In ancient times the Maldives were renowned for cowry shells, coir rope, dried tuna fish (Maldive Fish),ambergris (Maavaharu) and coco de mer (Tavakkaashi). Local and foreign trading ships used to load these products in Sri Lanka and transport them to other harbors in the Indian Ocean. From the 2nd century AD the islands were known as the ‘Money Isles’ by the Arabs who dominated the Indian Ocean traderoutes, The Maldives provided enormous quantities of cowry shells, an international currency of the early ages. The cowry is now the symbol of the Maldives Monetary Authority.
The Maldivian Government began an economic reform program in 1989, initially by lifting import quotas and opening some exports to the private sector. Subsequently, it has liberalized regulations to allow more foreign investment. Real GDP growth averaged over 7.5% per year for more than a decade. Today, the Maldives’ largest industry is tourism, accounting for 28% of GDP and more than 60% of the Maldives’ foreign exchange receipts. Fishing is the second leading sector.
In late December 2004, the major tsunami left more than 100 dead, 12,000 displaced, and property damage exceeding $400 million. As a result of the tsunami, the GDP contracted by about 3.6% in 2005. A rebound in tourism, post-tsunami reconstruction, and development of new resorts helped the economy recover quickly and showed a 18% increase on 2006. 2007 estimates show the Maldives enjoy the highest GDP per capita $4,600 (2007 est) amongst south Asian countries excluding rich Persian Gulf countries.
New banknotes Maldives released 2015
The Maldives was largely terra incognita for tourists until the early 1970s. Strewn across the equator in the Indian Ocean, the Maldives archipelago possesses an exceptionally unique geography as a small island country. Nature has fragmented the archipelago into 1,190 tiny islands that occupy a mere one per cent of its 90,000 km2 territory. Only 185 islands are home to its 300,000 population, while the other islands are used entirely for economic purposes of which tourism and agriculture are the most dominant.Tourism accounts for 28% of GDP and more than 60% of the Maldives’ foreign exchange receipts. Over 90% of government tax revenue comes from import duties and tourism-related taxes. The development of tourism has fostered the overall growth of the country’s economy. It has created direct and indirect employment and income generation opportunities in other related industries. The first tourist resorts were opened in 1972 with Bandos island resort and Kurumba Village.
According to the Ministry of Tourism website, the emergence of tourism in 1972 transformed the economy of the Maldives, moving rapidly from the dependence on the fisheries sector to the tourism sector. Just in three and a half decades, the industry has become the main source of income and livelihood of the people of the Maldives. Tourism is also the country’s biggest foreign currency earner and the single largest contributor to the GDP. Today, there are 89 resorts in the Maldives with a bed capacity of over 17,000, providing world class facilities for tourists whose annual arrival figure exceeds 600,000.
The number of resorts has increased from 2 to 92 between 1972 and 2007. As at 2007, over 8,380,000 tourists had visited Maldives.
Practically all visitors arrive at Male’ International Airport, located on Hulhule’ Island right next to the capital Male’. The airport is served by a wide array of flights to India, Sri Lanka, Dubai and major airports in South-East Asia, as well as an increasing number of charters from Europe. Many flights stop in Colombo (Sri Lanka) on the way.
Gan Airport, on the southern atoll of Addu, also serves an international flight to Milan several times a week.
For many centuries the Maldivian economy was entirely dependent on fishing and other marine products. Fishing remains the main occupation of the people and the government gives special priority to the development of the fisheries sector.
The mechanization of the traditional fishing boat called dhoni in 1974 was a major milestone in the development of the fisheries industry and the country’s economy in general. A fish canning plant was installed in the island of Felivaru in 1977, as a joint venture with a Japanese firm. In 1979, a Fisheries Advisory Board was set up with the mandate of advising the government on policy guidelines for the overall development of the fisheries sector. Manpower development programs were begun in the early 1980s, and fisheries education was incorporated into the school curriculum. Fish aggregating devices and navigational aids were located at various strategic points. Moreover, the opening up of the Exclusive Economic Zone(EEZ) of the Maldives for fisheries has further enhanced the growth of the fisheries sector. Today, fisheries contribute over fifteen percent of the country’s GDP and engage about thirty percent of the country’s work force. It is also the second-largest foreign exchange earner after tourism.
Agriculture and Cottage industries
Agriculture and manufacturing continue to play a lesser role in the economy, constrained by the limited availability of cultivable land and the shortage of domestic labor. Most staple foods must be imported. Industry, which consists mainly of garment production, boat building, and handicrafts, accounts for about 7% of GDP. The development of the tourism sector gave a major boost to the country’s fledgling traditional cottage industries such as mat weaving, lacquer work, handicraft, and coir rope making. New industries that have since emerged include printing, production of PVC pipes, brick making, marine engine repairs, bottling of aerated water, and garment production.
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