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mELCOME

2
§ 
A
PRESENTATION
ON
³STUDY OF MICRO & MACRO ECONOMY OF
MALDIEVES´
BY
MAYUR.V. PATEL
{092034}
BATCH-M1(A)
SUBMITTED TO
PROF.SUHRUD NEURGAONKAR
MITSOT(Pune)
2009-11
Maldives comprises an approximate population
of 385,925 people spread over about 1900
islands. Mixed economy is one of the major
features that include tourism, fishing and
shipping industry. Struggling with the post-
impact of Tsunami in 2004, Maldives economy
has managed to find stable ground by achieving
US $1.588 billion GDP and a growth rate of
6.6% till 2007.
[ %bout 99% of the territory of Maldives comprises water. No
wonder, this has proved to be one of the major reasons for the
success of tourism and fishing industry. Since the land is not
fertile enough, agricultural possibility is restricted. The vegetation
is limited to the growth of few tropical fruits, vegetables and root
crops. Dearth of proper resources has resulted in poor
manufacturing prospects of basic essentials and consumer
goods. So, almost everything is imported in Maldives.

[ Mixed economy is an important aspect of the Maldives economy


and is based on the prime activities of tourism, fishing and
shipping. In 1989, the economic reform program implemented by
the government lifted the import quota and encouraged exports
to the private sector. Later on, the liberalized conventions
allowed more foreign investments.
Õ  85.65 Õ  71.48 Õ  84.33 Õ  87.02 Õ  83.43
6  Õ 6  Õ Õ   Õ   Õ  

6  Õ Õ 6 Õ   Õ   Õ  

6  Õ Õ 6   Õ  
primary

20

secondary
18
2

tertiary
     


     


 


· % 
Due to the availability of poor soil and scarceness
of arable land in the islands, agriculture is limited to
only a few subsistence crops, such as
coconut, banana, breadfruit, papayas, mangoes, taro,
betel, chilies, sweet potatoes, and onions. %griculture
contributes about 6% of GDP
[ S  

The industrial sector provides only about 7% of
GDP. Traditional industry consists of boat building
and handicrafts, while modern industry is limited to
a few tuna canneries, five garment factories, a
bottling plant, and a few enterprises in the capital
producing PVC pipe, soap, furniture, and food
products. There are no Patent Laws in the
Maldives
[  S 
The Maldives has successfully promoted its natural assets
for tourism. The beautiful, unpolluted beaches on small coral
islands, blue waters and sunsets attract tourists
worldwide, bringing in about $325 million a year. Tourism and
other services in the tertiary sector contributed 33% to the
GDP.Since the establishment of the first resort in 1972, over
84 islands have been developed as tourist resorts, with a total
capacity of some 16,000 beds. The number of tourists (mainly
from Europe) visiting the Maldives increased from 1,100 in
1972 to 280,000 . In 2000, tourist arrivals exceeded 466,000.
The average occupancy rate is 68%, with the average
number of tourists staying for 8 days and spending about
$755.
[ S%% C(2ND %UGUST 1983)
[ WTO(27 SEP 1981)
[ UNESCO(18 JULY 1980)
[ UNISEF(6 %P IL 1971)
[ INTE POL(4 SEP 1984)
[ IMF(13 J%N 1978)
[ The gross domestic product (GDP) or gross
domestic income (GDI) is a measure of a
country's overall economic output. It is the market
value of all final goods and services made within
the borders of a country in a year. It is often
positively correlated with the standard of living.
r  %S%S 
$5,000 (2009 est.)

 å-
r
Total $1.357 billion (2009 estimate)
[ %s a collection of thousands of secluded tropical
islands, the Maldives should have little impact on the
workings on the elite economics of the G20 nations, yet
the United Nation's World Tourism Organization
(UNWTO) believes the country can have a vital role in
the global development debate.%s a major tourist
economy, the Indian Ocean archipelago is seen by the
global tourism body as offering an important indicator of
the role that the seemingly carefree world of holiday
making can have on aiding developing countries to meet
the social and economic goals outlined by groups like
the United Nations.
The comments come ahead of next month's G20 summit meeting
in Seoul, South Korea, where the T20, an unofficial analogue
group consisting of the same 20 member states' tourism
ministers, are pledging to try and play up the development
opportunities afforded by a well managed holiday industry.

