DTIS, Volume I - Enhanced Integrated Framework (EIF)

fish and other marine products account for about two thirds. Moreover, tourism earnings
have shown a formidable growth pattern with an average annual increase over the past
two decades of almost 14 percent since 1985, when tourism receipts were estimated at
USD 41.4 million, increasing to USD 88.7 million in 1990, USD 210.7 million in 1995,
USD 320 in 2000 and to almost USD 480 million in 2004. The average annual increase in
tourism earnings is even higher than the corresponding average annual increase in tourist
arrivals of 9.3 per cent due to an increase in the estimated daily expenditure per tourists
from USD 39 in 1985 to almost USD 94 in 2004. With some 616,000 arrivals in 2004,
this corresponds to an average total expenditure per tourist of USD 775.
There are grounds for believing that the MMA estimates undervalue earnings from
tourism in the Maldives. This has also been confirmed and appreciated by the MMA.
For example, a 1997 visitor expenditure survey by the Asian Development Bank showed
average daily expenditure, excluding international air transport, of USD 120 for package
tourists and USD 152 for non-package tourists. Similarly, the ADB study estimated total
average expenditure per tourist at USD 1,367 excluding international air transport. Even
without considering the effect of inflation, the estimates made by the ADB study seem to
confirm that the MMA estimates are low.
Overall, the importance of foreign exchange earnings from international tourism for the
balance of payments of the Maldives cannot be overstated. The Maldives had a net deficit
of just under USD 260 million on merchandise trade in 2003. Without the foreign
exchange earnings from tourism, this deficit would not have been covered.
E. FOREIGN EXCHANGE LEAKAGES – IMPORTS
The need to import goods and services to support the tourism industry is traditionally
referred to as leakages from the foreign exchange earnings of the sector. In the case of the
Maldives, the import content of the tourism sector is high for both capital investment and
operations.
The primary operational leakages include:
1 Imports of consumables such as food and beverage, cleaning materials and
equipment for leisure activities, etc.
2 Remittances by expatriate staff.
3 Payments to service foreign equity and dept capital.
A 2000 UNDP/World Tourism Organization study of social, economic and
environmental impacts of tourism in the Maldives estimates that one third of the gross
foreign exchange earnings from tourism are used for imports. Using the ADB Tourist
Expenditure Survey findings, the net foreign exchange earning in 2004 would then be
USD 562 million.
In addition to the operational leakages, there are capital imports in connection with the
establishment of new tourist resorts or upgrading of existing facilities, as well as the need
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