Maldives

The Maldives is an island state in the Indian Ocean, southwest of Sri Lanka. Everything here is located on small but very picturesque areas of land — atolls, and this is truly a paradise on our planet.

General information

Official name of the country — Republic of Maldives. The state occupies an area of 298 km² (186th in the world). The population is approximately 519,438 people (as of early 2024). The name "Maldives" comes from the Hindu words «mahal» (palace) and "diva" (island).

Maldivians — mixed race (main ethnic types - Indians, Sinhalese, Arabs, East Africans and Malaysians). A third of the population lives in the capital, Male. Many of the islands of the Maldives are uninhabited.

Official language — Dhivehi, an Indo-Aryan language close to Sinhala, with borrowings from Arabic and English. Since the 18th century, the original writing has been used — tana, read from right to left. English is the second language. Also, most educated people speak Arabic.

Sunni Islam is the state religion. Under the 1997 constitution, freedom of religion is limited, so Islam is the only religion accepted publicly. Consequently, the vast majority of the population professes adherence to Islam.

The official currency of the country is the Maldivian Rufiyaa.

Male City — the capital of the Republic of Maldives, as well as the largest settlement in the archipelago. It is one of the most densely populated cities in the world. The capital Male has a large number of tourist attractions and entertainment and recreational complexes. Also in the city there is a central harbor and a port, where various types of commercial proposals are being implemented.

The headquarters of the Maldivian airlines Maldivian and Villa Air are based in Male.

Administrative-territorial division of the country: 7 provinces, including 20 administrative units — Male city and the capitals of 19 atolls.

History, geography, culture, mentality

The officially documented history of the Maldives begins in 1153, when the inhabitants of the archipelago converted to Islam. From this moment on, all events taking place in the country are recorded in the history of the Sultanate in Arabic.

Little is known about older historical events, since no historical documents remain.

One of the famous researchers of the Maldives archipelago was the Norwegian archaeologist Thor Heyerdahl, who described in detail all the discoveries made on the islands in his book “The Maldives Mystery.”

There is a legend on the islands that says that in this area around the 2nd century BC. lived ancient people called Redins. This legend is supported by ceramic fragments found by archaeologists.

Around 500 BC. From the territory of modern Sri Lanka, ships with Buddhists, who settled on the islands and built sacred temples in honor of Buddha, moored to the shores of the Maldivian archipelago.

Due to the fact that the Maldives were on the route of many sailors, the ships of ancient sailors often visited the archipelago. Most often these ships were from Egypt, the Roman Empire, Persia, China and India.

Throughout the 1st century, the inhabitants of the Maldives archipelago worked closely with the inhabitants of China and Africa. The island and China are connected by close trade ties that began in 412. The Arabs, who often visited the Maldives, in turn left a huge number of references and evidence about Maldivian culture.

In 1153, one of the Arab missionaries preaching Islam landed on the shores of the Maldives. He spent a lot of time preaching and spoke in detail about his faith. In a short time, the inhabitants of the islands converted to Islam. The preacher himself introduced himself as Muhammad ul-Abdala and declared himself the Sultan, subsequently founding a dynasty on the islands, which was in power in the Maldives for a long period.

These events lead to the Maldives entering the era of the sultans. Throughout the era of the sultanates, there were 6 dynasties in power on the islands, of which approximately 90 sultans and sultanas were replaced.

The first Europeans landed on the shores of the Maldives only in 1507. 20 years later, the French arrived on the islands.

In 1517, the Portuguese sailed to the Maldives and built a trading port here. The Maldivians, not accustomed to obeying anyone, united with the merchants of Kannakur and exterminated all the Portuguese who arrived.

The Portuguese sail to the archipelago again 40 years later, conquer it and try to spread Christianity. Their power in the Maldives lasted 15 years and in 1573, as a result of the uprising of the islanders, more than 300 Portuguese were killed and the survivors were expelled from the archipelago.

In the mid-17th century, the Dutch government tried to take control of the Maldives. They also failed to maintain power over the islands.

In 1796, the British managed to conquer the archipelago, and the Maldivian sultans were forced to pay an annual tribute to the new government until 1947.

