The China-Maldives Free Trade Agreement (FTA) has come into effect starting 1 January, marking a significant milestone in the economic relations between the two countries. This agreement is anticipated to enhance trade and investment, thereby creating new opportunities for collaboration.
The FTA, aimed at promoting trade and investment between China and the Maldives, was signed in 2014 and approved by the Maldivian Parliament in 2017. However, its implementation was suspended following a change in administration in 2018. President Dr Mohamed Muizzu, who assumed office in November 2023, and his administration have been working diligently to bring the FTA into effect.
Significant Benefits for Maldivian Businesses
The agreement offers significant advantages for Maldivian businesses by providing opportunities to export products to one of the world's largest markets. A notable benefit is the duty-free export of fishery products to China, expected to enhance production in the fishery sector and boost foreign currency earnings. The FTA will also facilitate the expansion of the Maldives' manufacturing and processing sectors.
For the service sector, the FTA presents opportunities to penetrate the Chinese market. It also streamlines the process for Chinese investments in the Maldives and allows Maldivian investors to invest in China. According to the Ministry of Economic Development and Trade, the agreement paves the way for economic and developmental assistance and cooperation, thereby furthering the Maldives' economic diversification and growth.
Boosting Trade, Investment Opportunities
Another significant advantage of the FTA is the elimination of duties on Chinese imports to the Maldives. This measure is anticipated to result in increased Chinese exports to the Maldives and a reduction in prices due to the influx of diverse brands and products. The government asserts that this development will foster a more favourable environment for local businesses to prosper.
The Economic and Technical Cooperation chapter of the FTA will support human resources development and capacity-building efforts in the Maldives, assisted by China. This includes enhancing skills for Maldivians, creating jobs, and seeking Chinese assistance in further developing and expanding the research sector.
China, with a population of over 1.41 billion and a large number of mid-level business enterprises, presents a significant market for Maldivian products and services. According to government estimates, China-Maldives trade currently surpasses USD 700 million annually, with expectations that this trade volume could rise to USD 1 billion with the FTA's implementation.