Q&A: Maldives is a friend of all countries, not just China and India

In the past couple of months, the small island country of Maldives has been depicted in the news as a pawn in a greater territorial battle between its two giant neighbours – China and India.

Beijing and New Delhi have been in a race to extend their regional influence through investments and military outreach. While the Chinese military has installed missile bases in islands on the South China Sea, Indian naval ships have ventured deep into the Arabian Sea to take on pirates.

The Maldives' new government of President Mohamed Muizzu, who took office in November 2023, had taken a strong position against the presence of Indian soldiers in the archipelago.

Since he came to power, Indian soldiers have started leaving the country. However, Male still considers India a close trade partner as it looks for foreign investments and funds to construct bridges and airports that are essential to connecting Maldives’ more than 1,192 islands.

Maldives is perhaps the most vulnerable country to rising sea levels, and successive governments have struggled to build enough houses for the 520,000 people who live on the atolls.

TRT World spoke to Mohamed Saeed, the trade and investment minister in Muizzu’s government, to understand how the government plans to meet a particular set of challenges in an ever-changing geopolitical climate.

Edited excerpts:

TRT World: More than two-thirds of Maldives' economy depends on tourism. What’s being done to expand the economic base?

MS: As far as expanding the economic base is concerned, the government is looking into several areas, including the digital, financial, and maritime sectors.

We are also trying to empower small and medium enterprises. So, we are focusing on areas where previously not enough emphasis was given.

Real estate, including social housing, is a big component of the government’s programme. We have a big city under construction called RasMale, which is a signature project of the president.

We recently signed an agreement with Vitol, the biggest energy trader in the world, to provide bunkering services from the Maldives.

That is a new economic activity that hasn’t been done at this scale in the country. As a state, we have not given it such a big push in the past.

When will the work on the bunkering project start, and what about competition with other countries with similar oil storage facilities for ships?

MS: We expect Vitol to start the business activities around June when construction begins.

The project has two phases. One is off-port bunkering, which doesn't require physical infrastructure at the port because Maldives is a sea country, so we can park the ships in atolls. But the second stage will be obviously constructing the physical port and related services.

We have a history of getting into activities other than tourism.

Singapore and Sri Lanka have such a setup. Around the region, different destinations provide similar bunkering services. But the Maldives is ideally located and is a popular sea lane.

We believe that by partnering with the right people we can capture some bunkering market. It is not to compete with anyone but rather it is an effort to diversify our economy.

Has the war in Ukraine and Israel’s war on Gaza made your job any difficult as the Minister of Economic Development?

MS: Of course, it's a challenge for any country – small or big – when there's a crisis and global tension escalates in the Middle East or the Red Sea.

As a country that depends on tourism and is also greatly dependent on energy imports, most of which come from the Middle East, any price hike in the energy market is a major blow for us.

But despite chaos across the globe, we expect good growth in the tourism sector. This year until now, we have seen more than 500,000 visitors, which is a major leap over the past trend.

So we are expecting to meet the target of 2.4 million arrivals this year.

We have more flights coming in from different parts of the world. Recently, we had about three or four new flights from China. Malaysia Airlines, too, started flights, while Virgin Atlantic, Emirates and Qatar Airways offer connections to Europe and elsewhere.

When there’s a global challenge, you need a break, you need a holiday. And Maldives offers that ‘do nothing, just relax’ experience - let your attention go for a while. So when there’s tension in the world, you need Maldives.

Maldives’ economy contracted drastically as air travel came to a halt during the Covid-19 pandemic. Does a recurrence of such an event bother you?

MS: No country would want to see another pandemic. Whatever happens in the external environment is out of our control, be it a pandemic or an environmental or natural disaster. Wars, terrorist activities, and accidents are beyond our control.

If you go back in history and look at what happened after the 2004 tsunami, we had zero occupancy overnight. But it bounced back very quickly.

Any international crisis affects every country but Maldives is affected more because our economy is solely based on tourism.

But we often neglect to highlight that Maldives’ tourism bounces back very quickly. Maybe it's because people believe Maldives to be a very safe destination.

I will reflect on what happened during the Covid pandemic. Even during the pandemic, some tourists were coming as we have the ‘one island, one resort’ concept that offers a major advantage of being separated from others.

When you arrive, you arrive on an island of your own. It’s your own world. It’s a cruise ship that doesn’t move. We have hundreds of such islands.

Maldives meets all its energy needs from imports, leaving it vulnerable to international events. What’s being done to change that?

MS: The president has set a very strong objective of converting 33 percent of our energy consumption to renewables within these five years.

As we speak, several companies are interested in investing in the renewable energy sector. But obviously, this requires extensive policy drafting.

The energy ministry is the focal point here in terms of renewable energy. What we do is assist in bringing investments and help renewable energy companies navigate purchase agreements with a national electricity provider and how they can invest in individual islands and resorts.

Can the Maldives be friends with both China and India?

MS: I think the Maldives is a friend of all the countries, not only two countries. We are a tourist country and open to the world. As a holiday destination, we are appreciated by both Chinese and Indians.

So that's one side of it. As far as trade is concerned, both markets are very important to us.

Of course, we are friends with both. What our president, our government and the people reject is the presence of foreign soldiers here.

On the question of the decline in the number of Indian tourists in recent months, I think certain headlines have blown things out of proportion.

Tourism arrivals from certain countries decline while they grow from others.

For example, China was not in the number one spot before Covid. But now it has bounced back.

We have flights coming from India on a daily – almost hourly – basis.

There have been concerns that Maldives is borrowing too much to finance bridges and other big infrastructure projects.

MS: Look, Male is a two by two by two kilometres, and almost one-third of the country's population lives here.

Other cities and countries are blessed with land, land is not so scarce for them.

Maybe it is impossible for you to imagine how much work we have to put in for our survival, to provide shelter and social housing.

In a big country, to build houses you just have to earmark an area and the land is there. But Maldives doesn’t have land, we have to produce it.

Unlike any other country, we have to do reclamation and dredging. Obviously, all this adds to the cost. But this is for our own survival.

The bridges we build are necessary to improve and advance the livelihood of the people.

We live in the sea, so we can't settle down and limit the hopes of our youth and say, ‘this is what you deserve and you can't expect more’. As a government, we have to gear up and provide and cater to the expectations of the people.

President Muizzu has pledged to provide accommodation, social housing for all the people within these five years of our tenure.

And that’s why people vote us into government, because they want the government to meet their basic wants.

Of course, there’s a cost to it but whatever infrastructure development we initiate involves serious calculations on how we could pay off those borrowings and those loans when it is required. In any case, most of the borrowing we do is at concessional rates.