Tag: economic development

New regulation issued on import duty waivers

President Abdulla Yameen has issued a new regulation for businesses seeking to waive import duties on a variety of capital goods and has waived duties on some goods imported to address “special circumstances.”

The revised Maldives Import Export Act gives the president the authority to waive import duties for “items imported to commence, undertake and operate activities that are beneficial to the Maldivian economy.”

According to the new regulation, businesses seeking the duty waiver should fit on the following criteria:

  • Businesses seeking to increase Maldives’ exports and reduce imports.
  • Businesses introducing a new technology
  • Economic activities which will increase living standards and employment opportunities.
  • Increase foreign currency revenues
  • Diversify the Maldivian economy.
  • Encourage small and medium sized enterprises.

The decree states that such imports can only be expensive machinery, capital equipment, infrastructure material, aircrafts and aircraft spares. The total value of items imported must be above US$2million. Duty can be waived for a period between 3 to 15 years depending on the investment of the business.

Depending on the business sector, companies seeking duty exemption should request the waiver from either the economic development ministry, the tourism ministry or the fisheries ministry. The waiver must be requested 14 days before the goods arrive in the country.

President Yameen also waived import duties for goods used in special circumstances.

These are:

  • Goods imported treat people during an epidemic.
  • Goods imported to address a decline in living standards or food supplies because of a failure to provide education, healthcare, electricity, water, sewerage and other such basic services.
  • Goods imported to address the impact of a natural disaster.
  • Goods imported on free aid to provide basic services, infrastructure development and environmental conservation projects.
  • Goods given as gifts or free aid to the people of the Maldives or to a specific island.

Goods brought under special circumstances do not need to provide the 14 day notice.

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Free trade feasibility talks begin with Chinese delegates

The Maldives government has started technical discussions with China regarding the feasibility of a free trade agreement between the two nations.

At a meeting held at the Ministry of Economic Development today (February 4), a technical committee consisting of experts from both countries engaged in discussions over what would be the Maldives’ first free trade agreement with a single country.

Haveeru reported economic development minister Mohamed Saeed as saying that the committee is tasked with determining the feasibility of such an agreement and identifying any potential difficulties.

“The truth is we want to set up the free trade agreement as soon as possible,” he told the paper.

He said the two main reasons in pursuing a free trade agreement with China were duty-free exports of fisheries products, and an increase in air travel between the countries which will bring more Chinese tourists to the Maldives.

Fish accounts for 98 percent of the Maldives’ exports, while Chinese tourists make up 30 percent of all visitors to the Indian Ocean nation.

Speaking with Minivan News today, former Economic Development Minister Mahmoud Razee said that free-trade is most advantageous when taken up by nations at the same level of development, with a demand for goods exported by both countries.

“Maldivian fisheries products are mainly imported by European countries, Japan, and America. The question is whether China imports enough fisheries products from the Maldives,” he said.

Razee also said noted that there was a potential risk of  China ‘dumping’ low quality and undesirable goods into the Maldivian economy.

Minister at the President’s Office Mohamed Shareef has previously said that free trade talks were initiated by the Maldives, and that China has taken a flexible approach with regards to the final agreement.

Last year, President Abdulla Yameen declared a foreign policy shift to the East, slamming the European Union after regulations resulted in the non-renewal of the Maldives’ preferential trade partner status.

The government’s decision to engage in free-trade with China was revealed in December 2014 after the cabinet’s economic council visited China to hold discussions on Chinese-assisted projects in the Maldives.

“The biggest advantage of the free trade will go towards fishermen. With free trade, the 12 percent export duty will be gone, thus the 12 percent becomes profit for fishermen,” said fisheries minister Dr Mohamed Shainee at the time.

The cabinet members’ visit to Beijing in December also saw the Maldives officially sign up to the Maritime Silk Road project, which will provide a trade route between China and east coast of Africa and the Mediterranean.

