Beyond its breathtaking natural beauty, the Maldives is also home to a diverse economic landscape driven by key industries that play a crucial role in shaping the nation’s prosperity. This article delves into the pulse of the Maldivian economy, exploring the top five industries that contribute significantly to its growth, sustainability, and global presence. Explore the economic heartbeat of the Maldives as we unravel the pivotal roles played by its top five industries. From the oceanic bounty of fishing to the allure of tourism, each sector contributes to the nation’s prosperity and global standing, shaping its unique economic tapestry.
Major Industries in Maldives
Before the 1970s, the Maldives remained a relatively obscure destination for tourists. Among the more than 1,190 coral islands, approximately 198 were inhabited, while the rest were dedicated to economic activities, primarily centred around agriculture and tourism. Notably, tourism has emerged as the dominant industry in the Maldives, serving as a primary source of foreign earnings and employment. Accounting for around 39% of the GDP and contributing over 60% to total foreign earnings, tourism plays a pivotal role in the country’s economic landscape. Additionally, more than 90% of government taxes are derived from tourism-related taxes and import duties. The inception of the tourism sector in the Maldives dates back to 1972 when the first resort was established, attracting the first wave of tourists that same year. Since then, the industry has witnessed remarkable growth, with 132 resorts scattered across various atolls. The number of visitors has surged from just over 100 in 1972 to approximately 1.5 million tourists in 2016, with China, Germany, and the United Kingdom being the primary sources of tourism.
Agriculture holds a significant position in the Maldives economy, particularly for the rural populace, contributing substantially to both livelihoods and nutritional needs. Approximately 7,000 farmers and their families rely on agriculture as their primary source of income. Despite a recent decrease in the sector’s prominence, agriculture still constitutes 6% of the total GDP in the Maldives. Notably, there has been an upswing in agricultural production and sector revenue in recent times. Despite the challenge of limited arable land on coral islands, agricultural activities remain integral to the livelihoods of residents in more than two-thirds of inhabited islands. On these islands, a variety of field crops, including watermelons, sweet potatoes, cassavas, chillies, eggplant, cabbage, and papaya, are cultivated throughout the year.
Due to the predominant oceanic nature of the Maldives, the fishing industry holds a pivotal role in the economy, serving as a crucial source of both sustenance and income for a majority of households. It stands as the second-largest industry in the country and is often described as the nation’s “lifeblood” by President Gayoom. Beyond its economic significance, fishing also doubles as a recreational pursuit, drawing hundreds of tourists annually. The Maldives boasts numerous fishing resorts that cater to enthusiasts engaged in such leisure activities. Abounding in diverse fish species such as dolphin fish, tuna, barracuda, grouper, and rainbow runner, the nation’s waters are particularly rich, with tuna accounting for approximately 90% of the total catch.
The Maldives boasts a developed manufacturing sector, contributing around 7% to the GDP. Traditional industries encompass handicrafts, boat construction, and garment manufacturing, while contemporary manufacturing is centred on tuna canneries, food production, and the manufacturing of PVC pipes. The limited availability of natural resources in the Maldives has hindered the expansion of the manufacturing sector, particularly in the production of essential and consumable goods, leading to a reliance on imports for these items. Nevertheless, with the flourishing fishing and agriculture sectors, there is an anticipation that the manufacturing industry will experience growth, subsequently enhancing its contribution to the overall economy.
The Maldives is characterized by a financial sector largely dominated by the banking industry, with seven banks operating under the regulation of the Maldives Monetary Authority. Notably, the Maldives stands out for its unique tax structure, devoid of income, sales, property, or capital-gains taxes, earning a reputation for having one of the simplest tax codes globally. In the realm of financial secrecy, the Tax Justice Network assigned the Maldives a high “secrecy score” of 92 in its 2011 Financial Secrecy Index, the highest among actively-ranked countries in that category. However, despite this, the Maldives’ limited market share positions it toward the lower end of the overall weighted lists.