Maldives: Small nation with great potential

Thursday, 23 January 2014 00:00 -     - {{hitsCtrl.values.hits}}

Sri Lanka-Maldives relations have always received a great deal of attention in Maldivian trade as well as Sri Lankan trade. The close economic cooperation has taken the relations between Sri Lanka and Maldives to new heights. Over the years both countries have developed a unique friendship due to the mutual cooperation extended. Sri Lanka-Maldives relations have been revitalised with the recent visit of the Maldivian President Abdulla Yameen Abdul Gayoom to Sri Lanka. Abdulla Yameen, the President of the¬†Republic of the Maldives,¬†made his first official visit to Sri Lanka on 21¬†January 2014, upon an invitation made by the Sri Lankan President Mahinda Rajapaksa. This visit is identified as a remarkable milestone in Sri Lanka-Maldivian relationship as it provides ample space to renew bilateral relations in trade and economics. Strengthening trade ties President Yameen has shown great deal of interest in strengthening Sri Lanka-Maldives trade relations over the last two decades. During his tenure as the Minister of Trade and Industries, he has extended valuable cooperation in enhancing trade relations with Sri Lanka. Moreover, he has brought change and modernisation to Maldivian trade and attracted more investment to the country as the Minister of Trade and Industries. I have personally encountered the cooperation extended by President Abdulla Yameen Abdul Gayoom as the Minister of Trade and Industries during my stay in Maldives from 1995 to 1997 as the Director of Sri Lanka Trade Centre in Maldives. Early relations The early relations between Maldives and Sri Lanka dates back a several centuries. Geography has undoubtedly favoured the two countries in developing a fraternal bonhomie. Located almost seven hundred kilometers south west of Sri Lanka, Maldives identifies Sri Lanka as its geographically closest neighbour and an important ally in international forum. Sri Lanka has been a strong influence to Maldives from early times.¬†The cultural and linguistic factors of Maldives thus reveal that early settlers of Maldives were of South Indian origin and from Sri Lanka. The great Sri Lankan chronicle Mahavamsa describes Maldives as¬†Mahiladvipika, an island to which some troupes of Prince Vijaya drifted to, establishing early settlement in the archipelago around 500 B.C.¬†Sharing common attributes of culture, linguistics and traditions, Sri Lanka and Maldives have evolved their bilateral relations into new dimensions with time. Enriched with natural resources and blessed with a strategic location in the Indian Ocean, both islands have identified themselves as valued trading partners. The mutual cooperation as well as diversification of trade has taken a strong foothold in the bilateral relations between Sri Lanka and Maldives. A leading trading partner Sri Lanka has been trading with the Republic of Maldives from ancient times as one of the leading trading partners of Sri Lanka. Most of the old generation of this country can still recall the Maldivian traders who visited Sri Lanka in their traditional Dohni, the Maldivian sails to sell sweets such as ‚ÄúBondi Aluwa‚ÄĚ and ‚ÄúRiya Hakuru‚ÄĚ. Nevertheless today, the total trade pattern of Sri Lanka and Maldives has been subjected to massive change. The economy of Maldives is an open economy based on free enterprises. Most of the production and commercial units are privately owned. Nevertheless, the Government of Maldives has established its own enterprises in the field of fishing industry, which is one of its largest and prominent fields due to strategic reasons. The Maldivian economy is stable and growing at a 4% annual growth rate. Moreover, the Maldivian government has formulated micro-economic policies and created an environment conducive for the growth of their economy in order to encourage the private sector. Priority market Today, the Republic of Maldives is a priority market for Sri Lankan products and services. Even though the Maldivian market is considerably small with a population of nearly¬†390,000,¬†the potential for Sri Lankan products is high compared to some other markets. Furthermore, Sri Lanka has also been an important trading partner for Maldives. Today, Sri Lanka exports nearly 250 to 300 products to Maldives. The most important product sectors exported to Maldives are agricultural products, fruits and vegetable, electrical items, construction products, confectionary items, mineral water, tea, wooden furniture, etc. Maldives is the leading export market for dried ice, mineral water, oxygen and construction products amidst which dried fish, famous Maldivian fish and canned fish remain Sri Lanka‚Äôs leading imports from the Maldives. A significant feature of the exports in product sectors is the large vegetable and fruit market of Maldives which is only beaten by Sri Lanka‚Äôs vegetable and fruit exports to the Middle East. Sri Lanka‚Äôs exports Sri Lanka‚Äôs exports to Maldives have had fluctuations. The statistical data illustrates that in 2004, Sri Lankan exports to Maldives was approximately US$ 61 million which Sri Lanka has failed to reach over the last 10 years. Moreover, the position of Maldives in the Sri Lankan export rankings too has had a significant drop. In mid-1990s, Maldives was the 10th or 12th¬†leading market of Sri Lankan exports which is now below the 25th position. Sri Lanka has been the major supplier to Maldives in 1980‚Äôs but gradually over the years the Sri Lankan market share in Maldivian trade has