firm Nexbis – have had their share prices become collateral in local political rivalries following accusations of corruption.

“It’s one thing to be accused of something,” Razee said. “I’m sure most companies think about this [problem], but we have not seen it become a huge issue.”

Development of the private sector was stymied by “costly credit and limited access to financial services” the report noted, and while labour regulations were flexible, “enforcement is not effective in the absence of a dynamic labor market.”

The International Monetary Fund (IMF) has consistently urged the Maldives to reduce the size of its bloated civil service wage spend, which ballooned 400 percent between 2004 and 2009.

“With the government borrowing at the rate it has, it reduces the amount of credit available to the private sector, and that constrains the ability of the private sector to provide jobs and employment,” leader of the Maldives IMF delegation, Rodrigo Cubero, said in November last year.

“That then constrains economic growth. Furthermore, by spending more than it earns, the government is putting pressure on imports and the exchange rate.”

Razee noted that the introduction of new tax regulation such as the GST and Business Profit Tax, “while not the panacea to everything, shows the government’s willingness to come to terms with [the country’s economic condition].”

“If you look at the level of companies interested and investing in the Maldives, it has not lessened,” he said.

On a positive note, the report observed the potential of the government’s mobile phone banking project, dubbed ‘Keesa’, to enhance development in the private sector. Keesa is being jointed developed by the Maldives Monetary Authority and Dhiraagu, with World Bank assistance.

Summarising, the report observed that higher levels of economic freedom “correlated strongly to a country’s overall well-being, taking into account factors such as health, education, security and personal freedom.”

Hong Kong and Singapore were ranked top, followed by Australia, New Zealand, Switzerland and Canada. North Korea, Zimbabwe and Cuba were ranked at the bottom.


20 thoughts on “Maldives one of the world’s most economically-repressed countries: report”

  1. Let the youth of our country work on their own.. Install mechanisms where they can sell services and products online...

    Bank of Maldives: Tie up with Paypal and allow two way money transfer.

    The youth of Maldives has the talent to export:

    1. Art work -
    2. Apps
    3. web development
    4. Maldives Merchandise

    and the list will go on and on if we put some thought behind it..

    It will create Peer to Peer businesses and will reduce waste as well.. through eBay...


  2. MDP Government (as they like it to be called) has the same top heavy and exaggerated administration as in the last regime. The only reason is to keep supporters happy. Just as Maumoon kept his cronies in top positions and made sure that a large part of the employable population were kept in the Government by his grace to make sure they were obedient civil servants then, so is Anni doing the same, only he has no hold on the civil servants anymore which makes it more important to have a larger administration. It is a sad thing. Private sector development has always been carefully steered to keep people who get rich independently and through their businesses smaller. They were supported and nurtured with special favours and in return for favours. The Government and these business elites helped each other. They were then added to the elite Maldivian circle of VIPs which consists of top positions (with deputy Ministers and Ambassadors being the lowest rank accepted into this circle)

    When people have money in their hands, they think freely and are more powerful to make their own decisions as they are not dependent on anyone. Maldivians believe that people who earn salaries should obey their masters. That is slavery. People sell skills that employers buy. So each one is independent. A large flourishing private sector means more people's power. So far Maldivian Presidents have been afraid of this.

  3. I think in one way it is good that the government controls most if the business and economy related companies. The reason been Maldivians are generally lazy people and if the private sector is increased, all the economy will go under the hands of Bangalhu or Indian people. Maldivians generally are ignorant and pigro. Hence its better the way government control things. What the government need to do is distribute the wealth to some of its people. This will help decrease poverty and Maldivians would benefit from the high income the government earns from areas like tourism and fishing industry.

  4. "Minister of Economic Development Mahmoud Razee noted that with regard to corruption, “in the past the country has not had the institutions to monitor and provide transparency, but now the information is available."

    Oh yeah, Mr Razee, show us your Auditor General please?

    It's one thing for institutions to exist on paper without proper functioning bodies or worse, full of corrupt individuals.

    It's true that these so-called "institutions" have not been any benefit to the country at all. They are hugely bureaucratic, totally non-transparent. Simply, no one knows what these "institutions" do.

  5. Maldivians are lazy people? That's absurd. Maybe the one who said it framed everyone else to his own state of being. Which is not true. There are lots and lots and lots of people who are hardworking in this country but who get a raw deal for their work. Take for example the contract workers. They do back breaking hardwork for weeks on end for a meagre pay which may or may not materialize at the end of their task. only the contractors seem to profit from their work. the hands that worked hard didn't. many examples like this

  6. Can Anni think of a unity government? we can hire some DRP professional who are not very loyal to the party.

  7. Well,well,well.This a nation is naturally made for seabirds not for long as people are in habitat, the act of corruption will never end.Every single tongue speaks and pretend to be politician and speaks for people is more corrupted then all the others.
    But its 100% Muslim country and they say they are Muslims.what a shame for all of us.
    Even Iblis has left this nation coz he nothing else to teach.

