DTIS, Volume I - Enhanced Integrated Framework (EIF)

including natural disasters. But many of these investors source their insurance needs
offshore in more competitive markets.
N. DEVELOPMENT COOPERATION
Over the years, the Maldives has received assistance from multinational development
organizations, including Asian Development Bank (ADB), Islamic Development Bank
(IDB), the World Bank Group, and the UN Development Programme (UNDP). Bilateral
partners include the EU, Kuwait, South Korea, Malaysia, New Zealand, Australia,
Norway, OPEC, Saudi Arabia, Singapore, USA, Canada, China and Egypt.
International NGOs such as the International Red Crescent Federation are significant
actors in post- tsunami reconstruction and recovery activities.
International assistance has focused primarily on projects relating to development of
infrastructure such as airport upgrading, power generation, water supply and sewage
disposal, fisheries development, communication, environment conservation and projects
in the social sector such as education, training, and medical facilities. Assistance through
the UNDP and other UN organizations has also focused on regional development and
regional imbalances.
It is important not to underestimate the impact of development cooperation and technical
assistance on the business environment, particularly in a small economy such as that of
the Maldives.
II. Assessment of the Business Environment
The business environment in the Maldives is liberal – the result of which is particularly
visible in the tourism sector. As a result, the Maldives comes out fairly well in the World
Bank ‘Doing Business Survey’ of such issues as ease of entry and establishment or free
repatriation of profits (see the Appendix to this chapter). Indeed, given the specificity of
tourism sector ‘resource-seeking’ investment, or perhaps more aptly in the Maldives case,
‘resort-seeking’ investment, a benign approach is primarily what is required to attract the
necessary flows. But the business environment in the Maldives is also one in which there
are significant gaps in the underlying policy, institutional and legal framework for
business development and private sector support. This is reflected in the general
weakness of the domestic private sector and thin national portfolio of SMEs engaged in
value added activities in the dominant tourism and fishery sectors, forging stronger intraand
inter-sectoral linkages, and achieving a more diversified economy.
It is also true that as a small island developing economy, the business environment in the
Maldives poses formidable challenges for the investor and entrepreneur. Aside from
Male’, the capital, there is no significant population centre. Local markets are also
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