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Maldives Economy

The Maldives is not blessed with many natural resources except for her beauty and the riches of the sea. In fact, 99% of its territory consists of water. Hence it is not surprising that tourism and fishing are the major industries of the country. Agriculture is practised only on a limited scale, as the land is not very fertile. The diversity of the flora is limited to a few tropical fruit and vegetables, root crops and others. The essentials and consumer goods are not manufactured because of the lack of resources. Almost everything required for living has to be imported.

During seventies and early eighties the Maldivian economy was based on three major industries, fishing, tourism and shipping. Though Maldives has traditionally relied on fishing it also had developed a modest merchant fleet in the region called Maldives Shipping Limited (MSL). However, today shipping is a minor actor in the Maldives where only two industries dominate the economy. Fishing provides most employment to the inhabitants while the tourism controls the major foreign exchange.

A Cargo Ship - Maldives highly depends on imports
A Cargo ship - Maldives highly depends on imports' - Photo by © Niyaz

Notwithstanding the scarcity of resources in the Maldives, the past two decades have experienced a phenomenal growth of the economy. In fact, Maldives is one of the few countries which enjoys an annual GDP growth rate of 6.0%. The main activities in the modern industrialisation arena includes fish canning, manufacture of garments, bottled of aerated water and fizzy drinks, brick making, refrigeration, transportation, banking, andinsurance. These activities are significant in today's economy.

Other minor industries in the Maldives consist of building and construction, boat-building, rope-making, blacksmith, handicraft, lacquer work and other cottage industries.

 

Fishing | top |

Traditionally fishery is the main occupation and major livelihood of the Maldivians. It is also the second largest industry in the Maldives. The main methods of fishing are pole and line for skipjack tuna. Surface trolling is done for little tuna, frigate mackerel, wahoo and jacks. The main composition of fish catch is skipjack tuna (Katsuwonus pelamis), representing 50-75% of the total catch. The second most important fish caught is the yellowfin tuna (Thunus albacaraes). The main fish products exported are; frozen fish, canned fish, dried fish and salted dry fish. The traditional fishing vessel is a sailing dhoni not about less than 15 feet long. Thatch sail were also used in the early days of fishing. Clothe sails and rowing is common in traditional fishing practice. The Maldivan fishery is famous in the world for its dolphin friendliness.

Male' Fish Market local fishermen selling fish '
Male' Fish Market local fishermen selling fish ' - Photo by © Niyaz

The mechanisation of fishing vessels revolutionised the Maldivian fishing industry. It enabled the fisherman to travel much farther distances, than were possible when sailed boats were in use. It meant that the direction and speed of the wind were no longer determinants of the distances travelled by fishermen in search of fish. Establishment of cold storage facilities was another important landmark in the development of the fisheries industry. In 1997 average number of mechanised fishing (dhonis) vessels engaged in fishing were 1,328. Catches of tuna and other tuna like species tripled from 30,000 metric tons to 100,000 metric tons in 1994. The total catch of fish increased to 107,358.17 metric tons. Haa Alif, Raa and Baa, Lhaviyani, Kaafu, Thaa, Laamu and Gaafu are the principle fishing atolls representing about 75% of total fish landings.

In the past Maldives exported tuna primarily in the dried and smoked form called hiki kandumas or 'Maldive Fish' to Sri Lanka. In 1971 due to reduction in purchase of 'Maldive Fish' there was a strong need for diversification of the product and market. Maldives also exported other form of fish products to Japan and Thailand. In 1982 the export of fish was severely affected because of the drop in negotiated export prices caused by world recession and decline of demand for the Japanese companies which had been regularly buying fish from Malé.

However, the government of the Maldives stepped in to take over the collection and canning facilities of Japanese company, which had withdrawn from the country. Authorities ensured that the procurement prices paid to the fishermen were maintained. Later better prices were negotiated with some buyers in Thailand and other countries.

The government of Maldives implements various projects to diversify the fish projects and get new markets. Ministry of Fisheries, Agriculture and Marine Resources is the government authority concerning the implementation of projects and studying the various impacts of new developments in this sector. During 1980s Fisheries Ministry started a project to anchor mooring buoys in various parts of the country to attract tuna. Fishermen's Day is also marked to emphasise the importance of fishing to the Maldivian economy and the livelihood of Maldivians.

The Maldives Industrial Fisheries Company Ltd. is a government owned company which carries out business in the field of fishery. MIFCO buys fresh tuna from local fishermen. They have collector vessels deployed in fishing atolls. It also owns a fish-canning factory at Felivaru in Lhaviyani Atoll. MIFCO operates a boatyard in Alifushi, where larger fishing vessels are now built and sold to the people on hire purchase basis. Fishery in the Maldives shows a promising future. The industry needs modernisation and new technology to keep pace with the global economic development.


Tourism | top |

The spectacular beauty of these coral islands made the Maldives one of the most popular holiday destinations in the world. People had visited these islands to trade with the inhabitants and by chance when their ships ran off course or were shipwrecked in the shallow reefs of the Maldives. The sheer natural beauty of the country and the warm hospitality of her dwellers captivated almost all of them.

Tourist in a Maldives Beach
Tourist in a Maldives Beach - Photo by © Muha

From a very humble beginning in the 1970s the tourism in the Maldives has evolved and matured into an industry, which is a key player of the domestic economy. Tourism in the Maldives began in 1972 with 2 tourist resorts namely Kurumba Village and Bandos Island Resort with a bed capacity of 280. By 1987 the total number of resorts increased to 57, while their bed capacity rose to 6203 beds.

After 29 years of sustainable growth in the industry the number of resorts in 2000 stands at 87, having a total bed capacity of more than 15,000 in resort islands. There were more than 2500 beds in other tourist accommodating facilities such as hotels, guesthouses and safari vessels. Today tourism contributes over 19% to the country's GDP, generating more than 70% of foreign exchange earnings and more than 40% of government revenues. The number of in-bound tourists to the country increased tremendously from 1097 tourist in 1972 to 395,725 in 1998.

Each resort is located on an island with self contained facilities such as power plants, cold rooms, desalination plants, sewage and waste disposal systems, staff quarters, transport services and diving facilities etc. Each resort is designed differently and every island is unique despite the typical tropical environment of the Maldives. Guestrooms are generally built in single story though very few resorts have two story rooms. Most of them have thatched roofs and are built of corals and bricks.


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