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Executive Summary

The Republic of Maldives comprises 1,190 islands in 20 atolls spread over 348 square miles in the Indian Ocean. Maldives attracts over 1.2 million tourists annually. Tourism is the growth engine for the economy and accounts for approximately 70 percent of gross domestic product (GDP). The tourism sector’s contribution to the economy is split between direct (30 percent) and indirect (70 percent) via the transportation, communication, and construction sectors. Tourism will likely continue to drive the economy with the government of Maldives promoting the construction of new island resorts. The number of Chinese tourists visiting Maldives more than tripled from approximately 100,000 in 2010 to 306,530 in 2017. Chinese tourists accounted for nearly one-third of arrivals with a 23 percent market share, representing the single biggest source of tourists to Maldives.

Maldives is a multi-party constitutional democracy, but the transition to democracy has been a challenge. Parliament ratified a new constitution in 2008 that provided the first multi-party presidential elections. In 2012, the first democratically elected president, Mohamed Nasheed, stepped down, and Vice President Mohamed Waheed became the head of state. The current president, Abdulla Yameen Abdul Gayoom, was elected in 2013 and his administration has become increasingly autocratic. In March 2015, former President Nasheed was jailed for a 13-year term under controversial charges of terrorism. Former President Maumoon Gayoom, two Supreme Court justices, a former vice president, a former defense minister, and several members of parliament and political dissidents have been imprisoned as well, and the Maldives Bar Association has been dissolved. The government implemented states of emergency in November 2015 and February-March 2018, creating even greater political instability. The next general election is expected to take place in 2018.

Corruption has been reported in all sectors, including tourism, remains a significant issue. Independent institutions such as the Anti-Corruption Commission are unable to fulfil their mandate due to executive and judicial interference. Political opposition parties have said they will review major investments agreements signed by the current government if they gain power.

Total GDP in 2016 (the most recent data available) was an estimated USD4 billion. GDP growth averaged six percent during the past decade and has helped lift Maldives to middle-income country status. Per capita GDP, estimated at over USD8,000, is the highest in South Asia. However, there is significant income disparity as many Maldivians do not benefit from the revenue generated by the tourism industry and have few job opportunities.

Maldives faces significant fiscal problems. Public debt remains very high and the International Monetary Fund (IMF) has recommended Maldives reduce fiscal spending, particularly the expenses resulting from large infrastructure projects. Public debt as a share of GDP rose nearly 11.5 percentage points from 2014-16. The current account deficit widened to 19.6 percent of GDP in 2016, due to increased infrastructure-related imports, static tourism receipts, higher remittance outflows, and a large one-off court mandated payment.

Maldives welcomes foreign investment, although the ambiguity of codified law and competition from politically influential local businesses act as deterrents. U.S. investment in Maldives is limited and focuses on the tourism sector, particularly hotel franchising and air transportation.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2017 112 of 175
World Bank’s Doing Business Report “Ease of Doing Business” 2017 136 of 190
Global Innovation Index 2017 N/A https://www.globalinnovation
U.S. FDI in partner country (M USD, stock positions) 2015 N/A
World Bank GNI per capita 2015 USD 10,380

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Toward Foreign Direct Investment

Maldives began opening up to foreign investment in the late 1980s, and currently pursues an open policy for foreign investments, although the weak and in some cases arcane system of laws and regulations discourage investment.

Foreign investments in Maldives have primarily involved resort management, but also include telecommunications, accounting, banking, insurance, air transport, real estate, courier services, and some manufacturing. The government encourages investment projects that: (1) establish and enhance the delivery of basic services required to be provided by the state; (2) promote economic diversification and demonstrate potential to structurally reduce the country’s current dependence on the tourism sector; (3) expand the export base of the economy and support import substitution; (4) enhance the human capital development and employment opportunities for Maldivians; (5) promote innovative product development and new markets for the tourism sector; (6) bring enhanced improvements to the health and education sectors in terms of service delivery, quality, and accessibility; (7) expand and develop sports infrastructure and services in the Maldives; (8) promote the use of renewable energy in Maldives; and (9) promote incremental social and economic benefits from the available natural resources.

