DTIS, Volume I - Enhanced Integrated Framework (EIF)

government revenues from the supply of electricity, water and sewerage,
telecommunication, etc.
GOVERNMENT EXPENDITURES
As far as government expenditures on tourism development are concerned, the evidence
suggests that this contribution is extremely limited. Indeed, the government uses the bulk
of the revenue generated from tourism for general economic development purposes.
In 2004, total government expenditure amounted to about Rf. 3,786 million or USD 297
million. Of this amount, only a small fraction was allocated directly to the tourism sector,
i.e. USD 4.1 million (Rf. 52.5 million). This corresponds to less than 1.5 per cent of
public expenditure and covers such costs as the operation of the Ministry of Tourism
(now the Ministry of tourism and Civil Aviation), the Maldives Tourism Promotion
Board (MTPB), the Tourism Information Office at Frankfurt in Germany, and a small
Tourism Promotion Fund established by the MTPB.
If total direct government expenditure on tourism is compared to the number of
international tourist arrivals, the expenditure corresponds to about USD 6.5 spent on
tourism promotion and administration per visiting tourist. By comparison, each visiting
tourist in 2004 generated an average of USD 143 in direct government revenue. This
figure increases to USD 169 if indirect revenues are included, with total revenue to the
Maldivian economy being USD 1,350 per tourist.
However, the government budget also includes expenditure that indirectly benefits
tourism. For instance, the cost of staff salaries and other operational costs of the Faculty
of Hospitality and Tourism Studies are included under the educational budget. Similarly,
the government also spends on servicing the tourism sector though airport operation,
aviation, immigration, customs, etc.
G. CONTRIBUTION TO EMPLOYMENT
While available statistics on direct and indirect employment in tourism are not
sufficiently detailed and accurate, employment in the tourism sector is estimated at
between 20,000 to 25,000 persons. Of this number, some 11,500 are expatriates. Since
the law requires tourist resorts to employ a maximum of 50 per cent expatriate staff, there
is perhaps as many as 12,000 Maldivians employed directly in the tourism sector,
constituting around 14 per cent of the total Maldivian workforce.
However, many more are employed indirectly in other sectors providing services and
goods to tourism business operators, e.g. construction, air and sea transport, trade, and
government services such as customs, immigration, airports, etc. The Ministry of Higher
Education, Employment, Labour and Social Security has estimated the tourism
employment multiplier effect to be in the range of 4-5. Other estimates are 1-2.
Whatever it is, it is clear that tourism makes a significant contribution to employment, the
generation of income for the local population and poverty reduction. It is noteworthy that
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