DTIS, Volume I - Enhanced Integrated Framework (EIF)

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Table 3.11: Percentage share of Maldivian Imports from SAPTA members SAARC member 2000 2001 2002 2003 2004 2005 (Jan-Jun) % % % % % % Bangladesh 0 0 0 0 0 0 Bhutan 0 0 0 0 0 0 India 8.85 10.6 10.7 10.14 10.26 10.10 Nepal 0 0 0 0 0 0 Pakistan 0.32 0.38 0.39 0.37 0.34 0.40 Sri Lanka 13.07 13.07 15.19 13.74 10.67 5.30 Total 22.24 24.05 26.28 24.25 21.27 15.8 Source: Customs Services Import/Export Statistics, 2004 and own calculation Table 3.12: Percentage share of Maldivian Exports to SAPTA members SAARC member 2000 2001 2002 2003 2004 2005 (Jan-Jun) % % % % % % Bangladesh 0 0 0 0 0 0 Bhutan 0 0 0 0 0 0 India 0.31 0.37 0.13 0.31 0.37 0.61 Nepal 0 0 0 0 0 0 Pakistan 0 0 0 0 0 0 Sri Lanka 17.82 19.3 15.36 13.58 12.31 13.4 Total 18.13 19.67 15.49 13.89 12.68 14.01 Source: Customs Services Import/Export Statistics, 2004 and own calculation The SAARC countries have agreed to upgrade the SAPTA into a free trade area agreement and signed the Agreement on South Asian Free Trade Area (SAFTA) on 6 January 2004. The Agreement entered into force on 1 January 2006. The Agreement has four annexes. The Annex on areas of Technical Assistance has so far been agreed. Annexes on Sensitive Products (expected to be 20 per cent of trade and 30 per cent for least-developed countries), Rules of Origin and a Mechanism for Compensation of Revenue Loss for Least Developed Member States are still under negotiation. These three annexes will be crucially important for Maldives, if they are to derive any significant benefit from the SAFTA. For example if fish remains in the negative list as a sensitive product for Sri Lanka, that would remove the main product and main market from which Maldives could benefit. Furthermore if the Rules of Origin insist on high levels of local value added or transformation, Maldives will again be virtually unable to obtain any real benefit from the Agreement (other than on fish). The Agreement would not therefore provide any real opportunities for diversifying into new export areas. The Sensitive Products lists are to be reviewed every four years or earlier with a view to reducing the number of items. Other measures to complement the trade liberalization that members agreed to consider include the harmonization of standards and mutual recognition of tests and certification, customs simplification and harmonization and other measures to facilitate trade. Under the Trade Liberalization Programme scheduled for completion in ten years by 2016, the customs duties on products from the region will be progressively reduced and 33
emoved. However, in order to provide early benefit to the least developed member states, India, Pakistan and Sri Lanka are to bring down their customs duties on imports from these countries to 0 to 5 % by 1 January 2009. It should be noted that within the SAFTA arrangements, Maldives has successfully negotiated to continue to enjoy the privileges of an LDC even after graduation. Since the Maldives generates most of its government revenue from import duties, elimination of duties on around 20 per cent of imports will inevitably adversely affect government revenues. Government revenues on existing regional imports will be lost (static effects). 17 There will also be a loss of revenue on imports from other countries (dynamic effect) as buyers in Maldives switch to “cheaper” duty free regional imports. A 2004 report on the impact of SAFTA on Maldives calculated, on the basis of a partial equilibrium model, that the loss of total tariff revenue could be 26.7% of total customs duties. “This implies that the loss of government current revenues will be of the order of 7.0%.” 18 Some sectors of the economy, such as tourism and fishing, should benefit from lower prices on imports of inputs such as food imports and packing materials from regional trade partners like India and Sri Lanka. The construction sector should also be a beneficiary, thus improving the competitiveness of the economy through its imports, especially from India. On the export side, the preferential, eventually tariff-free, access to the SAFTA market represents new opportunities for developing export sectors. Currently, merchandise exports to the other SAARC members are limited – largely because of the low consumption of fish in those countries. Dried fish exports to Sri Lanka are a notable exception. The Agreement does however present an opportunity in principle for the Maldives to look at developing possible new export sectors. The SAFTA Agreement is restricted to the liberalization of trade in goods, though one of the stated objectives is the establishment of a framework for further regional cooperation – leaving the way open for agreements on such matters as trade in services in the future. There is still insufficient analysis and information available to be able to determine the long-term implications of SAFTA membership. However political commitment has been given, so Maldives has to undertake the necessary measures for implementation of its commitments and to instigate measures now to mitigate the threats and to seize the opportunities being created from membership. More detailed analysis is therefore required on these threats and opportunities. Regarding implementation commitments, the Customs Tariff will have to be modified to reflect a new column for qualifying SAFTA imports. This will have to be revised on an annual basis. Systems will have to be established concerning certificates of origin and notifications. New sources of 17 A detailed static and dynamic analysis of the impact of liberalisation on revenues is required (trade creation and trade diversion) using a partial equilibrium model of Maldives imports. 18 “Viability of Maldives’ Entry into SAFTA” by Michael Davenport, 2004 34