Since 2014, the current administration has held an annual investor forum to showcase priority public and private sector investment projects. The fourth annual forum was held in December 2017 in Dubai. In 2014, the government enacted a Special Economic Zones (SEZ) Act to facilitate foreign investment projects of strategic significance but has yet to establish any SEZs.

Invest Maldives, an organization within the Ministry of Economic Development, is the government’s investment promotion arm. Services provided by Invest Maldives include promoting Maldives as an investment destination, providing information to potential investors about the Maldives, guidance on investment approval and business registration and facilitating the licensing of business.

In April 2018 President Abdulla Yameen established a new “National Investment Management Company”, a government owned enterprise tasked with studying the Maldivian economy and protecting investments, but it had not become operational as of April 2018.

Limits on Foreign Control and Right to Private Ownership and Establishment

Maldives allows foreign parties to register companies and partnerships but does not allow foreign parties to register cooperative societies or as a sole proprietor. Foreign investment is allowed in all major sectors of the economy apart from the following areas, which are restricted for locals only:

  1. Photography and related activities
  2. Retail trade (but retailing under a franchise agreement is allowed provided that evidence of franchisee is submitted)
  3. Ownership, operation and management of:
  • Travel agencies,
  • Guesthouses,
  • Tour guiding and tour operating facilities, and
  • Tourist vessels (with less than 40 beds and 20 cabins)
  1. Operating bonded warehouses in customs areas
  2. Fishing within the Exclusive Economic Zone (EEZ) of Maldives
  3. Purchasing, processing and export of skipjack tuna

Foreign companies are allowed to invest in the following areas in instances where 51 percent of the foreign investment company is owned by a Maldivian individual or legal entity:

  1. Passenger transfer services (where the company engage in provision of maritime transfer services on a wholesale basis by seeking contracts from resorts)
  2. Water sports and related activities

The following conditions are applied to foreign investments in the construction sector, as per the foreign contractor regulation:

  • Construction companies valued below USD5,000,000 are required to be at least 35 percent Maldivian owned.
  • Construction companies valued above USD5,000,000 may be 100 foreign owned.

There is little private ownership of land; however, Maldivians are permitted to hold title to land. A prohibition on foreign ownership of any land ended in July 2015 when the parliament passed and the president ratified a constitutional amendment that will allow foreigners, who invest at least USD1 billion to own land and islands in connection with major projects, provided that at least 70 percent of the land is reclaimed. However, the government cannot designate more than 10 percent of existing land in the country as sites for such projects. Until the constitutional amendment, there were no property and real estate laws or a mechanism to allow foreign persons to hold title to land.

The Land Act allows foreigners to lease land on inhabited islands for up to a maximum of 50 years but there is no formal process for registration of leasehold titles. The Uninhabited Land Act allows foreigners to lease land on uninhabited islands for purposes other than tourism for a maximum of 21 years for investments amounting to less than USD1 million and up to a maximum of 50 years for investments over USD10 million. An amendment to the Tourism Act passed in 2010 allows investors to lease an island for 50 years in general. A subsequent 2014 amendment allows the extension of resort leases up to 99 years for a payment of USD5 million. The changes aim to incentivize investors, make it easier to obtain financing from international institutions and increase revenue for the government. Leases can be renewed at the end of their terms, but the formula for assessing compensation value of a resort at the end of a lease has not been developed. In 2016, Parliament approved additional amendments to the Tourism Act, whereby islands and lagoons can be leased for tourism development based on unsolicited proposals submitted to the Tourism ministry (Law No: 13/2016).

The Ministry of Economic Development screens and reviews all foreign investment proposals. The process includes standard due diligence efforts such as a local police screening of all investors, determining the financial standing of the proposed shareholders through a bank reference and performing a background check on the investors involved. According to the government, each case is reviewed based on its merits accounting for factors such as the number of existing investors in the sector and the potential for employment and technology transfer. In practice, the investment review process is not as transparent as policy would indicate with corruption influencing the decision making process.

