The bilateral trade between the Maldives and China is projected to increase to USD 1 billion per year following the implementation of the Free Trade Agreement (FTA) between the two countries, according to Heena Waleed, the chief spokesperson for the President’s Office. Speaking at a press conference held at the President’s Office on Monday, Heena stated that the FTA would provide significant benefits to businesses and the general public in both nations.
Heena highlighted that the current bilateral trade between the Maldives and China already amounts to over USD 700 million. She noted that the activation of the FTA is expected to boost this figure to USD 1 billion annually. The agreement, she explained, would not only enhance trade volumes but also offer additional advantages such as facilitating current account transactions using both countries’ currencies, encouraging direct investments, easing travel for Maldivians, and improving access to goods and services.
A key benefit underlined by Heena was the potential for transactions to be conducted in Maldivian Rufiyaa, reducing the reliance on the US dollar for transportation and business-related transactions. This could be a significant advantage for Maldivian businesses, allowing for smoother and more cost-effective trade operations.
To support these developments, the government of Maldives signed a Memorandum of Understanding (MoU) with the People’s Bank of China (PBOC) last Friday. The MoU establishes a framework for settling current account transactions and direct investments in local currencies, a step that aligns with the broader goals of the FTA to facilitate smoother economic exchanges between the two countries.
The Maldives and China signed the FTA in December 2014 after two years of negotiations during the administration of President Abdulla Yameen Abdul Gayoom. The agreement is set to enhance economic ties between the two nations by reducing tariffs, removing trade barriers, and fostering a more integrated trade environment.
Free Trade Agreements (FTAs) are pacts between two or more countries to reduce or eliminate barriers to trade, such as tariffs and import quotas. These agreements aim to facilitate smoother and more efficient trade by creating a more predictable and transparent environment for businesses. FTAs often cover a range of areas beyond just the trade of goods, including services, investment, intellectual property, and regulatory standards. By fostering closer economic ties, FTAs can help participating countries improve market access, attract foreign investments, and promote economic growth.
The FTA between the Maldives and China, like other such agreements, aims to create a more conducive environment for trade and investment, providing opportunities for businesses and the public in both countries to benefit from increased economic activity and collaboration. With the agreement’s implementation, both nations expect to see enhanced trade flows and stronger bilateral economic relations.
