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.


Exports decline 48 percent in October, but revenue rises

The Maldives Customs Service has revealed that exports in October decreased by 48 percent compared to the same period last year.

While MVR131.3 million worth of goods were exported in October 2014 – compared to MVR251.3 million in October 2013 – revenue collected grew by 8 percent.

“The main reason for this reduction is largely due to the fact that export of frozen skipjack and frozen yellowfin tuna decreased by a large extent this October when compared to the same period last year,” reads a statement from customs.

“Total revenue collected during October 2014 has increased by 8% compared to the same period last year. A total of MVR170.8 million was collected as customs duty and other charges this October while this figure stood at MVR158.3 million for the same period last year.”

Imports meanwhile increased four percent in October compared to the same period last year.

“Looking at the distribution of imports in October 2014, fuel was the most imported item with a CIF [Cost, insurance, and freight] value of MVR625.7 million which accounts for 23% of the total imports for the period. This is followed by food items and machinery and electronics with CIF value of MVR508.1 million (19%) and MVR444.2 million (17%) respectively.”


Expansion of economic activity in first quarter driven by tourism sector growth: MMA

Domestic economic activity expanded in the first quarter of 2014 “driven by the strong growth of the tourism sector during the ongoing high season of the industry,” according to the Maldives Monetary Authority’s (MMA) quarterly economic bulletin.

Total tourism receipts in the first three months of the year increased by 10 percent compared to the first quarter of 2013, reaching US$801.1 million, the central bank revealed.

“In Q1-2014, the average operational bed capacity of the industry also increased by four percent when compared to Q1-2013 and totalled 26,999 beds, contributed by the opening of more resorts and guesthouses during the period,” the bulletin explained.

“Despite the increase in the operational bed capacity of the industry, the occupancy rate of tourism accommodation facilities remained relatively unchanged at 84 percent when compared to Q1-2013, owing to the higher increase in bednights.”

Arrival trends

On arrival trends in the first quarter, the bulletin noted that the 10 percent annual increase in arrivals was “entirely driven by the significant increase (24 percent) in arrivals from the Chinese market.”

Chinese tourists accounted for 27 percent of guests during the first quarter of 2014. According to the Tourism Ministry, the Chinese market expanded by 24 percent with an additional 16,960 tourists compared with the same period of 2013.

Statistics from the Tourism Ministry show that 331,719 Chinese tourists visited the Maldives last year –  a 44.5 percent increase from the previous year.

Chinese tourists accounted for 29.5 percent of all tourist arrivals in 2013.

“Meanwhile, after recording three successive quarters of positive growth, arrivals from Europe (which constitute over half of total tourist arrivals) registered a marginal decline of two percent in Q1-2014, mainly due to a substantial fall in arrivals from Russia owing to its economic crisis and partly due to Easter calendar effects,” the bulletin continued.

“The poor performance of the Russian market (the third main market from Europe since Q2-2012) is in stark contrast to the double-digit growth rates exhibited by the Russian market throughout the last year.”

The bulletin noted that all major markets from Europe recorded a decline in arrivals. While arrivals from Germany – “the main source market from Europe” – and Italy both declined by four percent, arrivals from France declined by two percent.

“The better performance of UK market during the quarter is attributable to the sustained growth of the British economy since last year,” the bulletin observed.

Fisheries and construction sectors

The fisheries industry in the first quarter of 2014 “continued to be adversely affected by falling tuna prices in the international market since September last year,” the bulletin observed.

“This is reflected by the annual decline in fish purchases by collector vessels (12 percent) and the fall in both volume and earnings of fish exports in Q1-2014, by 26 percent and 6 percent, respectively,” the bulletin stated.

The construction industry however continued its “ongoing recovery” in 2014, the bulletin continued, which was “indicated by the strong annual growth in construction-related imports and bank credit to mainly residential housing construction projects.”

“Spurred by the strong performance of the tourism and other key sectors, activity in the wholesale and retail sector also picked up during the review period. This was reflected by a 13 percent increase in bank credit to the sector in the review period compared to Q1-2013, while private sector imports (excluding tourism) grew by 9 percent in the same period,” the bulletin read.