During the twentieth century, a large number of conspiracies have been carried out in the Maldives, as a result of which there is a constant change of sultans. The sultanate was abolished in 1953 and restored a year later. Over the next few years, several islands saw rapid economic development, leading to the creation of the breakaway republic of the United Republic of Suvadive. In 1959, she expressed a desire to secede from Male, but she did not succeed in completely separating from the Maldivian state.

Residents of the Maldives rioted in 1964, during which the airport was destroyed and the residence of the British administrator was seized. After these events, England made concessions to the islanders and granted the Maldives full independence in 1965. Almost immediately, the reunification of the Suvadive Republic with the rest of the Maldives took place. A few years later, the British government liquidated its military base on the archipelago, after which tourism was actively developing on the islands.

In 1968, the state was officially renamed the Republic of Maldives. In the same year, Ibrahim Nasir, who was in power until 1974, became the leader of the country.

In 1978, Mamoon Abdul Gayoom, who ruled the country for 30 years, was appointed president of the Maldives. Despite several unsuccessful attempts to carry out a coup d'état, Gayoom's rule had a positive impact on the development and prosperity of the archipelago.

2008 was marked in the history of the country by the fact that presidential elections were held, in which residents themselves chose the leader of their country. After the elections, Mohamed Nasheed took over as president.

An interesting fact is that in 2009, the Cabinet of Ministers of the Maldives held an underwater meeting, during which a document was signed calling on all countries of the world to stop emitting hydrocarbons into the atmosphere. With such actions, the government of the archipelago is trying to attract public attention to the problem of climate change on the planet. Due to climate warming, sea levels are rising. This could cause the flooding of many islands in the Maldives archipelago within the next 100 years.

The Maldives belongs to the South Asian region. Located in the equatorial waters of the Indian Ocean, approximately 450 km southwest of the southern tip of Hindustan. The western coast is washed by the waters of the Arabian Sea, and its waters also include the interior of the Maldives. At the same time, the eastern coast of the archipelago is washed by the waters of the Laccadive Sea.

The archipelago is a chain of 26 atolls stretching strictly from north to south, which include 1192 coral islets. The islands do not rise much above sea level: the highest point of the archipelago — on the southern Addu (Sienu) atoll — 2.4 m.

Historically, the Maldives was an important crossroads in the Indian Ocean, so Maldivian culture is a mixture of the characteristics of the different peoples who have arrived here over many centuries. The influences of India, Sri Lanka, Arabia, Persia, Indonesia, Malaysia and Africa are evident in the country's unique culture. The Maldivians have internalized these influences and created their own cultural identity. Many of the country's traditions are closely related to the sea and the fact that life depends on the sea around it.

Since the Republic of Maldives is an Islamic state, foreigners must carefully observe local laws and customs. It is prohibited here to drink alcohol in public places (outside the resort area), nude swimming (as well as topless) on all islands of the archipelago, fishing in the immediate vicinity of the shore, and it is prohibited to catch and destroy living or dead corals. When walking around Male, it is recommended to dress in accordance with Muslim ideas about morality: long trousers or a skirt, a shirt or blouse.

Power

Presidential republic. Head of state and executive power — the president, who heads the Cabinet of Ministers and appoints its members. The president is elected by parliament, but the candidate must be approved in a national referendum and receive at least 51% of the vote. The total presidential term is not limited.

The highest legislative body is the unicameral parliament — Mejlis, elected for a five-year term by direct vote. It consists of 50 deputies (42 deputies are elected and 8 deputies are appointed by the president).

Economy

Unique geographic and demographic characteristics pose significant development challenges for the Maldives (eg, provision of social services, development of transport infrastructure, access to markets). However, despite these challenges, the Maldives has achieved incredible levels of economic growth and development in recent decades.

The tourism industry makes the largest contribution to the economy of the Maldives, providing more than 28% of GDP and 60% of foreign exchange. In 2022, the IMF pegged the country's growth at 10.5%, driven by the resumption of tourism activity following the COVID-19 pandemic and related impacts on related sectors such as transport and trade. According to the IMF, GDP is projected to continue growing by 5.7% in 2024.

Agriculture is the source of income for about a quarter of the rural workforce, and domestic products have significantly increased market share in recent years. Although arable topsoil is minimal on many islands, local farmers have begun to use organic hydroponic systems, producing higher quality produce.