The approval procedure for foreign investments is as follows:

  1. Submit a completed Foreign Investment Application form to the Ministry of Economic Development
  • The Foreign Investment Application Form is available from the Ministry’s website; .
  • Walk-in consultations are available for foreign investors who may wish to discuss their proposals prior to submitting an application.
  1. Receive approval
  • The standard processing time is three working days, however, if relevant ministries must be consulted, the approval may take 10-14 days.
  1. Register a business vehicle
  • Once approval is received, an investor must register as a company, partnership, or a company which has been incorporated in another jurisdiction.
  • Application forms for registering as a legal vehicle are available from the ministry’s website.
  1. Sign the Foreign Investment Agreement with the Ministry of Economic Development
  • This Agreement outlines the terms and conditions related to carrying out the specific business in Maldives. For tourism sector investments, a Foreign Investment Agreement is not required as the land lease signed with the Ministry of Tourism governs all matters relating to tourism businesses in Maldives.
  1. Obtain licenses and permits
  • Sectors which require operating licenses include, fisheries and agriculture, banking and finance, health, tourism, transport, construction and education.

Other Investment Policy Reviews

The most recent World Trade Organization trade policy review was conducted in March 2016: . In the past three years, the Government of Maldives has not conducted trade policy reviews through other international organizations.

Business Facilitation

As of April 2018, the government was drafting amendments to the Companies Act, Electronic Transactions Bill, Mercantile Court Bill, and an Insolvency Bill which could affect business facilitation. In 2019, the Asian Development Bank will commence a National Single Window project designed to improve the ease of doing business. The government aims to expand the types of businesses that can be registered on its portal:  ; registration is currently limited to sole proprietorships.

Outward Investment

The government does not promote or incentivize outward investment but does not restrict domestic investors from investing abroad either.

2. Bilateral Investment Agreements and Taxation Treaties

BITs or FTAs

The Maldives signed its first bilateral free trade agreement with China in December 2017, however, the contents of the agreement have not been made public as of April 2018. The government is currently engaged in negotiations to establish another free trade agreement with Hong Kong. The Maldives and the United Arab Emirates signed an Agreement on the Promotion and Reciprocal Protection of Investments in October 2017.

Bilateral Taxation Treaties

The United States has not signed a bilateral investment or a taxation treaty with the Maldives. In 2009, the United States signed a Trade and Investment Framework Agreement (TIFA) with Maldives.

Maldives signed a Double Tax Avoidance Treaty with the United Arab Emirates in October 2017, which had not come into force as of April 2018. In April 2016, Maldives and India signed an agreement to avoid double taxation of income derived from air transport and an agreement to share information on taxes, both of which are currently in force. In 2005 Maldives signed a double taxation avoidance treaty which is a limited multilateral agreement between members of the South Asian Association for Regional Cooperation (SAARC) for avoidance of double taxation and mutual assistance in tax matters.

Maldives currently does not have personal income taxes, although bank profits and business profits are taxed and there is a goods and services tax on the tourism sector and a general goods and services tax. Under the Business Profit Tax Act, a non-resident owner or charterer of a ship or aircraft may be exempt from the tax if the commissioner general of taxation of Maldives is satisfied that a reciprocal treatment for business profit tax or any other similar tax is granted by the taxpayer’s country of residence to a Maldivian-resident taxpayer.

3. Legal Regime

Transparency of the Regulatory System

Legislation is formulated by the parliament, People’s Majlis, while regulations pertaining to investment are developed by ministries and agencies, mainly by the Ministry of Economic Development. Regulations relevant to the tourism sector are developed by the Ministry of Tourism. Certain business sectors require sector-level operating licenses from other ministries/agencies including fisheries and agriculture, banking and finance, health, tourism, transport, construction and education. The central bank, Maldives Monetary Authority, regulates the financial sector and issues banking licenses. The Capital Market Development Authority develops regulations for the capital market and pension industry and licenses securities market intermediaries. Parliament does not regularly make draft bills and regulations available for public comments.

The government initiated a new public accounting system in 2009, which had been partially implemented as of April 2018. A new Public Finance Law and an Audit Law came into force in 2006-2007 and the Maldives Financial Transactions Reporting regulation came into effect in July 2011. The Maldives became a member of the Asia/Pacific Group on Money Laundering in July 2008 and ratified the Anti-Money Laundering and Combatting Terrorism Financing Law in April 2014, which introduced rules governing financial transactions and the inflow and outflow of money from Maldives.

The Financial Intelligence Unit, which resides in the Maldives Monetary Authority, is understaffed and lacks the expertise necessary to adequately combat money laundering and terrorist financing. A February 2016 special audit of the government-owned Maldives Marketing and Public Relations Corporation (MMPRC) by the auditor general revealed the embezzlement (through checks deposited into private bank accounts) of USD79 million in resort lease acquisition fees. The audit found the Maldives Monetary Authority’s inaction facilitated the embezzlement.

