Maldives-China Free Trade Agreement to Take Effect, Promising Economic Growth

The Free Trade Agreement (FTA) between the Maldives and China, set to come into effect on 1 January, is expected to create significant opportunities for Maldivian traders, according to Economic Minister Mohamed Saeed.

Speaking at a ceremony on Monday to celebrate the agreement, Saeed highlighted that the FTA will result in up to 90 per cent duty exemptions on many Maldivian imports within five years. He addressed concerns raised by opposition parties regarding the potential impact on the Maldives’ traditional trade markets and revenue from import duties.

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Saeed acknowledged that traditional trade partners include neighbouring countries such as India and the United Arab Emirates (UAE). However, he assured that the government’s efforts to diversify trade agreements would mitigate any adverse effects.

Addressing fears over reduced import duty revenue, Saeed said the government would generate income through alternative channels, such as the Goods and Services Tax (GST) and other taxes. He provided an example, explaining that the FTA could save up to MVR 600,000 in import duties on materials to construct a guesthouse on a local island.

Under the agreement, the Maldives will gain zero-tariff access to export 296 fish products to China. Saeed called on Maldivian traders to seize this strategic opportunity, which he believes will have far-reaching economic benefits.

The FTA was signed in December 2014 during the administration of former president Abdulla Yameen Abdul Gayoom, following two years of negotiations. It received parliamentary approval in November 2017 but was not implemented during former president Ibrahim Mohamed Solih’s tenure. The current president, Dr Mohamed Muizzu, who took office in 2023, has prioritised the agreement’s implementation.

Trade between the Maldives and China is currently valued at USD 700 million annually, with expectations to increase this figure to USD 1 billion under the FTA.

Saeed concluded by commending Maldivian traders as “visionary and hardworking” and urged them to capitalise on the opportunities presented by the agreement. “This FTA is a historic and strategic step forward. The benefits will be celebrated for generations to come,” he said.