Doing Business in Maldives
Background Information on the Maldives & Investment Policies in the Maldives
The Maldives is a small island state located in the Indian Ocean, just South-East of Sri Lanka. The Maldivian archipelago consists of 1192 islands each surrounded by shallow, crystal clear lagoons enclosed within naturally protective coral reefs. The climate is tropical, with two monsoons, keeping the islands unvaryingly warm throughout the year.
As a country renowned worldwide for its natural geographical beauty, around 130 of Maldives’ islands have been developed into luxury resorts for tourists (2019), from which the country generates most of its income. Additionally, the Maldives sits astride busy sea-lanes that connect Asia with the rest of the world.
The local population, which is close to 350,000 (2019), is spread out across 188 islands, but most concentrated in the capital city of Malé, which is not only the political capital but also the centre of commerce in the country. The population is homogenous, speaking one language and practising one religion. In addition to the local language, English is widely spoken and is the primary medium of communication in business.
The Maldivian Rufiyaa (MVR) is the main unit of currency used in the country. The most common foreign currency used within the country is the US dollar.
The main port of entry to Maldives is through Velana International Airport at Hulhulé, an island adjacent to Malé. There are three additional international airports, one in Hanimaadhoo located in the northern tip of Maldives, the second in the southernmost Gan Island and the third in Maamigili.
There are 8 domestic airports within the Maldives, and a large fleet of seaplanes providing daily and easy access to the 130 resort islands across the country. The other modes of transport most widely used by residents are ferries or motorboats that regularly travel through Maldivian seas.
The Malé port and harbour lie on the western side of the capital and receive the bulk of imports into the country.
Maldives has had a nimble ascent to an upper middle-income country with the highest GDP per capita in South Asia.
The Maldives is a unitary state and a sovereign, independent and democratic Republic founded on the principles of Islam. The fundamental principles and framework for the functioning of the executive, legislative and judicial branches are specified in the Maldivian constitution.
The Maldives practices a tripartite presidential system of governance ushered in with the enactment of the current Constitution in 2008.
The Maldivian legal system is a common law system with the courts having a wide leeway to interpret and apply the law.
Maldivian law is a complex admixture of Shariah & English common law. However, trade-related legislation is influenced mostly by similar statutes and common law principles from English and other Western jurisdictions. The Contracts Act (Law No.: 4/91) allows contracting parties to agree on the law that should govern their agreement.
The court system is adversarial. There are three tiers of courts. In commercial matters the lowest tier is the Civil Court (in Male’ City – which hears high-value commercial claims) and magistrate courts (in the islands). Appeals are heard by the High Court which has branches in Male’ City as well as the North and South of the country and finally by the Supreme Court which stands at the apex of the judiciary.
With the enactment of the Arbitration Act (2013) the Maldives now recognises arbitration as an alternative means of dispute resolution. Also, although Maldives is not a party to the New York Convention, foreign arbitral awards are enforced under the Arbitration Act.