The Companies Act requires all companies to prepare and report annual financial statements. Public companies whose share capital is more than USD65,000 are required to prepare an additional annual audit report. The Registrar of Companies is responsible for making these reports publicly available but seldom does so in a timely manner. All companies listed on the Maldives Stock Exchange are required to submit their annual financial statements to the Capital market Development Authority, which publishes the statements on its website.

The website of the Attorney General’s Office (  ) publishes the full text of all existing laws and regulations, but most of the documents are in the Dhivehi language. The Attorney General’s Office is establishing an English language database of laws and court judgements.

International Regulatory Considerations

Trade and investment related legislation and regulation are influenced by common law principles from the United Kingdom and other western jurisdictions. The judiciary has cited foreign case law from jurisdictions from the United Kingdom, the United States and Australia when interpreting local trade-related statues. The Maldives is not a signatory to the WTO Trade Facilitation Agreement.

Legal System and Judicial Independence

The sources of law in Maldives are its constitution, Islamic Sharia law, regulations, presidential decrees, international law, and English common law, with the latter being most influential in commercial matters. The Maldives has a Contract Law (Law No. 4/91) that codifies English common law practices on contracts. The Civil Court is specialized to hear commercial cases. The Employment Tribunal is mandated to hear claims of unfair labor practices. A bill proposing the establishment of a Mercantile Court is pending in parliament since 2013. The Judicial Services Commission is responsible for nominating, dismissing, and examining the conduct of all judges. The attorney general acts as the legal advisor to the government and represents the government in all courts except on criminal proceedings, which are represented by the prosecutor general.

Lack of Judicial Independence, Qualification and Training

A Supreme Court was established for the first time in 2008 under the new Maldives Constitution. The Supreme Court is the highest judicial authority in Maldives. In addition to the Supreme Court, there are six courts: a high court, civil court, criminal court, family court, juvenile court, and a drug court. There are approximately 200 magistrate courts, one in each inhabited island. The Supreme Court and the High Court serve as courts of appeal. There are no jury trials. The judicial process is slow. In August 2010, the Judicial Services Commission reappointed – and confirmed for life – 191 of the 200 existing judges. Many of these judges held only a certificate in Sharia law, not a law degree. The Maldivian judiciary is not independent and impartial and is subject to executive influence. The United Nations Office of the High Commissioner for Human Rights in 2015 stated the judicial system is perceived as politicized inadequate and subject to external influence. An estimated quarter of the judges have criminal records. The media, human rights organizations and civil society have repeatedly criticized the Judicial Services Commission for appointing unqualified judges.

Laws and Regulations on Foreign Direct Investment

Foreign parties can invest in Maldives through the Foreign Investment Law or the Special Economic Zones (SEZ) Act. Details are available on the Ministry of Economic Development’s Doing Business in the Maldives Guide: 

Foreign investment in Maldives is governed by Law No. 25/79, covering agreements between the government and investors. The Business Registration Act (18/2014) requires foreign businesses to register as a company or partnership. The Companies Act (10/96) governs the registration as well as the regulatory and operational requirements for public and private companies. The Partnership Act of 2011 governs the formation and regulation of partnerships. Foreign investments are currently approved for an initial period of five years, with the option to renew.

The Special Economic Zones (SEZ) Act of 2014 provides for the creation and management of special economic zones in Maldives and investments in those zones. The minimum investment for an SEZ project is at USD150 million and the application fee is USD25,000.

The Business Profit Tax Act (No. 5/11) governs taxation. All investments – local and foreign – are required to pay 15 percent of profits as a business profit tax. Maldives currently does not have personal income taxes. In addition, there is a goods and services tax on the tourism sector and a general services tax on all goods and services.

Competition and Anti-Trust Laws

Maldives does not have a competition law and there is no legal mechanism to review transactions for competition-related concerns.

