Imports up by 22 percent in 2014, exports down by 12 percent

Imports rose by 22 percent in 2014, while exports dropped by 12 percent, the Maldives Customs Service has revealed.

According to a statement from customs today, imported goods in 2014 amounted to MVR30.7 billion (US$1.99 billion), resulting in duties of MVR1.96 billion – a 15 percent rise compared to 2013.

The decline in exports saw the total value of goods leaving the Maldives in 2014 valued at MVR2.24 billion, compared with MVR2.56 billion in 2013.

The latest balance of payments figures from the Maldives Monetary Authority show the current account deficit was US$290 million in 2014 – equivalent to 10 percent of GDP, though the central bank estimates that this will drop to 6 percent of GDP in 2015.

Recent amendments to the Import Export Act – part of a raft of revenue raising measures – are expected to raise MVR533 million (US$34.5 million) in additional income in 2015.

Customs revealed today that petroleum products had contributed the most to last year’s imports, totaling MVR8.3 billion – or 27 percent of the total. Food items comprised 19 percent of the year’s imports while 16 percent was machinery and electronic items, totalling to MVR6 billion and MVR4.8 billion respectively.

The customs third quarterly review for 2014 suggested that the rise in machinery and electronics was largely responsible for the period being the most costly in terms of imports in the past five years.

It was also noted that 65 percent of the goods imported during quarter were sourced the UAE, Singapore, Malaysia, India, and Sri Lanka. These countries made up 62 percent of total imports in 2013.

The export of tuna products to Thailand dominates the Maldives’ exports – constituting 44 percent in the quarter, having received 37 percent of exports in 2013.

An IMF delegation to the Maldives late last year noted that, though the economy is “relatively buoyant”, the widening fiscal deficit as a result of high public expenditure and debt needed to be addressed.

Revisions to estimates of the current account deficit had indicated greater stability in the economy than previously thought, explained the IMF. Previous MMA estimates of the 2014 trade gap suggested it could equal 22 percent of GDP.

During the IMF’s last visit to the country in February this year, the delegation expressed surprise at the resilience of the economy, admitting that it was still studying how the domestic economy has remained afloat in the face of soaring public debt and persistent budget deficits.

Related to this story

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Maldives and UAE sign customs agreement

The Maldives has signed a customs agreement with its largest trade partner, the United Arab Emirates (UAE), which will result in enhanced bilateral cooperation.

The MoU signed yesterday will involve the exchange of data and expertise on consignments, customs policies, and general capacity building as well as cooperation to ensure the security of international supply chains.

The Commissioner General of Maldives Customs Service, Ahmed Mohamed, signed the agreement with Acting Director-General of Federal Customs Authority (FCA), Khalid Ali Al Bustani in Dubai.

Ahmed Mohamed expressed his confidence that the MOU will enable Maldives customs to translate the experience of its UAE counterparts for valuable use as the Maldives works to modernise its operations both in trade facilitation and customs enforcement.

29 percent of the Maldives imports came from the UAE in 2013, making the country the Maldives’ largest source of goods.

UAE authorities reported that two-way trade between the Maldives and the UAE reached AED943 (US$256 million) between 2009 and 2013 – 1.7 percent of which represented exports from the Maldives to the emirates.

The Maldives spends 30 percent of its GDP on importing fossil fuels – with make up around 90 percent of the UAE’s trade – with US$486 million on oil imports in 2012.

The figure is estimated to increase to US$ 700 million by 2020, although the current government is seeking foreign investors for the resumption of oil exploration projects in the Maldives.

As an island nation heavily dependent on imports, the Maldives Monetary Authority’s latest balance of payments projections estimate that the country’s current account deficit will widen to US$562.5 million in 2014, which is equal to 22 percent of GDP.

During the visit to Dubai, the commissioner general along with the accompanying delegates is scheduled to visit Rashed Port, Airport of Dubai, and Jebel Ali Port to witness and learn from the best practices of the UAE, said a Maldives Customs Service press release.


India permits 291 tonnes of pulses to be exported to Maldives until 2016-17

India has permitted exports of an estimated 291 tonnes of pulses, the shipment of which is banned, to Maldives until 2016-17, reported the Economic Times.

