The Republic of the Maldives is a tourism success story, going from practically no infrastructure in the 1970s to its current position as an upscale destination for visitors who appreciate the perfect weather, pristine environment, luxury facilities and the privacy of its "one island-one resort" concept. As the nation expands its international airport to accommodate a growing influx of tourists, it is also offering good investment opportunities in developments that will match the rising demand – and promising interesting returns on investment.
The history of tourism in the Maldives is a real success story, starting from basically no tourism infrastructure in the 1970s to what it is today – a world-class leader and pioneer in the sector. What is this success based on?
The Maldives' tourism sector had very humble beginnings back in the 1970s as a private sector initiative. Over the course of four decades we have seen tremendous change in the way that we look at tourism, in the products that we offer, and in the way that other people look at us. Our success rests on sustainable policies and our concern for the environment, and also in the way we look after our guests. People who came here in the 1970s found a very natural, unspoiled environment, and we have striven to preserve that harmony while encouraging positive changes.
The expansion of the Maldives airport, which aims to increase passenger arrivals from 1.5 million to 7 million, will have a huge impacts on the tourism industry. What is the Maldives' strategy for accommodating the vast amounts of new visitors?
One of the bottlenecks to the expansion of our tourism industry is Velana International Airport, which has a maximum capacity of around 1.5 million passengers annually. We are almost reaching that target now. The government needed to move on, and President Yameen has brought about this transformational change. Following an investment of close to one billion dollars in the airport, what we are doing now is opening up investment opportunities in resorts and other types of developments. Over the next two to three years we are going to see the current 35,000-40,000 available beds jump to 50,000-60,000. So the airport expansion is going to impact those investments. Currently we've got over 100 resort projects already contracted, and we hope that by the time the airport is finished, a big chunk of these projects will be up and running.
In 2016, Maldives Tourism said it was hoping to double visitor numbers from the Middle East, with a focus on Gulf Countries. What is your strategy for attracting more visitors from these countries?
When you look at the Middle East, the Maldives is just a four-hour flight away, so anyone who wants a weekend getaway can take advantage of our very good flight connections with the UAE, Saudi Arabia or Qatar. Right now we just need to focus a little more on marketing and on identifying the segments that we are working with. We are currently restricted by the international airport's size, but once we have the new runway and terminal up and running it, will be very easy for us to get in touch with major businesses in these countries and start our travel expansion. We already have a plan for that.
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"We are opening up investment opportunities in resorts and other types of developments. Over the next two to three years we are going to see the current 35 to 40,000 available beds jump to 50 to 60,000."
The Maldives is a 100% Muslim country and Halal or Islamic tourism is a very complementary niche sector. How would you describe what the Maldives have to offer to Muslim travelers?
If you look at our resorts, we have a "one-island, one-resort concept," which makes it very private. And if you look at our resorts, we have individual bungalows and villas, which is again very private, unlike the concept of a hotel in the city. There is also ample privacy on the beach, as only 30% of the land available on the islands is developed.
What incentives does the government offer foreign investors in the tourism sector?
The Maldives is unique in the world. You don't see many other islands with this kind of climate. Other islands in the Mexican Gulf may be similar, but the Maldives lack the extreme weather conditions you see elsewhere. Plus you can get a very private tourism experience in a natural environment that is very well preserved. So all the requirements are there, and that is why we invite the very choosy investor to come to the Maldives. Plus, all developments are free of import duties, and you get rent free for two years for the development of an island. Also, there is a one-stop window to get all the paperwork done, so obtaining permits is very easy. For the last two or three years we have studied the system to ensure that investors do not need to wait to start working on these resorts.
"Investors who put in their money today are going to be glad that they did so 10 years down the line because this government's focus is on giving them a good return on investment."
In 2015, the government amended the constitution to allow foreign investors who invest at least $1 billion and whose projects use at least 70% of land reclaimed from the ocean, to freehold the land. How has that affected investment over the past years?
Originally, the islands were ceded for five years, and that became 10 years, and then 15 years. This government has very liberal economic policies and we brought the lease terms up to 99 years. The international perception had previously been that we were a very closed country in terms of economic policies, so we brought in this legislation, and while no investor has taken up the offer, perceptions have changed. We are as free as countries like Singapore, Dubai, Qatar or Malaysia – in fact, we might be more liberal than some of these destinations. The message is that we are open for business.
What benefits do you hope to achieve from hosting an investment forum in Dubai in December?
We have good investment from the Middle East, and good investment from Singapore, China and Thailand. These are countries with very good domestic regulations. The forum will give investors in the Middle East an opportunity to see what others have already done in the Maldives, and to pitch their own projects. By now everyone has heard about investment opportunities in the Maldives because the president has done a good job of spreading the word, so now investors will have an opportunity to sit down with our regulators and policymakers and institutional directors to see what's available. This is going to benefit both the investors and the Maldives, it's a win-win situation. There are opportunities from individual island development, which would mean anywhere between $30 million and $100 million, or one could invest in beautiful lagoons, a project involving about $1 billion.
What are the biggest challenges that the Maldives tourism industry currently faces? And how could Gulf investors work in the Maldives to help address those challenges?
Our challenges are not so much domestic as international. Every country in the world faces the problem of growing security concerns and safety issues. But we are individual islands, so anything that happens on Malé or on individual islands has very little bearing on the rest of the country. Our hospitality is based on this security, because there are a lot of competing destinations. We have sometimes been falsely accused of terrorist activities, but I think that people who have come here understand that although we are a Muslim country, we work with international agencies on security issues. The other challenge is climate change, and that is why we strive to implement proper environmental policies. All tourism projects go through rigorous impact assessment evaluations. And because of the geographical dispersion of the islands, transport is a factor that has to be incorporated into all projects. All of our resorts have their own power supply, for instance. Then again, this dispersion has contributed to the "one island-one resort" concept that creates a luxury experience which, in turn, attracts travelers and helps investors get returns on their investments.
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"The islands' geographical dispersion has contributed to the "one island-one resort" concept that creates a luxury experience for the traveler, which, in turn, helps investors get returns on their investments."
As tourism minister, what recommendations would you give Gulf visitors coming to the Maldives? How can they get the most out of their stay?
Come to the Maldives and lie down on the white beach. There's no other place where you can get that breeze, that sunshine and that kind of pristine sand. There are also opportunities to observe island life: we have island communities with traditional Islamic values, and that would be very interesting for Gulf travelers. People are very friendly here.
Where do you foresee the Maldives' tourism industry in 10 years?
The Maldives is unique. Investors who put in their money today are going to be glad that they did so 10 years down the line, because this government's focus is on giving them a good return on investment. We have fantastic transformational plans for the economy. To the travelers I would say that our developments are going to be unique and sustainable and we will ensure that the environment is preserved. So the unspoiled landscape you see today is still going to be there in 10 years, and the experience will continue to be unique.