Expropriation and Compensation

According to the Law on Foreign Investment (No. 25/79), the government may, with or without notice, suspend an investment when an investor indulges in an act detrimental to the security of the country or where temporary closure is necessary for national security. If, after due investigation, it cannot be concluded within 60 days of the temporary closure that the foreign investor had indulged in an activity detrimental to the security of Maldives, the government will pay compensation. Capital belonging to an investment that is closed for these reasons may be taken out of the country in a mutually agreed manner.

Both the previous government and the current government cancelled or re-opened provisions of foreign development agreements approved by previous governments, raising concerns about contract enforcement. In December 2012, the Maldivian government took over operation of the Malé International Airport from GMR Infrastructure Limited, an Indian company, after the Maldivian government repudiated the 2012 contract. While the government has agreed to pay GMR Infrastructure Limited damages, the amount and timing of the payments remain in dispute. Many Maldivian businesspeople consider the action tantamount to expropriation.

Dispute Settlement

ICSID Convention and New York Convention

Maldives is not a Party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and is not a Contracting State under the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, although the Attorney General’s Office is drafting policies required to become a party to both conventions.

Investor-State Dispute Settlement

Maldives does not have a Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with the United States. An Arbitration Act was passed in 2013 and provides for implementation of international arbitral awards. However, the judgments of foreign courts cannot directly be enforced through the courts. Judgments of foreign courts must be submitted to domestic courts, which then make a separate judgment.

An example of an ongoing dispute is the government’s termination of a 2010 35-year concession agreement with Global Project Developments (GPD), a subsidiary of the U.K. company Capital Investment and Finances Limited, in 2015. GPD claims the government failed to honor terms of the agreement and has publicly challenged the validity of the termination.

International Commercial Arbitration and Foreign Courts

An Arbitration Act was passed in 2013 and provides for implementation of international arbitral awards. However, the judgments of foreign courts cannot directly be enforced through the courts. Judgments of foreign courts have to be submitted as a fresh action and established as a judgment by the local courts that may then be enforced. Dispute resolution for significant investments can take years and it can be a challenge to collect payment for any damages from the government or from Maldivian companies. The Maldivian judicial system is subject to significant political pressure.

Bankruptcy Regulations

Maldives does not have a bankruptcy law although corporate insolvencies are dealt with under the Companies Act. Debtors and creditors may file for liquidation. There is no priority assigned to creditors and there is very limited legal framework to protect creditors following commencement of insolvency.

4. Industrial Policies

Investment Incentives

The government has the discretion to offer incentives such as exemption from import duties and restrictions on the repatriation of profits.

Foreign Trade Zones/Free Ports/Trade Facilitation

The 2014 SEZ Act provides for investments allowed under the SEZ framework to be provided reduced foreign employment restrictions and exemption from business profit tax, goods and services tax, withholding taxes and from taxes on the sale and purchase of land.

Performance and Data Localization Requirements

Maldives does not require foreign investors to use domestic goods or technology. Maldives does not require information technology providers to provide source code or encryption keys.

5. Protection of Property Rights

Real Property

Secured interests in property, movable and real, are recognized and enforced under the 2002 Land Act, and the councils on each island maintain registries. Rights in real estate are governed by the Land Act, the Uninhabited Islands Act (20/98), the Tourism Act (2/99) and Chapter 15 of the constitution. Foreign parties can acquire ownership of land through Chapter 15 of the constitution and can lease land for periods no longer than 99 years for business activity under the remaining regimes.

Intellectual Property Rights

The government has an intellectual property unit within the Ministry of Economic Development but has not yet signed international agreements or conventions on intellectual property rights.

The World Intellectual Property Organization (WIPO) is providing assistance to the government on the drafting of bills regarding trademarks and geographical indicators. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at .

6. Financial Sector

Capital Markets and Portfolio Investment

Maldives Stock Exchange (MSE), which first opened in 2002 as a small securities trading floor, was licensed as a private stock exchange in 2008. The Securities Act of January 2006 created the Capital Market Development Authority (CMDA) to regulate the capital markets. The MSE functions under the CMDA. The only investment opportunities available to the public are shares in the Bank of Maldives, five state-owned public companies, a foreign insurance company, a foreign telecommunications company and a local shipping company. The market capitalization of all companies listed on the exchange was MVR 8.1 billion (USD525 million) at the end of 2015.