  8. the one who said lazy!please go to an eye clinic.coz he cant see the image of this nation before and now.can't those see the development that we have achieved in past few years.Its a result of braveness& ethic with come one can judge it as Lazy

    Please don't blame yourself and be a real Muslim.

  9. We need economic the young economist guy said on tv with lawyers, we don't need politicians. We need ppl who has the economic vision

  10. In Reality we are heading towards a Disaster. Harbour Developments and Reclamation Projects on Small Islands will not be financially Feasible.

    Better start laying a foundation for people to move to some plave like Hulhumale .. it;s the only way to develop Maldives.

    Each Year 10k students outta secondary Education .. with no jobs and fewer educational opportunites for those who excel in their studies. Rest starts to roam on the streets to earn money for Mobile phones , coffees and fancy clothes.

    Gang violence and drug trade will grow in a situation like this.

    Government needs to address this issue as in this 5 year term around 40k teenagers will end up in streets.

    So i call upon the government to create 1000's of jobs via foreign investments or anyother way.

  11. It is Rule of Law that boosts development, human well-being, human security and productivity.

    Maldives, unfortunately, lost it, failing to guarantee Independence and Integrity in judges; and thereby failing to establish an Independent Judiciary…

    Judicial Service Commission, Parliament and the interim Supreme Court breached trust and colluded to subvert Rule of Law, and deny the State and Citizens’ an Independent Judiciary.

    Until, and unless, the matter is redressed Maldives’ is doomed to join the list of Failed State. A very sorry State indeed, for we had the opportunity to build the Institutions of a democratic State. And, all is lost for the greed and fear of a few who used all their powers to obstruct change to the system.

    Demand those responsible be held accountable, and Claim the Independent Judiciary guaranteed under the Constitution (2008).

    It does not exist, as yet.

    Aishath Velezinee
    Member, Judicial Service Commission (entrusted by the Constitution to establish the first-ever Independent Judiciary in the newly agreed Democratic State of the Maldives)

  12. This is a problem with every government and Anni is no different. Families of MDP MPs are holding the key posts of the government, board members of public companies and public private companies. The high price the MDP had to pay for the newly recruited MPs and to hold on to the old MPs are showing in the economic figures. We are all in the brink of bankruptcy and Anni is not ready to challenge it.

    If you have foreign currency, hold on to it. Coz we may never have them in the banks.

  13. Before you comment please note that The Heritage Foundation is a conservative think Tank. It only reflects their views of what is 'economic repression' what ever that phrase means...

  14. “public-sector graft remains a challenge for foreign firms operating in the Maldives”

    This sentence alone shows the problem with the report. Anyone who knows the Maldivian situation knows that the graft helps the deep pocketed foreign investors to edge out the local businesses.

    The Heritage Foundation's main ideology is "free market fundamentalism", i.e. the market should matter more than anything else. We have seen the human costs of this type of ideology in several countries already.

    I am not arguing that Maldives does not have any problems. There are indeed lots of economic problems. However, uncontrolled opening of markets to foreigners isn't the solution to the problem. But that is the only "solution" that will get a country high up in any list made by Heritage Foundation.

  15. to Soul of Maldives
    "the development that we have achieved in past few years.Its a result of braveness& ethic with come one can judge it as Lazy?"
    It is result of heavy work of many thousand workers from Bangladesh and India
    but not a locals /and you know that /braveness ethic?/
    do you mean humiliation of many foreigners workers what often we can see in Maldives?it is your braveness ethic?

  16. This country called Maldives is controlled by 10 individuals and their families! It includes the one's who control media (Dhitv otherwise know was Champa propaganda TV and Radio and Gasim TV called VTV, Male'TV otherwise known as Akram TV)!! People like Champa, Gasim and Universal are known for their greed and shamelessness when it comes for money!! Its evident from Champa's Dollar profits they make each day and they have Yameen's proxy MMA student Governor Puppet Fazeel najeeb! This country's young people needs to stand up and banish these rich elites to one inhabitat island forever!! Shameless B^^^^^s creat then people like Kutti Nasheed who say's "I need some cash!" Idiots!

  17. I believe the main problms are cox of the deficiency of laws that are required to protect the rights of the property owners and businesses.

    Also the customs needed to be regulated well using the law. The corruption is become so common in the country in the name of "favor", its not just the government officials everyone is corrupt. doing favors to their friends and family. we need laws to protect this. this culture will not change with another government or another party since we are all humans we need to be restricted.

    Since we started with a new beginning and our constitution was done in a rush in the last few months of special majlis. we still have lots of things to amend and to add to get the full benefit of this new beginning.

    More bills are needed to regulate the whole structure of the trade. Hope our parliament wakes up and kick start their works on this rather than fighting on political bullsh**. which is hardly possible. But lets hope so. 🙁


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