Fishing at the head of the bridge
With its 1,200 islands spread over 90,000 km² of ocean, marine resources are the primary source of wealth in the Maldives. Fishing is one of the archipelago's traditional activities, and its historical industrial activity. The sector underwent a major revolution in the 1970s with the appearance of motorized "dhonis". These boats, built from coconut planks, long-line for yellowfin tuna and bonito. Fishing used to account for the lion's share of GDP, but is now down to just 10% due to the boom in the tourism industry. In 2015, growth in the fishing industry contracted for the first time due to dwindling resources and falling world prices. Nevertheless, it remains the country's sole source of exports.
Tourism, a key source of income
Tourism is the backbone of the Maldivian economy. In 40 years, the country has grown from two island hotels opposite Malé to 132 island hotels spread across the archipelago. The Maldivian government created this unique concept to limit contact between the local population and Western tourists. The phenomenon spread like an oil stain, expanding in concentric circles. Investors immediately set their sights on the larger islands near Malé. Technological advances enabled further progress to be made: seaplanes to replace the slowness of boats, desalination of seawater to guarantee drinking water, solar power to compensate for oil-fired generators. By the 1990s, hoteliers were already coming up against the scarcity of large islands. They compensated by increasing the number of beds in their resorts. The Maldives went from an average of 39 beds per hotel in the 1970s to 233 in 1995. This restructuring was combined with a move towards luxury tourism. Hotels vied with each other in flamboyant ideas; rooms on stilts planted in the lagoon became the norm; services were ever more numerous. The number of arrivals has risen from a thousand in 1972 to over 1.7 million in 2023. The islands are leased by the government, which signs leases for an average of 21 years. The government also collects a tourist tax of US$6 per night per person, and an airport tax of US$25 per departing passenger. Tourism's share of GDP was 60% in 2023, or US$3.2 billion. This result means that the country's GDP per capita will be among the highest in Asia, at US$12,667 in 2023. While tourism plays a beneficial economic role at national level, it is much less so at individual level. Less than 10% of Maldivians work in the tourism sector, the vast majority of jobs being filled by immigrants from South Asian countries. Nevertheless, a law requires Maldivian management in resorts. In reality, positions are very often doubled up and filled by better-qualified Western staff. In 2010, the government decided to open the inhabited islands to tourists, so that the local population could benefit from the windfall. The simple accommodation on offer attracts tourists who can't afford a 5-star hotel, but want to enjoy the Maldivian experience. Tourists are welcomed in local homes and must abide by the rules in force: no alcohol, bathing on bikini beaches reserved for Westerners. This form of tourism cuts the bill by at least a factor of three. It attracts a younger clientele, mostly from countries in the region. So much so that some inhabited islands have become destinations, with a competitive hotel offer. On the island of Maafushi, for example, over 60 guest rooms and hotels have sprung up on its 12 hectares in just 10 years.
COVID crisis and prospects
The COVID-19 pandemic has had a devastating effect on the Maldivian economy. The archipelago closed to tourism from March 27 to July 14, 2020, and only 555,500 tourists entered the country that year, generating a 67.4% drop in visitor numbers compared to 2019. GDP collapsed by 32% (compared with an increase of +7% in 2019), the poverty rate rose by 5.1% to 7.3% of the population; hotel-related tax revenues plunged by 56%. The country gradually recovered, boosted by the end of Chinese confinement in 2023. The Maldives set a new visitor record with 1.8 million admissions that year. Despite these good figures, hotel development has slowed. Some projects were brought to a screeching halt by the Covid crisis. For other hotels, notably aging resorts offering moderate rates, Covid meant permanent closure, with no recovery in sight.
The pandemic has highlighted the need to diversify the Maldivian economy. A sustainable fisheries development plan drawn up with Japanese assistance is currently being implemented. Its aim is to modernize the fleet and port structures, and to intensify aquaculture. The lagoons are ideal for grouper and lobster farms, while the mangroves are ideal for crab farms. The promotion of subsistence farming is also on the agenda. In terms of tourism, inter-atoll connectivity needs to be improved to facilitate the transport of passengers and products. India is providing financial support for the Greater Malé Connectivity Project, which should enable the capital to be de-saturated. A system of bridges and causeways will link the islands of Villingili, Thilafushi and Gulhifalhu. After financing the bridge linking Malé to Hulhumalé, China is now participating in the renovation and expansion of the international airport. The runway has been lengthened to accommodate A380s, and new parking spaces for aircraft have been created.
