Maldives economy surging ahead

Rohantha ATHUKORALA

While the Maldives is poised to cross the 800,000 visitor barrier in 2011, Sri Lanka needs to keep an ear to the ground to understand the impact of the recent price increases and how the future demand is shaping up. The current low occupancy level even with the lower stock of rooms due to refurbishment needs a deeper understanding.

Tourist arrivals to the Maldives as at May this year stands at 392,020 visitors and the nation is targeting to achieve 800,000 by the end of the year. With the latest marketing campaign that has been launched, the Maldives is strongly poised to capture the positioning. The Miracle of Asia, Sri Lanka needs to understand who actually visited Sri Lanka last year and the reasons for the low occupancy in the recent past even with the low stock of rooms available.

Sunny, unique and un-spoilt the Maldives is an archipelago comprising 1190 low lying coral islands scattered across the equator in groups of 26 naturally occupying atolls which are developed into 20 for administrative purposes.

The country has graduated from a less developed country (LDC) to a middle income group with an impressive per capita income from $ 771 in 1984 to $ 2514 in 2008 and today boasts a performance of $ 4200 which is the best performing country in South Asia. What’s unique about the Maldives is that even though it does not have resource endowments or a scale of economies or the diversity of the one billion dollar GDP economy, the country has the best MDG+ performance in the Asian region that already makes it the Small Miracle of Asia. The country also has a per capita spending on social indicators at a level that now can be a best practice to the South Asian region.

The Maldives like any other country has its fair share of challenges. The country is classified as a ‘Small island economy’ with the country highly geared with only tourism and the fisheries sector mainly driving the income into the country with high transport and logistic costs that is usual for an island nation. In the recent past a demographic landscape emerged that 65% of the population is below the 25 year age group that has resulted in unemployment issues and skewed lifestyles that can lead to drug issues and getting into risky lifestyles that needs be addressed as a priority.

It must be highlighted that the Maldives has performed remarkably well over the last few years in the Human Development Index (HDI) along with its three other associated indices - the Human Poverty Index, the Gender Development Index and the Gender Empowerment Measure. To be specific, the Maldives has overtaken Sri Lanka with the highest Human Development Index (HDI) ranking in South Asia (95th out of 182 countries).

A steady improvement from 2006 when the HDI ranking was 98th which gives an idea of the focused development the country has progressed to in the last couple of years.

Opportunities for growth

Like any other country the key challenge is for new thinking to come into the system and then for the organization to pick this idea up and run with it so that it becomes competitive in the global arena. The biggest strength in the Maldives is the governance structure.

A high quality leadership exists, that is well educated with international exposure.

There is a hunger for new ideas and the good ones get picked up quickly. There is also a passionate drive to implement change which is a very positive sign in the making of a leading economy in Asia like what Singapore had achieved over time.

Invest Maldives

At the recently staged Partnership summit in New Delhi the President of Maldives has stated that the country is targeting a 200 billion dollars in the year 2011.

This include permission for 100% foreign investment, legally backed investment guarantees, provision for overseas arbitration guarantees, permission to use foreign management and technical expertise including unskilled workers.

There is no restriction on the repatriation of funds out of the country which makes the Maldives the Small Miracle of Asia but has also contributed to the currently seen stability of the financial system.

The county has a high ranking in the ‘Ease of doing business index’ in the World Competitiveness Report.

Export Maldives

The export sector will include driving the fisheries sector by way of canning factories, Tuna processing and exporting factories targeting the EU so that this thrust can help the Maldives address the key issues of bridging the fiscal deficit, the youth bulge and engaging women into the economy.

Unique Positioning

Given the leadership given to the world by the current President of the Maldives on the area of carbon neutrality and hinged on this area of climate change may be the products that come out of the Maldives. The country can be positioned on the platform of ‘Ethically Manufactured Ozone Friendly Merchandise’ which makes for a unique purchase.

Next steps

The next key step for the country is to be stable politically and thereafter drive a strong economic development agenda to bring in stability to the financial system in the island. The new taxation structure that was launched recently is one clear way on this direction but a lot needs to be done. After all, if the quality of life can be improved not only on the one third of the population that lives in the capital, Male but the rest of the population that is scattered over approximately 198 islands then the Maldives has the potential to become the Small Miracle of Asia.