The G20 summit are a set of ongoing meetings between the


financial leaders of the world's 20 most influential economic
powers, which aim to try and tackle issues of development and
poverty all over the world - despite leading to its fair share of
criticism and controversy along the way from some non-
governmental organisations (NGOs).
[ Three fourths of the total revenue in Maldives come from
import duties, tourism tax, state own enterprises and
resort lease rents. Other taxes include bank profits
tax, land rent, royalties, administrative fees and
charges, work permit and interest receipts. Most of the
tax revenues income from two sourceså import duties
and tourism tax. Dividends from the state-owned
enterprises and the resort lease rents are the principal
sources of nontax revenues.
Pank profit tax is the only direct tax imposed in
Maldives. % bank profit tax of 25% on its taxable
income is charged to all commercial banks. It
comprises 2% of the total government
revenue.However there are many indirect taxes in
Maldives, the major two areå

[ 1. Import duty
Import duty is a duty levied on imported commodities.
It is a percentage charged on the cost, insurance and
freight (CIF) of imports. The duty charges range from
5% to 200%. Import duty is about one quarter of the
government revenue .
2. Tourism tax
Tourism is the largest industry in Maldives and
developments in tourism drive the other sectors of
the economy at present. Tourism has experienced
phenomena growth since its inception some 30
years ago, with an 8% average annual growth in
tourist arrivals. Tourism tax composes 13% of
government revenue. This contribution is
generated through the tourist bed tax levied at a
flat rate of US$6
Strengthening and diversifying the economyå The economy
will continue to be dominated by fisheries and tourism. These
sectors can be strengthened, while moves are made to
diversify other economic sectors.

˜  The government¶s recent decision to increase the


speed of issuing new resort leases represents a fundamental
change in Maldives¶ policy of expanding the sector gradually.
%s part of the proposed expansion, the Government is
creating a public enterprise that would hold leases at
low, preferential rates in a number of islands, and sell these to
new operators. It would also sell some shares on the stock
market to local residents.
Fisherieså
Successful sector performance requires policy and
structural adjustments over the next five years to
support a multitude of actions by the government
and the private sector. % transition strategy for the
main species, skipjack tuna, must be based on the
private sector and government reaching a
negotiated consensus on critical adjustments
[ %POUT ECONOMY «.
Maldives had a strong reputation for many commodities
to include cowries, dried tuna,ambergns, coco de
mer, and coir rope. Pecause of this, it was common for
both ships coming to Maldives from local regions and
foreign countries, loading up on the goods and then
returning home with a full cargo. However, in more
recent times, Maldives has experienced economic
fluctuations and while fishing and shipping are still a part
of Maldives exports, other industries to include tourism is
also big business.
[ Maldives trade shows that for Maldives exports, both
fish and clothing are the top two commodities with an
estimation of $123 million. The current partners for
Maldives exports include the United States, the United
Kingdom, Sri Lanka, Japan, Thailand, and
%lgeria. For Maldives import, this involves a variety of
commodities such as ships, foods, petroleum
products, clothing, textiles, capital goods, and
intermediate goods. The estimated value of more
than $550 million involves Singapore, Japan, Sri
Lanka, India, and Canada
[ %POUT TOU ISUM SECTO

Maldives trade, tourism is the primary industry,


accounting for close to 30% of the country¶s
GDP. In addition, tourism currently accounts for
approximately 60% of all foreign exchange
receipts. In the 1990s alone, tourism in Maldives
reached a whopping 115%. %t that time, some
90% of tax revenue for the government was
associated with duties for Maldives imports, as
well as tax discounts connected to this industry
[ %POUT FISHING INDUST Y

fish is still an important industry for


Maldives. Thanks to the 1989 reform, quotas for
Maldives imports were lifted, which meant the
private sector could now benefit from some of the
Maldives exports available. This reform also
helped create more flexible regulations whereby
foreign investment could participate more in the
overall Maldives trade market.