DTIS, Volume I - Enhanced Integrated Framework (EIF)
DTIS, Volume I - Enhanced Integrated Framework (EIF) DTIS, Volume I - Enhanced Integrated Framework (EIF)
investment promotion and business support services including support to SME start-ups in the outer atolls. • Expertise on the various economic sectors, types of business arrangements such as joint ventures and public/private partnerships and resources will be required to ensure that such a cell has the necessary capacity is in place. • In particular, it should be the responsibility of the investment promotion and business support cell to create awareness in the atolls of the existence of business support services and potential finance or credit facilities. The cell should also be able to undertake needs assessment of existing and potential entrepreneurs, followed by tailor/made training activities to build business skill levels. • Consideration should also be given to the use of ICT support systems – to support on-going business development activities, with on-line workshops and e-learning materials. • The new investment promotion and business support cell board should also be responsible for assessing business support issues and for developing measures to enhance the business climate as well as for promoting the Maldives locally and internationally. • The Maldives has several private sector associations, but outside of Male’ most Maldivians are unaware of their existence or their functions. It is therefore essential to create awareness of these associations and for an investment promotion and business support cell to help them develop capacity as networks for business development. • There is a need to review, revise and modernize the legal framework for investment and in particular, to make it more supportive of local business development. This review should also clarify and make transparent reporting requirements including with respect to financial information. • There is further need to clarify the legal requirements for joint ventures and public/private partnerships. The government’s public sector investment programme, which has averaged USD 25 million annually in recent years, is substantial with considerable scope to leverage partnerships with private investors, foreign and local. The support activities of development partners also have scope for business partnerships. • Overall, the Maldives government has established a credible record of ensuring that business development is in line with sustainable environmental standards. To the extent that key investment decisions depend on the country’s natural resources remaining in their current under-exploited state, there is need for more clear demarcation of coastal zone and elaboration of conservation standards as part of the current 7 th NDP process. 69
B. LABOUR MARKET REFORM About 44 per cent of the work force in the Maldives is expatriate, due to the shortage of relevant skills among Maldivians and other major labour market rigidities related to cultural and traditional norms, especially concerning women. Wage rates for Maldivian workers are also about 40 per cent higher on average than for expatriate workers and in neighbouring countries. At the same time, there is significant unemployment among Maldivians. The traditional role of the public sector as an employer and the discretionary manner by which salaries, benefits and working conditions are negotiated has led to a perception that this is the best sector for Maldivians to work in. The main recommendations for labour market reform are as follows: • There is need to align labour policies, training facilities and support services more closely with the needs of business development in the economy. • In view of the relatively high costs of employing Maldivians, attention needs to be given to productivity issues as well as to the incentives that are required to overcome labour market rigidities due to culture and tradition. The fishery and tourism sectors are cases in point. • Maldivians are generally well educated, adaptable to learning hi-tech skills and capable of producing good workmanship. These are attributes that should be built upon in making training, transfer of technology and productivity improvements in value added activities an essential part of business support services, C. FINANCIAL SECTOR REFORM • Financial information that is transparent and reliable is not currently required in the Maldives. To significantly increase the opportunities for providing credit and bring practices in the financial sector up to international standards, this should change. • A key driver of change in this regard will be the introduction of value added, corporate and personal income tax which will provide a basis for realistic, internationally recognized accounting and auditing systems with greater transparency and integrity of business operations. • The cost of borrowing is adversely affected by the MMA reserve requirements for credit providing institutions. This is 30 per cent for commercial banks and 15 per cent for the ADF. This relatively high reserve requirement artificially raises interest rates by 1.5 – 2 per cent. There is scope to reduce the reserve requirement 70
- 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 and 88: difficult to reach given the except
- Page 89 and 90: system of micro-credit intermediari
- Page 91: F. LAND, RAW MATERIALS AND SUPPLIES
- 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
B. LABOUR MARKET REFORM<br />
About 44 per cent of the work force in the Maldives is expatriate, due to the shortage<br />
of relevant skills among Maldivians and other major labour market rigidities related<br />
to cultural and traditional norms, especially concerning women. Wage rates for<br />
Maldivian workers are also about 40 per cent higher on average than for expatriate<br />
workers and in neighbouring countries. At the same time, there is significant<br />
unemployment among Maldivians. The traditional role of the public sector as an<br />
employer and the discretionary manner by which salaries, benefits and working<br />
conditions are negotiated has led to a perception that this is the best sector for<br />
Maldivians to work in. The main recommendations for labour market reform are as<br />
follows:<br />
• There is need to align labour policies, training facilities and support services more<br />
closely with the needs of business development in the economy.<br />
• In view of the relatively high costs of employing Maldivians, attention needs to be<br />
given to productivity issues as well as to the incentives that are required to<br />
overcome labour market rigidities due to culture and tradition. The fishery and<br />
tourism sectors are cases in point.<br />
• Maldivians are generally well educated, adaptable to learning hi-tech skills and<br />
capable of producing good workmanship. These are attributes that should be built<br />
upon in making training, transfer of technology and productivity improvements in<br />
value added activities an essential part of business support services,<br />
C. FINANCIAL SECTOR REFORM<br />
• Financial information that is transparent and reliable is not currently required in<br />
the Maldives. To significantly increase the opportunities for providing credit and<br />
bring practices in the financial sector up to international standards, this should<br />
change.<br />
• A key driver of change in this regard will be the introduction of value added,<br />
corporate and personal income tax which will provide a basis for realistic,<br />
internationally recognized accounting and auditing systems with greater<br />
transparency and integrity of business operations.<br />
• The cost of borrowing is adversely affected by the MMA reserve requirements for<br />
credit providing institutions. This is 30 per cent for commercial banks and 15 per<br />
cent for the ADF. This relatively high reserve requirement artificially raises<br />
interest rates by 1.5 – 2 per cent. There is scope to reduce the reserve requirement<br />
70
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