China currently has free trade agreements with eight countries – including Pakistan, Costa Rica, Peru, and New Zealand – as well as a regional agreement with the Association of South-East Asian Nations.

The Maldives is currently a member of the South Asian Free Trade Area, along with its fellow SAARC nations.


Related to this story

Maldives backs new Chinese investment bank, pursues free trade deal

Silk road deal to be concluded in China-Maldives economic committee

President Yameen slams “Western colonial powers,” declares foreign policy shift to East

EU refuses to extend duty-free status of Maldivian fish imports on human rights grounds

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Number of Maldivian seafarers has plummeted: Economic development minister

The Minister of Economic Development Mohamed Saeed says the number of Maldivian seafarers has plummeted significantly over the years due to lack of interest in the field.

Saeed’s comment came after signing the Maritime Labor Convention at a ceremony held at State Electric Company (STELCO) to celebrate world maritime day.

“Maldivian crew members working aboard vessels have reduced to a mere 400. This is a very undersized figure, we need to boost it,” said Saeed.

It is believed that Maldivians will be given the opportunity work in foreign vessels now the nation has signed the maritime convention.

“Many employment opportunities will be opened for Maldivians since we are part of the convention now. In addition the convention also protects the rights of ship crews,” said Saeed.

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Development bank to be established this year

President Mohamed Nasheed has announced the establishment of a new development bank specialising in providing investments for small and medium enterprises, to be ready at the end of the year.

President Nasheed added the main challenge for these enterprises is lack of funding, and said he hopes a new development bank will solve the problem.

The president said the ministry of Economic Development is providing financial assistance to these enterprises through a fund worth MRF 18.8 million. He said 41 per cent of those receiving assistance were women.

President Nasheed added that the government is working to bring in more foreign investment. In 2009, 18 foreign investments were approved. According to the president, the total foreign investment registered in 2009 was US$22 million.

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IMF approves US$92.5 million for macroeconomic programme

The International Monetary Fund (IMF) on Friday approved US$92.5 million in financial arrangements to help the Maldives adjust to the aftermath of the global recession and support the government’s economic policy.

The “blended financing arrangements” include a 36-month US$79.3 stand-by agreement, 600 per cent of the Maldives’ quota, and a 24-month US$13.2 under the fund’s exogenous shock facility high access component.

“The Maldivian economy was severely hit by the global crisis through significant declines in Maldives’ tourism receipts, capital inflows, and goods exports. Coming after unsustainable public spending over the last few years—partly reflecting post-tsunami reconstruction efforts—the crisis led to a very large fiscal deficit, a sharply weakened balance of payments position, and reserve losses,” reads a statement by Takatoshi Kato, deputy managing director and acting chair of the IMF executive board.

“The government’s ambitious policy program, supported by the IMF, is aimed at addressing the impact of the global economic crisis and restoring macroeconomic stability and fiscal sustainability. At the core of the program is a very strong effort to bring down the fiscal deficit while protecting social spending. To that end, the authorities are taking immediate action to cut spending, including unwinding part of the recent large wage increases, and are introducing new revenue measures to broaden the tax base. They have also taken steps to reform the civil service, improve the targeting of subsidies to the poor, and transfer enterprises and services to the private sector.”

In September, the Maldives Monetary Authority (MMA) ceased printing money to finance the budget deficit and launched open market operations to absorb excess liquidity of the rufiyaa in order to alleviate the dollar shortage.

Meanwhile, the government debt at the MMA has been converted to tradable securities, while it announced the issuance of treasury bonds denominated in US dollars last week.

“The authorities’ program, while subject to considerable risks, is strong, comprehensive, and well-focused, and deserves strong support of the international community. If fully implemented, it will put the Maldivian economy back on a path of macroeconomic stability and set the conditions for sustained economic growth and poverty reduction,” concludes the statement.

The government’s policy to restore macroeconomic stability and fiscal sustainability involves reducing expenditure and increasing revenue to lower the large budget deficit and introducing targeted subsidies to the poor for food and electricity.

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