The China-Maldives Free Trade Agreement (FTA) will enable exclusive opportunities to the Maldives that are not available to other countries, the Minister of Economic Development and Trade Mohamed Saeed has said. The Minister made the statement at a ceremony held to announce the FTA coming into force on 1 January.
The Maldives and China signed the FTA in 2014. Although the Maldives Parliament approved the FTA in 2017, the change of government in 2018 delayed its implementation. However, after President Dr Mohamed Muizzu assumed Office in November 2023, he initiated the necessary efforts to implement the agreement.
Speaking at the ceremony announcing the implementation of the FTA, the Minister highlighted that the FTA would bring significant benefit and trade opportunities to the Maldives. He acknowledged concerns that the agreement would reduce the Maldives’ border revenue and assured that the FTA would increase trade opportunities for the Maldives while also increasing revenue through other means.
Giving an example, Minister Saeed said a large part of the cost incurred to obtain the material required to build and open a guesthouse can be saved due to the FTA. He noted that the development and advancement to guesthouse businesses will in turn benefit other related businesses.
“If a 12-room guesthouse costs USD 325,000 to build, 10 percent is for construction items. If you consider the items required for the rooms, this is between 20 to 25 percent. Overall, the government can offer a discount of USD 32,500 to 39,000,” he explained.
The Minister also highlighted benefits to the fisheries sector due to the FTA. Noting that China too, cannot invest in sectors where foreign investment is prohibited in the Maldives, the Minister said the FTA would enable the export of all types of fish caught in the Maldives without restriction— an ease previously unavailable.
The Minister further emphasised that the China-Maldives FTA provides unique opportunities to the Maldives that are not available to other Chinese FTA partners.
“As predicted 20 years ago, China is the largest inbound outbound travel contributor. While this is the reality today, the FTA enables local companies to conduct business in some free trade areas of China with the same rights assured to Chinese companies under the FTA, including internal travel distribution. This is not a benefit extended by China to any other FTA partner until now,” he stated.
Addressing concerns about the FTA’s impact on traditional markets, the Minister said free trade agreements represents the future. While efforts are ongoing to establish an FTA between Maldives and India, similar discussions are underway with the United Kingdom, he disclosed. The FTA signed with Türkiye will also come into force in the first quarter of 2025, possibly as early as January, he added.