Foreigners can invest in the capital market as both retail and institutional investors. Capital market license holders from other jurisdictions can also seek licenses to carry out services in the Maldives capital market. There are no restrictions on foreign investors obtaining credit from banks in Maldives nor are there are restrictions on payments and transfers for current international transactions.

Money and Banking System

The Maldives financial sector is dominated by the banking sector. The banking sector consists of eight banks, of which three are locally incorporated, four are branches of foreign banks and one is a fully owned subsidiary of a foreign bank. There are 52 branches of these banks throughout the country of which 33 are in the rural areas. Additionally, at the end of 2017 there were 116 automatic teller machines (of which 51 were located in rural areas) and 230 agent banking service providers Maldives has correspondent banking relationships with six banks. The Maldives has not announced intentions to allow the implementation of block chain technologies (cryptocurrencies) in its banking system. International money transfer services are offered by four remittance companies through global remittance networks. Two telecom companies offer mobile payment services through mobile wallet accounts and this service does not require customers to hold bank accounts. Non-bank financial institutions in the country consist of four insurance companies, a pension fund, and a finance leasing company, a specialized housing finance institution and money transfer businesses. Maldives Real Time Gross Settlement System and Automated Clearing House system is housed in the Maldives Monetary Authority for interbank payments settlements for large value and small value batch processing transactions respectively. There has been an increase in usage of electronic payments such as card payments and internet banking. All financial institutions currently operate under the supervision of the Maldives Monetary Authority.

Foreign Exchange and Remittances

Foreign Exchange Policies

There is no exchange control legislation in Maldives. Both residents and non-residents may freely trade and purchase currency in the foreign exchange market. Residents do not need permission to maintain foreign currency accounts either at home or abroad and there is no distinction made between foreign national or non-resident accounts held with the banks operating in Maldives. The exchange rate is maintained within a horizontal band, with the value of the Rufiyaa allowed to fluctuate against the U.S. dollar within a band of 20 percent on either side of a central parity of MVR12.85 per U.S. dollar.

Remittance Policies

There are no restrictions on repatriation of profits or earnings from investments. The government introduced a 3 percent remittance tax in October 2016 on money transferred out of Maldives by foreigners employed in the Maldives. Effective from 1 January 2017, the coverage of the remittance tax was broadened to include the withdrawal of cash abroad in instances the withdrawal is made from a bank account opened in the Maldives or by using a prepaid cash card issued by a bank in the Maldives.

Sovereign Wealth Funds

Maldives does not have a sovereign wealth fund.

7. State-Owned Enterprises

At the end of 2013, 69 companies were either fully or partly government owned. Major operations include the State Trading Organization, Dhiraagu (a telecom provider), and Maldives Water and Sewerage Company. There are no laws that ensure a primary role for state-owned enterprises (SOEs) in any specific sectors and no published list of SOEs.

Maldivian SOEs do not strictly adhere to the OECD Guidelines on Corporate Governance for SOEs and political interference on behalf of SOEs can put private sector competitors at a disadvantage. When SOEs are involved in investment disputes, domestic courts, which are not transparent, tend to favor the government enterprise.

Privatization Program

A 2013 Privatization Act governs all privatization and corporatization efforts by the government. However, the government is not pursuing privatization.

8. Responsible Business Conduct

There is limited but growing awareness of corporate social responsibility (CSR) among the business elite. The government does not have any ongoing policies or programs to promote responsible business conduct. There are no non-governmental organizations that promote or monitor corporate social responsibility (CSR). Many of the larger resort companies have CSR programs, especially targeting environmental protection and employee welfare, but the Maldivian government does not regulate CSR programs or force companies to follow the OECD Guidelines for Multinational Enterprises.

9. Corruption

The law provides criminal penalties for corruption by officials but enforcement is weak. The Commonwealth Human Rights Initiative, which conducted a November 2015 fact-finding mission, concluded independent institutions like the Anti-Corruption Commission were unable to fulfil their mandate due to “incessant interference from the judiciary and the government.” Corruption is seen to be most prevalent in government procurement. Senior government officials such as judges and parliamentarians are commonly believed to take bribes.

