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The Economic Activity of Maldives

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The economy of Maldives is largely dependent on the tourism and fishing industries, with tourism consisting more than 60% of the country’s foreign exchange earnings, and fishing largely contributing to economic growth. Tourism as the main industry also contributes about one-fifth of the total gross domestic product (GDP). Many of the business ventures in the country are undertaken in line with the two industries like resort management, indigenous handicrafts making or exports of dried and canned fish.

The government has been promoting local and foreign investments to boost economic development. It has set up the Foreign Investment Services Bureau to provide duty exemptions and other benefits to investors and 100% foreign business ownership privileges. Among the foreign investment activities allowed by the government are in the areas of banking, resort management, accounting, air transport, telecommunications, manufacturing, and courier services.

Some industries also contribute, but not much, to the economy. They are garment production, handicrafts and boat building. Building of boats or dhoni, has been providing many people with good source of livelihood.

Because of the front-running role of tourism in the economic growth, it leads the providers of tax for the government revenues. Other major taxpayers are state-owned enterprises, resorts-lease rents, administrative fees, royalties and work permits, tax on bank profits, and interest receipts. The government also imposes such indirect taxes as vessel fees, stamp duties and vehicle fees.

The currency of Maldives is Rufiyaa (MVR) with an exchange rate of 12.79 Rufiyaa MVR to one US dollar. This is used in the country’s overseas trade and banking industry led by the Bank of Maldives, its first commercial bank, which has branches all over the island-nation, three of which are in the capital city of Male and 12 in various atolls, one in the Male International Airport, and another in Villingili.