The Directorate General of Foreign Trade has said in a recent statement, “Export of pulses to Maldives has been permitted for the years 2014-15 to 2016-17,” reported the online media outlet.

According to the report, a source stated that although exports of pulses are banned, the Indian government ships the commodity to the neighbouring country for diplomatic purposes.

Pulses exports have been banned in India since June 2006 in order to augment the domestic supply and to check prices.


Parliament passes bill reducing, eliminating import duties

Parliament today passed a bill proposed by the government under its economic reform package to amend the Export-Import Act of 1979 to reduce and eliminate import duties for a wide range of goods.

The amendment bill was passed today with unanimous consent of 60 MPs present and voting.

Among the items for which custom duties would be eliminated include construction material, foodstuffs, agricultural equipment, medical devices, passenger vessels and goods used for tourism services.

However, the bill was passed with an amendment to charge a Rf10,000 (US$650) annual fee for passenger vessels and no change to tariffs for spare parts. While import duties were eliminated for construction material such as cement, glass, tin, aluminium, plywood and plastic fittings, an import duty of five percent will be levied on tiles, which was reduced from the previous 25 percent.

Import duty was reduced to five percent for furniture, beds and pillows as well as cooking items made from base metals. Other kitchen utensils had duties reduced to 10 percent.

While import duties were eliminated for most fruits and vegetables, 15 percent would still be levied on bananas, papaya, watermelon and mangoes as a protectionist measure for local agriculture. Areca-nuts would have duty reduced from 25 percent to 15 percent.

Import duties for tobacco would be hiked from 50 percent to 150 percent. However an amendment proposed by the government to raise import duties for alcohol and pork from 30 to 70 percent was defeated at committee stage.

A total of Rf2.4 billion was projected as income from import duties in the 2011 budget. With the passage of the amendment bill today and ratification by the President, the figure is expected to decline to Rf1.8 billion next year. The shortfall is to be covered by Rf2 billion in tourism goods and services tax (T-GST) and Rf 1 billion as general goods and services tax (G-GST) revenue.

MDP parliamentary group leader MP Ibrahim Mohamed Solih was not responding to calls at the time of press.

PPM Media Coordinator and Vili-Maafanu MP Ahmed Nihan told Minivan News today that all members of the party’s parliamentary group voted in favour of the bill and stressed the importance of “providing relief to businesses” paying GST on top of custom duties.

“By this vote today, we have answered the MDP’s allegations that we tried to stop Majlis sittings to prevent this bill from being passed,” he said.

Speaker Abdulla Shahid and the ruling party should bear full responsibility for the cancellation of nine sittings over three weeks, Nihan said, as the dispute over the convicted Kaashidhoo MP’s attendance could have been avoided.

The PPM council member condemned the ruling party’s “efforts to blame the Majlis cancellation on opposition parties.”

“PPM will support any measure that will provide relief to the public,” he said, adding that the party would “very closely monitor” pricing by retailers following the elimination of import duties.


Short tempers over long lining

One of the most influential and pioneering shark and marine conservation organisations, Bite Back, has said a UK boycott of long line tuna from the Maldives is a real possibility unless the Maldivian government disallows long line fishing in Maldivian waters.

Bite Back, which works to promote sustainable fishing and halt the trade and consumption of vulnerable fish species to protect ocean habitats, has expressed alarm at the proposed long line fishing in Maldives.

Graham Buckingham, campaign director of Bite Back, says that seafood is a hot ecological topic, with consumers demanding that fish are caught sustainably and with the minimum of by-catch.

“As such, a UK boycott on long line-caught tuna from the Maldives is a real possibility that, of course, could be avoided by the government outlawing longline fishing in Maldivian waters in the first place,” he said.

Marks & Spencer, a global retail giant, and one of the major buyers of Maldivian tuna, announced last year it would no longer buy tuna that is not caught by pole and line.

Talking to the press last year, an M&S spokeswoman said: “As all of our food is own-brand, it means there will be absolutely no products in our stores that use tuna which isn’t pole or line caught.”

Minivan News has learnt that M&S buyers visited the Maldives recently and held talks with local environmentalists to ensure that all tuna in the Maldives were caught using pole and line.

The dilemma

The steady decline in fish catch has lead the Maldivian government in proposing long line as an alternative method of fishing alongside the more traditional and environmentally friendly pole and line.