“Main driver of inclusive growth”

Meanwhile, a delegation from the World Bank led by the World Bank Vice President Philippe Le Houérou – in his first visit to the Maldives since assuming the post in July 2013 – met President Abdulla Yameen in late May and agreed to work with the government in developing a national strategy for fostering growth and consolidating public finances.

The discussion focused on “the need to reduce fiscal deficits, create a favourable investment climate for the private sector and delivery of key public services,” according to a press release from the World Bank.

“Maldives has enjoyed economic growth during the last decade and expects to achieve 4.5 percent growth in 2014,” Le Houérou was quoted as saying.

“But it still faces challenges, such as balancing public accounts while delivering public services on some 200 islands across hundreds of kilometres of the Indian Ocean. The issue is how Maldives can make the most of its potential in order to achieve inclusive and sustainable development.”

World Bank Country Director for Sri Lanka and Maldives, Francoise Clottes, noted the country’s “great success in developing a world-class tourism sector to take advantage of its breathtaking beauty.”

“This sector is expected to continue to grow and remains the main driver of inclusive growth and sharing prosperity, going into the future,” Clottes said.


Majority of dollar receipts spent on imports: MMA assistant governor

The majority of US dollar receipts to the Maldives are spent on importing goods to the country, Maldives Monetary Authority (MMA) Assistant Governor Dr Azeema Adam said yesterday at a ceremony to launch the central bank’s first Quarterly Business Survey.

Dr Adam – who was recently named by President Abdulla Yameen as his nominee for the vacant governor’s position – reportedly said that US$1.5 billion out of the approximately US$2 billion that enters the domestic economy was used to pay for imports.

As an island nation heavily dependent on imports, the MMA’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.

As a result, explained Adam yesterday, there is a shortage of dollars in circulation. The central bank’s chief economist recommended reducing the volume of imports and increasing productivity.

“We have to find ways to keep dollars [circulating] in the economy,” she said.

Securing foreign markets for Maldivian exports was also essential for alleviating the dollar shortage, she suggested.

As a large number of foreign workers reside in the country, Adam said, their remittances added to the dollar outflow.

The business survey meanwhile showed “an increase in the level of business activity” in the fourth quarter of 2013 (Q4-2013) compared to the third quarter (Q3-2013).

“Looking ahead, businesses expect a continuation of this improvement in business activity and volume of demand in Q1-2014 as well. With regard to the labour market, respondents in all sectors, except for the transport and communication sectors, indicated an increase in employment in Q4-2013 compared to Q3-2013,” the summary of the survey results stated.

All sectors surveyed also “anticipate an increase in hiring in Q1-2014 reflecting the expected increase in business activity in this quarter.”

“Pressure on business costs, which includes all labour related costs and other input prices, increased in Q4-2013 when compared to Q3-2013. Similarly, average prices charged by businesses also increased in Q4-2013, except for those businesses in the manufacturing and transport and communication sectors, which indicated no change,” the summary read.

“Going forward, the majority of respondents expect a further increase in their business costs compared to Q4-2013. Average selling prices are also expected to increase, except for transport and communication sectors, which anticipate a decrease in their selling prices.”

A delegation from the International Monetary Fund (IMF) expressed surprise at the “resilience” of the Maldivian economy in a meeting with MPs on the parliament’s public finance committee yesterday.

“Imports are on the shelf. If you go into a shop, you’ll find a wide range of imported goods there. You see people with motor scooters and cars and smartphones. You see people going on travel. All these are available, are done, even while the level of reserves at the MMA is quite low,” observed the IMF’s resident representative Dr Koshy Mathai.

The country’s current international reserves were US$345.7million in December, equating to just over two months worth of imports.


Imports, exports rise in first quarter of 2013

Imports to the Maldives increased by 12 percent in the first quarter of 2013 compared to the same period last year, according to the Maldives Customs Service.

Total imports in the first quarter amounted to MVR6.5 billion (US$421.5 million) compared to MVR5.8 billion (US$376 million) in 2012.

Exports meanwhile grew by 44 percent compared to the same period in 2012.  During the first three months of 2013, exports rose to MVR785 million (US$51 million) from MVR545 million (US$35 million) in Q1, 2012 .

Total revenue from import duties also increased by nine percent compared to the same period last year.