The agricultural sector accounts for 5.3% of GDP and about 8% of total employment (World Bank, latest data available). The agricultural sector of the Maldives is based mainly on the cultivation of coconuts and other tree crops, with only about 4,000 hectares under other agricultural crops (FAO). Most of the islands' agricultural products are used for local consumption on the islands and atolls.

Fishing is the second largest industry in the Maldives after tourism, with over 20% of the Maldives workforce employed in the fishing sector, and fish and fish products account for over 98% of the country's physical exports.

 The industrial sector is relatively small, accounting for 8.9% of GDP and 19% of employment. Traditional industries include shipbuilding and crafts, with fish processing being the most important. Overall, the manufacturing sector accounts for only 2% of GDP.

Trade and economic ties between Russia and the Maldives are limited. The volume of mutual trade at the end of 2021 amounted to 6.137 million US dollars (Russian exports 6.13 million US dollars, imports 6.1 thousand US dollars). The Maldives imports metallurgical products, wood and wood products from Russia. The bulk of Russian imports consisted of fish supplies.

Business climate

In the Maldives, there are two options for foreigners to open a company:

1. Opening a joint venture with a state or private structure (individual or legal entity). When opening a joint venture with the participation of the state and a foreigner, the absolute majority of the shares (up to 99%) may belong to the foreigner, however, depending on the volume of investment, he is obliged to pay the appropriate tax to the government.
2. Opening a joint venture with the participation of a local legal entity or individual. In this case, the foreigner does not pay tax, but he can have no more than 49% of the shares of the acquired company.

To obtain a work permit, the employer, if there are quotas, must write a letter and provide an agreement between him and the hired employee to the Ministry of Labor of the Maldives. It is also necessary to provide a deposit for the employee’s flight to and from the country. If the decision is positive, the hired person is issued a visa for one year; Subsequently, the visa can be extended for a period of one to five years, depending on the agreements between the employer and employee.

Investment climate

Maldives allows foreign investors to register companies and partnerships, but does not allow them to register cooperative societies or as a sole proprietor.

Foreign investment in some sectors remains limited (e.g. wholesale and retail trade, logistics, catering, broadcasting, rental and leasing, etc.), while others have restrictions on ownership of foreign capital (production of fish and agricultural products - 75%, construction of buildings and civil engineering - 65%, maritime transport services - 49%, air transport services - 65%, etc.). 

Sale of land to foreigners is prohibited. The transfer of real estate to a foreign citizen for temporary management, for example a small island, is carried out on the basis of rent, which is issued for a period of 35 years with the possibility of subsequent extension.

The rent is paid to the owner of the island, who in turn pays a tax (depending on the value of the rent) to the Maldivian government.

In case of purchasing a hotel, villa, etc., the transaction is concluded for a period of up to 50 years.

The following conditions apply to foreign investment in the construction sector in accordance with the Regulation on Foreign Contractors:

• Construction companies valued at less than US$5,000,000 must be at least 35% Maldivian owned.
• Construction companies valued at more than US$5,000,000 may be 100% foreign owned.

The Ministry of Economic Development checks and reviews all foreign investment proposals. It also manages the process of business registration, permits, licenses and registration of logos, trade markets, seals, etc.

Business and investment support structures

There are several structures and mechanisms to support business and investment in the Maldives:

• Maldives Investment Corporation (MIFCO). This is a government organization that provides support to investors and entrepreneurs interested in investing in the Maldives. MIFCO provides advice, assistance in preparing business plans, and also facilitates interaction with other government agencies and organizations.
• Ministry of Economic Development & Trade. The Ministry of Economic Development provides a variety of services and support programs for investors and entrepreneurs. It is also a trade regulator and provides business registration services to the public.
• International Financial Corporate Center (IFC). This center provides support to international investors interested in investing in the Maldives. He provides investment advice and also helps in solving various business and investment related issues.
• Maldives Entrepreneurs Association (MECA). It is a non-profit organization that brings together entrepreneurs and represents their interests to the government and other stakeholders. MECA also provides a variety of support services to its members, including training, consultation and networking.
• Maldives National Chamber of Commerce and Industry (MNCCI). A private sector organization established for the social and economic development of the Maldives through the promotion of trade and industry. MNCCI also coordinates many of its activities and functions with other similar national organizations, including the Maldives Association of the Tourism Industry (MATI) and the Maldives Association of the Construction Industry (MACI).