President Mohamed Nasheed in his opening address to the Majlis appealed to fishermen to find new methods of fishing saying “Those massive fishing vessels that we built yesterday, that are now anchored in the lagoons as they are not suitable for pole and line fishing, are causing us immense loss.”

Nasheed went on to say that it’s not feasible to burn fuel and engage in pole and line fishing in big vessels, and experts had advised him it would be more profitable to use those vessels for group long-line fishing.

The Ministry of Fisheries is now poised to provide financial and technical support to fishermen to adopt this new method. The president urged the fishermen “to take to the seas again.”

The president also announced that licenses for foreign boats that had been catching fish using long line and net in the Maldives would be cancelled in April and Maldivian boats would take their place.

Ibrahim Manik, chairman of the fishermen’s union says “around 80 per cent of fishermen are against this new method, but the dire situation means there will be those who will adopt this.”

He says at least Maldivian fishermen will be more careful about the ecological impact.

“Even now our fishermen will release any sharks they catch by mistake, so if our people do long lining they will be more careful.”

Interestingly enough in 2008 the same union sent a letter urging the then fisheries minister to stop boats using long line methods in Maldives waters on ecological grounds.

“Even now we are saying don’t give permission for long lining, but on the other hand the fact that fishermen can’t make ends meet anymore means that there will be those who will do this for the money.

He admits that longline has negative effects on dolphin and sharks and says readily that ‘the reputation we had built over the years will be destroyed.”

Organisations like Green Peace which had urged last year for people to buy Maldivian fish would no longer be doing that, says Ibrahim.

“Money is the big factor here. A fishing boat used to earn around 10,000 Rf to 20,000 Rf per trip before, and now we have exporters also who are encouraging this.”

But even private exporters like Big Fish are worried. The company’s director Ali Riza says “long line is completely contradictory to how we fish now; Maldives Seafood Processor and Exporters Association (MSPEA) are even now debating the pros and cons of it.”

According to Ali, UK supermarkets are supposed to have certified sustainable products on their shelf in the year 2010, and this complicates everything.

“Europe is our biggest market right now and we are even now planning to participate and promote our product as one caught by sustainable fisheries in the biggest fish export fair in Belgium this year.

However he says the fact that ‘a lot of companies are now on the verge of bankruptcy’, which is also cause for concern.

No concessions

Ali says right now one can only hypothize about how European consumers will react but says he finds all the talk a bit hypocritical also.

“it’s not us that overfished the waters, but now that it’s done, we are being told not to do what western countries had been doing.”

And like Ibrahim who evoked the idea of foreign boats doing long lining, Ali says “we obviously can’t seal off our waters – fish are migratory. If we don’t do it others will overfish around us, so we might as well be the ones doing it.”

He expresses hope that there will be minimal negative impact, as they are not targeting sharks and other species, and says there will not be a “significant amount” of by-catch.

Activists like Graham say long lining causes the unintentional death of 80,000 turtles a year along with countless sharks, dolphins, sailfish and seabirds worldwide, calling it one of the most indiscriminate methods of fishing.

Major exporters like MIFCO who last year exported 115,580 cases of canned tuna, 21,008 tons of frozen tuna and 312 tons of fresh yellow fin seem to think that the shift in fishing methods would not cause a major problem.

“We will also apply for long line license when they start giving it,” says Ali Faiz, Managing director of MIFCO. He says as the customers are different for long line and canned tuna, it would not have much of an impact.

“With long lining we mostly export raw fish.”

He also scoffs at the environmental concerns, saying a lot of the time environmentalists are controlled by big businesses. “All these days’ foreign boats were doing it, and having an advantage over us. Now it will be more difficult for boats to come here and steal from us.”

He is confident that there will always be buyers for Maldivian fish.

Ali says those who support the environment friendly method of fishing in Maldives, do not give any incentive for it to be continued. “We have an entire country that is fishing with pole and line, but do we get any special concessions, any benefits because we do it?”


New licence required to export fish to Europe

All organisations involved in the export of fish to Europe must carry a special licence from next month.

The Maldives Seafood Processing and Export Association said that from next year they will only accept fish from vessels carrying this license.

Haveeru reports that the Fisheries Ministry will issue licenses for free until the end of December. After that licences be issued at a price depending on the length of the vessel.