The law on prevention and punishment of corruption (2000) defines bribery and improper pecuniary advantage and prescribes punishments. The law also outlines procedures for the confiscation of property and funds obtained through the included offenses. Penalties range from six months to 10 years banishment, or jail terms. Maldives acceded to the United Nations Convention against Corruption in March 2007, and under the 2008 Constitution, an independent Anti-Corruption Commission was established in December 2008. The responsibilities of the Commission include inquiring into and investigating all allegations of corruption; recommending further inquiries and investigations by other investigatory bodies; and recommending prosecution of alleged offenses to the prosecutor general, where warranted. The Anti-Corruption Commission is empowered to handle cases of corruption of members of parliament. The Anti-Corruption Commission is not mandated to investigate corruption in the private sector.

Tourism is the largest industry in Maldives; resort owners and tourism operators control a majority of the Maldivian economy. Several prominent resort owners are members of parliament and a few have served as ministers. Nepotism and cronyism are common in the private and public sector.

The Maldives is a party to the UN Anticorruption Convention. Maldives is not a party to the OECD Convention on Combatting Bribery.

Resources to Report Corruption

Contact at government agency responsible for combating corruption:
Anti-Corruption Commission of the Maldives
Address: Huravee Building, Male, Maldives, 20114
Telephone: (800)3300007 (Toll free number), (960) 331 0451, (960) 331 7410 (General Inquiries)

Contact at “watchdog” organization:
Mrs. Mariyam Shiuna
Executive Director
Transparency Maldives
Address: MF Building, 7th Floor, Chaandhanee Magu, Male’, Republic of Maldives
Telephone: +960 330 4017

10. Political and Security Environment

President Abdulla Yameen has become increasingly autocratic. Several political opponents, business figures, reporters, and bloggers have been arrested or are being pursued for alleged criminal offenses. Former president and leader of the opposition Maldivian Democratic Party Mohamed Nasheed was sentenced to 13 years imprisonment on terrorism charges in March 2015 while the courts sentenced opposition Adhaalaath Party leader Sheikh Imran Abdulla to 12 years imprisonment on terrorism charges in March 2016, both of which the UN Working Group on Arbitrary Detention concluded were unjust trials. Opposition Jumhooree Party Leader Gasim Ibrahim was sentenced to three years imprisonment on bribery charges in 2017. Former President Maumoon Gayoom, a former vice president, former defense minister, two supreme court justices, and several members of parliament and other political dissidents have also been imprisoned, and the Maldives Bar Association has been dissolved. Since May 2015, several other political leaders have been living in self-exile to avoid terrorism charges and political persecution.

Maldives police reported investigating 17 cases involving 40 Maldivians under the Prevention of Terrorism Act during 2017; five with intent to commit violence in Maldives and 12 with intent to participate in a foreign war. In November 2017, the State charged two Maldivians for allegedly conspiring with the Islamic State (IS) to launch a suicide attack in Malé and in August charged four other Maldivians of possession of an improvised explosive device and conspiring to commit an act threatening national security. Media reported a separate incident in November where two other men had been arrested for making bombs in Malé.

During the 2018 State of Emergency, the government of Maldives implemented regulations to intensify already severe restrictions on media. Police arrested two journalists providing media coverage of an opposition protest in February 2018, and beat one of them until he lost consciousness. Opposition-aligned Raajje TV suspended broadcasting for 56 hours on February 11 after receiving numerous threats of violence. In April 2017, a liberal blogger Yameen Rasheed was murdered, allegedly by seven young men categorized as religious extremists. As of April 2018, the seven suspects are on trial, but the details of the proceedings have not been public. As with Rasheed, Maldivians accused of being secular or anti-Islam are targeted by extremist websites and report receiving death threats. In June 2013, unknown assailants attacked local reporter and journalist Ismail Hilath Rasheed, slashing his throat. In August 2014, unknown assailants abducted Minivan News journalist Ahmed Rilwan, who has not been seen since. Four suspects were arrested, but none remained in custody. Three suspects were charged with terrorism over the abduction and two were acquitted in August 2018. Human rights NGO Maldivian Democracy Network blamed organized criminal gangs and accused the police of negligence for the delays in concluding the investigation. In May 2014, the Maldivian Broadcast Commission released a comprehensive survey of the press corps where 84 percent of journalists surveyed reported being threatened at least once. Five percent reported they received daily threats.

On October 1, 2012, Afrasheem Ali, a Member of Parliament and vocal supporter of moderate Islam, was found stabbed to death in the stairwell of his apartment building. This was the first murder of a Maldivian official in recent history and police investigations confirmed unspecified “political motives” behind the murder.

