In a monumental stride toward economic partnership, the Maldives has taken a significant leap by implementing the long-awaited Free Trade Agreement (FTA) with China. This landmark accord, which became fully operational on 1 January, ushers in a new era of opportunities for the island nation's tourism industry — a sector that is the lifeblood of the Maldivian economy.
Travel agents and tour operators, the unsung heroes of the tourism sector, stand poised on the brink of transformation, according to the government. With the FTA in effect, these key players can now expand their horizons to the vast Chinese market, tapping into a lucrative source of potential visitors. This agreement, originally signed in 2014 and approved by the Parliament in 2017, faced suspension in 2018 due to a change in administration. However, President Dr Mohamed Muizzu, who took office in November 2023, has been steadfast in his efforts to revive the agreement, seeing it as a cornerstone for economic rejuvenation.
The implementation of the FTA is expected to significantly benefit local travel agencies, according to the government. The potential for increased trade and commerce ties between China and the Maldives is immense, with the agreement expected to strengthen investments and attract a wave of new investors from China.
China has long been a vital source market for Maldivian tourism. In 2024 alone, over two million tourists visited the Maldives, with Chinese tourists accounting for a substantial 12.9%, totalling over 241,000 visitors. The government believes that the FTA will empower travel agencies to better market their services and travel destinations in the Maldives to Chinese tourists, further boosting these numbers.
The FTA encompasses cooperation and trade in the tourism and transportation sectors, providing a platform for local travel agencies to expand their businesses into the Chinese market. It also offers opportunities for Maldivians to establish new travel agencies aimed specifically at Chinese travellers.
Minister of Economic Development and Trade, Mohamed Saeed, highlighted the unique opportunities afforded by the FTA, stating, "As part of this FTA, Maldivian companies will receive all the rights granted to Chinese companies within certain free trade areas of China, including internal travel distribution. This benefit is not extended to any other FTA partner," he said.
As Maldivian businesses gear up to explore these newfound opportunities, the government anticipates a significant boost to Maldivian exports to China. Current trade volumes, which exceed USD 700 million annually, could soar to USD 1 billion with the FTA's implementation. This agreement not only promises enhanced trade but also fortifies the economic bond between China and the Maldives.