One of the primary challenges encountered by small and medium-sized enterprises (SMEs) in the Maldives is the difficulty in procuring the essential raw materials, resources, and tools necessary for their operations. The limited availability of these critical components within the Maldivian market further exacerbates these challenges.
However, according to the government, many of these challenges will be addressed with the implementation of the China-Maldives Free Trade Agreement (FTA), which came into effect on 1 January. The FTA is expected to provide significant relief to various sectors by facilitating access to materials and tools, easing the burdens faced by businesses.
The number of businesses and entrepreneurs in the creativity and handcraft sectors is increasing in the Maldives. Yet, one of their biggest challenges remains the difficulty in obtaining raw materials and tools in the local market and the high costs associated with sourcing these resources from abroad.
According to the Ministry of Economic Development and Trade, a significant advantage for businesses under the FTA is the exemption from duties on numerous items sourced from Chinese markets. This exemption encompasses essential materials and tools needed by photographers and other professionals in the creative industries, the ministry said.
In addition to benefits for small- and medium-sized enterprises, the construction sector will also gain significantly, as many resources required by the industry can now be imported from China to the Maldives with zero tariffs, according to the ministry. This includes essential items such as furniture. The FTA also encompasses the fisheries sector, eliminating duties on exports from the Maldives.
In accordance with the FTA's implementation, the Maldives Customs Services has made available a comprehensive list of items eligible for duty waivers on its website, accompanied by the revised tariff rates. Maldivian businesses and individuals intending to import goods from China must obtain a Certificate of Origin to qualify for the duty exemption, the authority said.
The FTA is expected to significantly boost Maldivian exports to China. Government estimates suggest that current trade volumes, which surpass USD 700 million annually, could rise to USD 1 billion with the FTA's implementation. This agreement not only promotes trade but also strengthens the economic ties between China and the Maldives.