decreased. Today, the South Asian countries cover over 50% of imports to Maldives, yet Sri Lanka barely manages only a share of 5%. During my tenure at the Sri Lankan Trade Centre in Maldives from 1995 to 1997, I managed to compile a complete market survey for agricultural products in Maldives which covered the entire gamut of agriculture in Maldives. Through the above, I highlighted the future threats as well as the challenges faced by Sri Lanka with its exports to Maldives. Although this survey was carried out to fulfil the board decisions and discussed at various forums,¬†no steps were taken to address the challenges and threats faced by Sri Lankan exports to Maldives due to unknown reasons. Significant feature As mentioned above, today Sri Lanka exports nearly 200 to 250 product range to Maldives. This is a significant feature which is not seen in Sri Lanka‚Äôs trade with any other leading market. After all, Maldives is the ideal market for SMEs. Furthermore, the trade statistics reveal that majority of Sri Lankan supplies to Maldives are SMEs. After all, it should be taken to notice that Maldives is a country with a conducive environment to trade with very less traffic barriers. Even the small land area of Maldives further facilitate convenience in trade as the purchasing offices are located within the two square meter area of Male, the Capital of Maldives where business visits could be concluded covering all offices within two days. Lifestyle and tourism The potential of the Maldivian market is mainly based on two factors. One is the development of the lifestyle of the Maldivian people and the other is the rapid development of its tourist industry. The market segments can be divided into three main sectors such as the tourist sector, the local Maldivian community and expatiates from South Asia, especially India, Pakistan, Bangladesh and Sri Lanka. Therefore, Sri Lanka should maintain its ability to serve all these sectors in trading with Maldives. Even today, Sri Lanka has a great opportunity in expanding her market share with Maldives by increasing existing exports as well as introducing new products to the Maldivian market as the Maldivian buyers still hold some preference in trading with Sri Lanka due to the traditional relationship maintained over the years. Moreover, the products sold in Maldives hold a great similarity to the Sri Lankan taste in design, size, etc., due to the common cultural, linguistic and traditional attributes shared between the nations from early times. Imports from Sri Lanka, too hold an importance to the Maldivians due Sri Lanka‚Äôs close proximity associated with the strategic location of both countries. Maldives is a country with robust development relative to its demography with rapid modification in the lifestyle of its people. These factors should be taken into concern by the Sri Lankan suppliers in trading with Maldives. This is a time where most of the Maldivians are moving from price consciousness to brand consciousness. The best example being mineral water products where world famous brands of mineral water like Evian and Perrier are freely available in the supermarket chain of State Trading Organisation. Therefore, the suppliers should divert their attention more to the quality and the requirements of buyers. Sri Lanka-Maldives Business Council The establishment of the Sri Lanka-Maldives Business Council is a significant step taken by the business community. It is a timely need for the council to coordinate and address the difficulties faced by the exporters. The Business Council could easily collaborate with the Maldivian National Chamber of Commerce and Industries, which is the leading Chamber in Maldives. Sri Lanka Trade Centre (SLTC) in Maldives was established by the Sri Lanka Export Development Board in 1993 with the objectives of promoting and developing Sri Lankan exports to Maldives. It was closed down in 2004 due to various reasons beyond the national interest. It was a known factor that SLTC played a huge role to promote and protect Sri Lanka‚Äôs interest in investment, tourism as well as trade with Maldives. Thus, it is understood that necessary steps should be taken to re-establish the Sri Lanka Trade Centre in Maldives by the new Chairman of Sri Lanka Export Development Board with the support of business community. Great opportunities In addition to the export trade, there are great opportunities and ample space available to further strengthen the economic ties between both countries. Development of cooperation in the tourist industry and encouragement for joint ventures are the key areas that need more concern in enhancing relations. It is also important to explore the possibilities of obtaining licence to fish in the Exclusive Economic Zone of Maldives. The issuing of these licences permits fishing in the sea area beyond 75 miles from the baselines of the islands situated at the outer edge of the atolls of the Republic of Maldives. It is of no doubt that the new President of Maldives has vast experience on trade and great interest in developing economic cooperation. Thus, this visit of the Maldivian President to Sri Lanka is the best opportunity to forge new economic ties with Maldives whilst exploring new paths in trade and well as strengthening the already-existing trade ties.   (The writer is the retired former Head of Corporate Affairs and Communications- Sri Lanka Export Development Board and Ex-Director of Sri Lanka Trade Centre in Maldives . He can be reached at t.k.premadasa@gmail.com.)

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