Maldives becoming the ‘Small Miracle of Asia’!

Tourist arrivals to Maldives as at May this year stood at 392,020 visitors and the nation is targeting achieving 800,000 by the end of the year. With the latest marketing campaign that has been launched, Maldives is strongly poised to capture the positioning ‘The Miracle of Asia’.

Sri Lanka needs to understand who actually visited Sri Lanka last year and why there was low occupancy in the recent past even with the low stock of rooms available. More importantly, it’s important for Sri Lanka to determine what the customer reactions are to the recent price increases so that we are clear if the proposition that we offer is competitive to the emerging competitors.

 

The Maldives isles – Small miracle

Sunny, unique and unspoilt the Maldives is a archipelago comprising of 1,190 low lying coral islands scattered across the equator in groups of 26 naturally occupying atolls, which are developed into 20 for administrative purposes.

The country has graduated from a Less Developed Country (LDC) to a middle income group with an impressive per capita income from $ 771 in 1984 to $ 2,514 in 2008 and today boasts a performance of $ 4,200, which is the best performing country in South Asia.

What’s unique about Maldives is that even though it does not have resource endowments or scale of economies or the diversity of a one billion dollar GDP economy, the country has the best MDG+ performance in the Asian region, which already makes it the ‘Small Miracle of Asia’. The country also boasts of a per capita spending on social indicators at a level that now can be a best practice to the South Asian region.

Key challenges

The Maldives just like any other country has its fair share of challenges. The country is classified as a ‘Small Island Economy’ with the country highly geared with only tourism and fisheries sector mainly driving the income into the country with high transport and logistics costs that is usual for a island nation.

In the recent past a demographic landscape emerged that 65% of the population is below the 25 year age group. This has resulted in unemployment issues and skewed lifestyles that can lead to drug issues and getting into risky lifestyles, which needs to be addressed as a priority.

The malnutrition level also is a key challenge that needs to be addressed as a recent study reveals that 31% of the children are underweight with 9% of them severely underweight. The fiscal deficit has added to the challenges of the country with falling tourism revenue and the 3F crises – Food, Fuel and the Financial Crisis.

However, the country has survived and come out of the crisis which with the help of the international community like the IMF/WB and UN augurs well of the leadership. It is a learning to the world on how important the international community is to the growth of a country.

It must be highlighted that the Maldives has performed remarkably well over the last few years in the Human Development Index (HDI) along with its three other associated indices – the Human Poverty Index, the Gender Development Index and the Gender Empowerment Measure.

To be specific, Maldives has overtaken Sri Lanka with the highest HDI ranking in South Asia (95th out of 182 countries) – A steady improvement from 2006 when the HDI ranking was 98th, which gives an idea of the focused development the country has progressed to in the last couple of years.

On the area of the Millennium Development Goals (MDGs), Maldives has achieved many of them ahead of the schedule as per the latest MDG assessment. Five of the eight MDGs have been achieved, making Maldives South Asia’s only MDG+ country as mentioned before.

There has been substantial progress in eradicating extreme hunger (MDG1), achieving universal primary education (MDG2), reducing child mortality (MDG4), improving maternal health (MDG5), and combating HIV/AIDS, malaria and other diseases (MDG6), which are signs of a robust development based on high growth with GDP at eight per cent which sure adds to my argument that Maldives is becoming the ‘Small Miracle of Asia’.

Opportunities for growth

Just like any other country, the key challenge is for new thinking to come into the system and then for the organisation to pick this idea and run with it so that it becomes competitive in the global arena.

In my mind the biggest strength in the Maldives is the governance structure. A high quality leadership exists, who are well educated and have a good flavour of international exposure. I have also noticed that there is a hunger for new ideas and the good ones get picked up quickly. There is also a passionate drive to implement change. These are very positive signs in the making of a leading economy in Asia just like what Singapore had achieved over time.

Invest Maldives

At the recently-staged Partnership Summit in New Delhi, the President of Maldives has stated that the country is targeting 200 billion dollars in 2011 by focusing investment on energy, transport, infrastructure, housing, education and health with a attractive package of benefits that I found very easy to comprehend and action.

This include permission for 100% foreign investment, legally-backed investment guarantees, provision for overseas arbitration guarantees, permission to use foreign management and technical expertise including unskilled workers.

There is no restriction on the repatriation of funds out of the country which sure makes Maldives the ‘Small Miracle of Asia,’ but has also contributed to the current instability in the financial system.

 The county boasts of having a high ranking in the ‘Ease of Doing Business Index’ in the World Competitiveness report.

I guess the next challenge is to quickly set up economic zones and may be the positioning of a Green Industrial Park to attract the top notch global companies that are driving on green manufacturing and carbon free business. I guess if Maldives can secure a GSP facility into the US and EU, this window can be very attractive to SAARC countries.

The other areas that Invest Maldives is showcasing is to attract ship repairing, dry docking services, privatisation of the hospitals and social housing tied up to concessionary terms of operating the tourism sector. In the energy sector it is looking at setting up of wind farms and driving ICT with a linkage to BPOs, which are very attractive investment opportunities that have the potential of making Maldives the tiger of South Asia like what Taiwan was for South East Asia.

Export Maldives

The export sector will undoubtedly include driving the fisheries sector by way of canning factories, tuna processing and exporting factories targeting the EU so that this thrust can help the Maldives address the key issues of bridging the fiscal deficit, the youth bulge and engaging women into the economy.

Unique positioning

Given the leadership given to the world by the current President of the Maldives on the area of carbon neutrality and hinging on this area of climate change, perhaps the products that come out of the Maldives can be positioned on the ‘Ethically manufactured ozone friendly merchandise’ platform, which makes it unique for a consumer in the Western world to purchase. This proposition becomes even more attractive given the developments across the world on the area of climate change.

Next steps

The next key step is for the country to be stable politically and thereafter drive a strong economic development agenda to bring in stability to the financial system in the island.

I guess the new taxation structure that was launched recently is one clear way in this direction but a lot needs to be done.

After all, if the quality of life can be improved not only on the one third of the population that lives in the capital Male, but the rest of the population that is scattered over approximately 198 islands, then Maldives has the potential to become the ‘Small Miracle of Asia’.

(The author is attached to the international public sector whilst serving the Government of Sri Lanka on different economic development initiatives. The thoughts are strictly his personal views and do not reflect the organisations he serves.)