The roadmap to elevate Maldives for businesses

The original Dhivehi article was published on Avas.mv website on 30th November 2017.

The following is a loose translation:

Every year the World Bank selects countries which are easy to do business. And those countries are categorized into an ‘Ease of Doing Business Index‘ list and made public. There are many countries included in this list with varying economies. This is the list where investors’ eyes are easily caught. Unfortunately, Maldives keeps going down from this list. What could be the reason? What is there to do to make Maldives more favourable to businesses?

The government has made several changes to make Maldives a business-friendly place. Likewise, the investor’s law had been revised to make it more easy for investors. In a way, that benefits the investors ‘Corporate Resident Visa’ was started to be issued. Still, Maldives keeps sliding down.

For an analysis on this, we would go through World Bank’s ease of Doing Business Index (DBI) of the past 6 years.

In 2013, Maldives’ ranking was at 85th and in 2014, it further shot up to 79th level. This was a progress. However, in 2015, plummeted to 95th level. The biggest ever tumble Maldives took from this list was in 2016. On that year Maldives slipped to 129th level. And when this year Maldives ranked at 135th, in the next year’s list Maldives comes to 136th level. One level below from last year.

When World Bank compiles this list, in the trade domain there are specific 10 elements that they look for. They are:

1. Starting a Business
2. Dealing with Construction Permits
3. Getting Electricity
4. Registering Property
5. Getting Credit
6. Protecting Minority Investors
7. Paying Taxes
8. Trading Across Borders
9. Enforcing Contracts
10. Resolving Insolvency

A country stands at a low level on the list if it fairs low on the above criteria. Question is, among these 10 things, what is a difficult task to do in the Maldives? Is it starting a new business? Or is it registration of a company or an office? Or is it obtaining finance for a business? Or is it protecting investors rights?

Ease of Doing Business Index in the Maldives, The World Bank

Looking at the areas where Maldives faired low on the list, the most noticeable was the investor’s rights category. In the list compiled last year (2017), under the investor rights protection, category Maldives ranked at 123rd level. But in the list of this year (2018), Maldives dropped to 132nd level. A dip of 9%. What does this mean?

Topics, Easy of Doing Business in the Maldives, The World Bank

According to experts, this shows that Maldives’ judiciary system needs to be reformed. And have to practically show that investors rights will be protected.

Business Reforms in Maldives, The World Bank

We take a look now at how other countries ranked in the World Bank’s list in protecting investors rights. The country that always tops in this category is Singapore. Singapore also ranks at the top of the list, every year. In the Maldives’ neighbourhood, Sri Lanka came to 43rd in this category. India ranked at 4th. Nepal at 62nd. So the question is when Maldives ranks at 132nd in this category, will it affect investors confidence?

Economic experts believe that if there is a desire to make Maldives an easy to do business country, the first step is to assure protection of investor’s rights. And they believe that the reason why Maldives ranked low on the list was due to the huge issues investors had faced earlier.

‘One of the biggest challenges in protecting investors rights could be the case of GMR. Because of that, it affected the whole system of the Maldives. That was a topic discussed in the world financial arena. No Matter how it was dealt, what you need to understand was the impact of it. I would say due to the way GMR case was handled, it had a role in Maldives low ranking on investors rights protection,’ a source revealed.

The source further revealed, apart from this issue, the contracts terminated due to MMPRC’s corruption scandal was another issue.

‘Due to the way MMPRC’s scandal went, investors rights were taken away. Even now a lot of them are going through it. Many island lessees had to bear losses. This is also something to highlight.

To make a country easy to do business, it isn’t just factors like being able to easily open an office and enabling loans that are necessary. There are many other factors that need to be attended. It is what was noted from the World Bank’s report. In order to ease up for investment, this is the way forward for Maldives.