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Home Around South Asia

Free trade and OBOR pacts take Sino-Maldivian ties to a new height

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December 8, 2017
in Around South Asia, Around The World, Business, China, Maldives, Top Story
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The signing of a Free Trade Agreement and an MoU on cooperation in implementing China’s ambitious and prestigious One Belt One Road (OBOR) international connectivity project at the Great Hall of People in Beijing on Thursday, has taken Sino-Maldivian relations to a new height, writes P.K.Balachandran in South Asian Monitor.

The signing, watched by Chinese President Xi Jinping and the visiting Maldivian President Abdulla Yameen, has linked the Maldivian and Chinese economies very closely and inextricably.

As a result of these pacts the Maldives’ economic ties with China may in course of time outstrip those with its traditional trading partners in the West.

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The FTA gives the Maldives access for its fish and fish products to the humongous Chinese market at zero duty. This is a boon at a time when Maldivian fish exporters are facing difficulty in paying 25% duty to enter the EU, the traditional market, with the EU having withdrawn its duty concessions under the GSP Plus scheme on account of the Maldives’ graduating into the middle income category. And fish and fish products constitute 90% of Maldives’ exports.

Apart from facilitating fish and fish products exports to China, the FTA enables China to export machinery to the Maldives which are necessary for the latter’s on-going ambitious infrastructural development plans. As the Maldivian Minister of Fisheries Mohamed Shainee said, if the country is to increase its tourist arrival rate from the current 1.5 million per year to seven or eight million, it has to have the infrastructure for it and that needs equipment and expertise on a large scale.

Maldives is craving for sea and air connectivity as it an island nation isolated from the world. It is an archipelago of many small islands many of which are resorts which need to be connected and serviced. China’s One Belt One Road (OBOR) international connectivity project (which Maldives has joined) will be operationalized through an agreement signed on Thursday. It will help end Maldives’ isolation.

However the Maldivian Democratic Party (MDP) has trashed the Yameen government’s claims saying that there is no guarantee that the Chinese will buy Maldivian fish. And at any rate, the Maldivian market will be flooded with Chinese goods which will only further widen the yawning trade gap, it says.

The opposition finds it intriguing that the draft of the FTA was passed by parliament in just ten minutes. But government spokesman said that the opposition has no right to criticize as they have been boycotting parliament.

As for China, a foothold in the Maldives through its connectivity and other projects is vital for the success of its OBOR project.

12 Agreements Inked

The twelve agreements signed on Thursday are as follows:

  1. Free Trade Agreement between China and Maldives.
  2. MoU on cooperation within the Framework of the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative.
  3. Agreement of Economic and Technological Cooperation.
  4. MoU on Cooperation in Human Resource Development.
  5. Exchange Letter on the China-Aid-Micro-Grid Seawater Desalination Project.
  6. Exchange Letter on a Feasibility Study on the China-Aid Municipal Solid Waste Treatment and Recycling Project.
  7. MoU between the National Health and Family Planning Commission of China and the Ministry of Health of the Maldives on Health Cooperation.
  8. Protocol on the Establishment of Joint Ocean Observation Station between the State Oceanic Administration.
  9. MoU between China Banking Regulatory Commission and Maldives Monetary Authority.
  10. MoU for International Cooperation Planning between Ministry of Economic Development of the Republic of Maldives and China Development Bank.
  11. Framework Agreement on Cooperation in Relation to the Joint Development of Airport Economic Zone Development in Hulhumale between the Housing Development Corporation Limited and the Beijing Urban Construction Group Corporation Limited.
  12. Facility Agreement for “Design and Construction of Link Road Connecting Hulhule’ and Hulhumale’ Project between Housing Development Corporation and Industrial and Commercial Bank of China Limited.

“Prime Time” for FDI in Maldives

Addressing the Business Leaders’ Forum in Beijing President Yameen said that this is the “prime time” to invest in the Maldives.

“The Maldives always welcomes foreign direct investments with open doors. The President said that there is a mistaken belief that the Maldivian economy is small with limited business prospects. Many international investors in the Maldives, who know the market well, will vouch for the fact that the Maldives is a luxury destination famous for visits by high net-worth individuals,” the President said.

Highlighting the measures being taken by his administration to transform the Maldivian economy, President Yameen underscored the special initiatives, including the development of Hulhumale’ Youth City and the development of Special Economic Zones.

The President noted that the Foreign Investment Act and the Special Economic Zones Act are in place today to ensure that foreign investments are protected.

Noting that Maldives is going through a key transformational moment in its history, the President stated that to achieve the true aspirations and desires of the Maldivian people, particularly the youth population, it needs to find “creative and sustainable” ways to enhance its economic base, create more opportunities for gainful employment, and provide livelihood opportunities for its people across the country

Speaking at the official reception held to mark the 45th anniversary of the establishment of diplomatic relations between the two countries on Wednesday, Yameen said that China is the Maldives’ “development and commercial partner.”

Agreement on Homegrown solutions

The Maldivian President underscored the fact that China, like the Maldives, believes that solutions to problems have to be “homegrown”.

Economic and political solutions cannot be given to others on the basis of the Western theory that one size fits all.  By talking of homegrown solutions, Yameen implied that Chinadoes not interfere in the internal affairs of the Maldives in contrast to the West, which does.

Yameen recalled the fruitful discussions held and agreements signed between the Maldives and China during President Xi Jinping’s historic State Visit to Maldives in 2014. These had paved the way to a partnership of “future oriented, all-round friendly, cooperative ties,” he noted.

The President further said that the ground-breaking infrastructure projects launched after President Xi Jinping’s visit, including the construction of the friendship bridge between Male’ and Hulhule’ and the construction of a new runway at the Velana international airport, would stand as “visible symbols of the everlasting friendship between the Maldives and China.”

(The featured image at the top  shows Maldivian President Abdulla Yameen and the Chinese President Xi Jinping) 

 

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