DTIS, Volume I - Enhanced Integrated Framework (EIF)

More documents

Recommendations

Info

Because the tourism sector is effectively an enclave within the economy, economic growth has not brought about sound institutions of economic governance. Until a few years ago, state-owned enterprises were dominant in virtually all sectors except tourism and the garment manufacture sector. The legacy of this domination is the underdevelopment of business support services resulting in a rather thin national portfolio of small and medium scale enterprises as well as the considerable scope that remains for value added activities within the main tourism and fishery sectors. The financial sector is thinly regulated with significant gaps in existing legislation. In particular, there is the peculiar situation in the Maldives that requires very low levels of reporting of accounts and audited information etc by registered businesses. This information is not required as there is no corporate tax (except for the banking sector) or income tax. This means that in practice, business operations cannot be properly documented. It is a situation that does not inspire confidence and leaves the way open for “creative accounting” if not corrupt practices. This is also problematic for the credit institutions, as they cannot verify the trading position of a business concern with reliable accounting information such as cash flow, profit and loss statements and balance sheets. As a result, credit in the Maldives is highly dependent on the ability of the creditor to provide suitable collateral. This may also account for one of the factors that have inhibited the growth of SMEs. Although the Maldives has been able to attract significant FDI for the tourism sector, the underdevelopment of the financial sector may also be help to explain why a neighbouring country like the Seychelles performs better in attracting tourism FDI or why Mauritius, also a small island economy in the region, has been more successful at economic diversification. The Seychelles attracts over twenty times more investment in the tourism sector capita than the Maldives. A key issue to be addressed in the short to medium term is the need for financial sector reforms to ensure more effective financial intermediation to turn local savings into productive assets. A detailed assessment of the financial sector is required as this has been outside the scope of the <strong>DTIS</strong>. C. GOVERNMENT SUPPORT SERVICES Government support for business development has generally been weak. MEDT and FISB are the main contact points for both foreign and local investment and business support. Indeed, there is at present no government-supported facility to provide technical assistance to SMEs in such areas as the establishment of business plans, credit application procedures, accounting and marketing. Support for income-generating activities with potential for linkages to the dominant tourism sector such as simple fish processing, retail trade, handicraft, horticulture, aquaculture and poultry farming is limited. Other than the credit facilities offered through the Atoll Development Funds, there is no effective 65
system of micro-credit intermediaries targeting women and the poor as can be found in other countries. As we have seen, FISB processes and registers investment in all sectors except tourism, which is the responsibility of MTCA. The investor is required to produce a plan for the investment and to obtain approval. A unit within the FISB is responsible for regulation and promotion of national investment. The Company Law, 1996 (No. 10/96) regulates the different types of legal entities under which companies may register, and is common to both foreign and national investors. To this extent, the primary role of the FISB is one of regulation. The FISB does not have the capacity or systems in place to provide effective support for investment promotion or for SME start-ups and related services. The main legal code on foreign investment is the Foreign Investment Law, 1979 (No. 25/79), which guarantees investor security in both goods and services. Foreign investors may own and operate business enterprises. The Law on Doing Business in Maldives by Foreign Nationals, 1979 (No. 4/79) covers foreign investment in trade (imports and exports) and related services. The same law also covers the operation of a foreign party or joint venture in wholesale and retail activities. Foreign investors are granted rights to invest on equal footing with the local investors, and 100 per cent foreign ownership is permitted. There is a need to revise and modernize the legal framework for investment for it to become more supportive of local business development. Investment in the tourism sector is managed and processed by MTCA. There are indications that the processes that are involved are relatively efficient if not fully transparent. In particular, incentives and concessions can vary from investor to investor. MTCA, in collaboration with MATI and MPTB is also active in promoting the Maldives as a tourism destination. Aside from the tourism sector, export promotion services have no government support mechanism, except for the state owned Maldives Industrial Fisheries Corporation (MIFCO) that promotes Maldives fish. Professional business or trade associations such as the Maldives Chamber of Commerce and Industry (MCCI) and the Fishermen’s Association are weakly funded. These bodies act mostly as informal discussion and lobbying partners with very little capacity for gathering and disseminating international marketing intelligence and providing services. Since corporate taxes and VAT are not levied, there has been no need in the Maldives to establish export processing zones, as these are normally justified by offering tax incentives to the investors. The only related incentive in this regard is the customs duty exemption, which is granted on a discretionary basis, thus reducing the scope of transparency. D. INFRASTRUCTURE 66
Page 1 and 2:
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 19 and 20:
Page 21 and 22:
Page 23 and 24:
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 and 56: The Modalities provide that the res
Page 57 and 58: emoved. However, in order to provid
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: difficult to reach given the except
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
Page 107 and 108: A new domestic terminal at MIA will
Page 109 and 110: There is need to clarify MAC’s na
Page 111 and 112: 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
Page 117 and 118: British market in 2001. In 2004, be
Page 119 and 120: Similarly, considerable demand was
Page 121 and 122: 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
Page 127 and 128: established as a quality tourism de
Page 129 and 130: Maldives' unspoiled marine environm
Page 131 and 132: The Faculty works very closely with
Page 133 and 134: TOURISM ACT A key objective of the
Page 135 and 136: HRD studies and conduct of necessar
Page 137 and 138: D. ESTABLISH AN ENABLING BUSINESS E
Page 139 and 140:
Main Recommendation No. 5: review a
Page 141 and 142:
Main Recommendation No. 6: Scale-up
Page 143 and 144:
CHAPTER 8 FISHERY SECTOR Chapter Pl
Page 145 and 146:
processing under-performing more th
Page 147 and 148:
per cent - see Table 8.4. The secto
Page 149 and 150:
In the light of these market trends
Page 151 and 152:
documentation, and administration.
Page 153 and 154:
monitoring and evaluation dates fro
Page 155 and 156:
and catering industry chefs demand
Page 157 and 158:
It is expected that the trial fishe
Page 159 and 160:
• Can seaming and retorting; •
show all

DTIS, Volume I - Enhanced Integrated Framework (EIF)

Create successful ePaper yourself

Delete template?

Save as template?