11. Labor Policies and Practices

Skilled and unskilled labor are scarce. Expatriate labor is allowed into Maldives to meet shortages. Maldives Immigration reported 133,969 registered expatriate workers in the country in 2017, mostly in tourism, construction, and personal services. Government reported 15,000 to 20,000 unregistered expatriate migrant worker, but non-governmental sources estimate the number is even higher. Notwithstanding the labor shortage, unemployment in Maldives is also high, as many youth leaving lower secondary school have few in-country avenues to pursue higher secondary education. Although resorts may offer employment opportunities, locals are less likely to take advantage of these jobs as resort employment practices require employees to live and work on the island for long stretches of time, away from family. Religious and cultural reasons also prevent women from seeking employment on distant islands.

The Law on Foreign Investments requires Maldivian nationals to be employed unless employment of foreigners is a necessity. In tourist resorts, policies require a workforce consisting of at least 50 percent Maldivians. Neither of these requirements are strictly enforced. SEZ investments provide exceptions to these rules.

The 2008 the Employment Act and a subsequent amendment to the Employment Act recognize workers’ right to strike and establish trade unions, however, current law does not adequately govern the formation of trade unions, collective bargaining and the right to association. While the constitution provides for workers’ freedom of association, there is no law protecting it, which is required to allow unions to register and operate without interference and discrimination. As a matter of practice, workers’ organizations are treated as civil society.

A regulation on strikes requires employees to negotiate with the employer first, and if this is unsuccessful, then the employees must file advance notice prior to a strike. In 2015, the Maldivian government threatened to revoke work visas of Bangladeshi migrant workers ahead of a planned gathering to protest unfair working and living conditions. The Freedom of Peaceful Assembly Act effectively prohibits strikes by workers in the resort sector, the country’s largest money earner. Employees in the following services are also prohibited from striking: hospitals and health centers, electricity companies, water providers, telecommunications providers, prison guards, and air traffic controllers.

The Employment Act created a 48-hour/week with a compulsory 24-hour break after six days of continuous work. Resort workers may accumulate the weekly rest day. Overtime is available. Workers in tourist resorts may work an additional two hours a day and are paid a higher overtime rate. Employees are usually authorized 30 days of annual leave, 30 days of medical leave, 65 days of maternity leave, and 10 days of special annual leave to “attend important obligations.” Either parent of a newborn child is entitled to one year’s unpaid annual leave after the expiry of the maternity leave period. Employers are also required to provide a safe workplace. The Employment Act does not cover emergency workers, air and sea crews, executive staff of any companand persons on on-call duty.

Maldives became a member of the International Labor Organization in 2008 and has ratified the eight core ILO Conventions. Maldives has not ratified the four priority governance ILO Conventions. In December 2009, the United States restored tariff preferences under the U.S. Generalized System of Preferences (GSP). The GSP facility to the Maldives was suspended in 1995 because Maldives did not have a mechanism to afford internationally recognized worker rights. Maldives is also eligible for Overseas Private Investment Credits.

12. OPIC and Other Investment Insurance Programs

Overseas Private Investment Corporation (OPIC) began operations in Maldives in 2011, but no projects have yet been identified. Maldives became the 165th member of the Multilateral Investment Guarantee Agency of the World Bank Group, on May 20, 2005.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) (M USD) 2016 USD 4,210 2016 USD 4.224 
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country (M USD, stock positions) 2017 USD 77.22 N/A N/A N/A
Host country’s FDI in the United States (M USD, stock positions) N/A N/A N/A N/A N/A
Total inbound stock of FDI as % host GDP N/A N/A N/A N/A N/A

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward USD 10,048 100% Total Outward Amount 100%
China USD 1,668 17% N/A Amount N/A
India USD 1,012 10% N/A Amount N/A
Singapore USD 976 10% N/A Amount N/A
British Virgin Islands USD 713 7% N/A Amount N/A
Sri Lanka USD 426 4% N/A Amount N/A
“0” reflects amounts rounded to +/- USD 500,000.

Source: Maldives Ministry of Economic Development

14. Contact for More Information

Partha Mazumdar
Economic Section Chief

2018 Investment Climate Statements: Maldives
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