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FINAL R E P O R T Volume 1 MALDIVES
Page 3 and 4:
GSP HACCP HDFC HDI HIES HH HRD HS I
Page 5 and 6: TRIPS TRTA TSA TTMP UAE UK UNCTAD U
Page 7 and 8: CHAPTER 6: CUSTOMS SERVICES AND TRA
Page 9 and 10: major stakeholders as the basis of
Page 11 and 12: C. ECONOMIC TRENDS Buoyant GDP grow
Page 13 and 14: WTO members (through the Committee
Page 15 and 16: The recommendations cover these iss
Page 17 and 18: Requirements Action no. Action reco
Page 25 and 26: government, and lawmakers are elect
Page 27 and 28: . 4
Page 29 and 30: to Sri Lanka. However, by 2004 the
Page 31 and 32: This relatively high proportion of
Page 33 and 34: On an annual basis, total NFA of th
Page 35 and 36: elow provides data on the public in
Page 37 and 38: According to the estimates prepared
Page 39 and 40: Table 2.8: Damage to agricultural f
Page 41 and 42: II. Imports - Merchandise There has
Page 43 and 44: the relatively high rate of unemplo
Page 45 and 46: A. DESTINATION OF MERCHANDISE EXPOR
Page 47 and 48: Penetration of international market
Page 49 and 50: Overall, the importance of foreign
Page 51 and 52: on goods deemed luxury goods (e.g.
Page 53 and 54: the Japan and USA markets. 11 Fish
Page 55: The Modalities provide that the res
Page 59 and 60: EBA. Appropriate transition arrange
Page 61 and 62: Several provisions such as Article
Page 63 and 64: CHAPTER 4 POVERTY REDUCTION AND HUM
Page 65 and 66: Table 4.2: Poverty Gap Ratios per R
Page 67 and 68: produced locally and are readily av
Page 69 and 70: commerce, information and communica
Page 71 and 72: Table 4.3: Fishery Sector employmen
Page 73 and 74: This also requires policies that ta
Page 75 and 76: with routine functions of administe
Page 77 and 78: Applying for a license to invest in
Page 79 and 80: E. MINISTRY OF FISHERIES, AGRICULTU
Page 81 and 82: K. PRIVATE SECTOR STAKEHOLDERS Priv
Page 83 and 84: Overall, it is estimated that the c
Page 85 and 86: The cash is held and disbursed by t
Page 87 and 88: difficult to reach given the except
Page 89 and 90: system of micro-credit intermediari
Page 91 and 92: F. LAND, RAW MATERIALS AND SUPPLIES
Page 93 and 94: B. LABOUR MARKET REFORM About 44 pe
Page 95 and 96: Appendix The mixed record of the Ma
Page 97 and 98: legislation incorporates the initia
Page 99 and 100: CHAPTER 6 CUSTOMS SERVICES AND TRAN
Page 101 and 102: Maldives Port Authority • Respons
Page 103 and 104: the correct amount of customs duty
Page 105 and 106: suspense procedures, thus eliminati
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A new domestic terminal at MIA will
Page 109 and 110:
There is need to clarify MAC’s na
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Changes in the role and structure o
Page 113 and 114:
Significant improvements have been
Page 115 and 116:
CHAPTER 7 THE TOURISM SECTOR Chapte
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British market in 2001. In 2004, be
Page 119 and 120:
Similarly, considerable demand was
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for imports of support infrastructu
Page 123 and 124:
government revenues from the supply
Page 125 and 126:
number of trainees that have been t
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established as a quality tourism de
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Maldives' unspoiled marine environm
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The Faculty works very closely with
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TOURISM ACT A key objective of the
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HRD studies and conduct of necessar
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D. ESTABLISH AN ENABLING BUSINESS E
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Main Recommendation No. 5: review a
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Main Recommendation No. 6: Scale-up
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CHAPTER 8 FISHERY SECTOR Chapter Pl
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processing under-performing more th
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per cent - see Table 8.4. The secto
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In the light of these market trends
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documentation, and administration.
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monitoring and evaluation dates fro
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and catering industry chefs demand
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It is expected that the trial fishe
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• Can seaming and retorting; •
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DTIS, Volume I - Enhanced Integrated Framework (EIF)

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