Minister: FTA with China will create ‘unprecedented opportunities’ for Maldivian traders

The free trade agreement between Maldives and China, which is set to take force on January 1, will create unprecedented opportunities for Maldivian traders, says Maldivian economic minister Mohamed Saeed.

Speaking during a ceremony held on Monday afternoon to celebrate the FTA, Saeed said the agreement will result in up to 90 percent in duty exemptions on many of Maldives’ imports within five years.

He also addressed concerns raised by the opposition that the FTA will result in loss of Maldives’ traditional markets.

Saeed said that the traditional markets include neighboring countries such as India and the United Arab Emirates (UAE).

Saeed noted that the government is negotiating an FTA with India, and signed a preferential trade agreement with Turkiye back in November.

“This allows for goods to be imported into Maldives at zero tariff. I do not believe this will result in loss of traditional markets,” he said.

Saeed noted that the opposition has also expressed concern over the loss of revenue from import duty due to the move.

He said that the state will earn revenue in other ways.

Explaining further, Saeed said that the agreement will save up to MVR 600,000 in import duty on goods to build a guesthouse in an island.

He said that while the state will lose this money in import duty revenue, it will earn the money in GST and other taxes once the guesthouse is up and running.

Saeed said the guesthouse will also create employment opportunities and boost economic activity.

“By exempting duty, I believe the government is offering a discount of MVR 500,000-MVR 600,000 to an entrepreneur who is building a guesthouse in a Maldivian island,” he said.

Saeed said that having a free trade agreement with the biggest global market is a huge opportunity for a small country such as the Maldives.

“This allows Maldives to export all the fish we catch, all the seafood, to the biggest market in the world at zero tariff,” he said.

Saeed described Maldivian traders as “visionary and hardworking”, and urged them to make the best use of the FTA.

“The opportunities this FTA will create – this is historic. This is something very strategic. These opportunities are something that will be celebrated in the future,” he said.

“My advice to you is to make the best possible use of this opportunity.”

The FTA, which takes effect on Wednesday, will allow Maldives to export 296 fish products to China at zero tariff.

The FTA with China was signed in December 2014 during former president Abdulla Yameen Abdul Gayoom’s administration after two years of negotiations. The agreement received parliamentary approval three years later, in November 2017.

The agreement wasn’t implemented during former president Ibrahim Mohamed Solih’s administration. But incumbent president Dr. Mohamed Muizzu, who replaced Solih in 2023, expressed keenness to implementing the agreement.

The annual trade between Maldives and China is valued at USD 700 million. The Maldivian administration expects the FTA will boost trade to USD 1 billion per annum.