- Investments nearing 12 percent of GDP
- Full assurance that all projects will have finances
- Financial sector heading towards major reform
Finance Minister Ahmed Munawwar has stated that the country had earned the highest amount of Foreign Direct Investment in the past three years, which amounts to around 12 percent of the GDP.
Speaking in session held for employees of MIRA on International Taxation Principles and Korean Policies, the Minister said the country needed large amounts of cash for the major projects carried out by the Government to broaden the economy. Noting that Maldives is now the biggest foreign investment destination in the region, the Minister attributed this to the investor friendly policies started by the Government. Minister Munawwar said that 2014 Special Economic Zone (SEZ) provided the necessary laws and security for investors, boosting the investments to the country.
"Similar small economies like ours have mega projects, they require foreign investment, Maldives is also progressing this way. After this Government came to power, between 2013 - 2015, the foreign investment generated amounts to nearly 12 percent of GDP. This is the highest in this region. This has been acheived due to investor friendly policies enacted by the Government," Minister said.
He said it was possible to double the GDP as envisioned by the President.
Minister Munawwar said that his Ministry has initiated financial sector reforms to achieve this goal. He said the Government had started to assess the credit rating of the country in collaboration with Moody's, which will help to develop the relationship between the country and global financial institutions. He added that a credit will strengthen local financial institutions as well.
Minister announced a sovereign development fund to facilitate repayments for loans taken for major projects and source funding for future projects.
"With these changes, the country's financial sector will develop and bring in infrastructure development," Minister said.
The Minister remarked that i-Havan, Airport development, Hulhule'-Male' Bridge project and Thilafushi port development will ensure that Maldives will become the biggest economy in the region. He said that there were financing difficulties for these projects. However, the Minister said that the Government had full assurance that funding can be guaranteed for these projects. Munawwar added that tax earnings will play a vital role in funding these projects but said that the Government policy was to not depend on tax earnings. He said the President had envisioned to broaden the economy and earn from that.
Minister said state earnings now accounts for 23 percent of GDP. He noted that this showed that a recently introduced system was robust one and an example that must be taken by developing nations. Munawwar said current taxation system was successful and beneficial.
OEDC nation's income from taxes are at around 15 percent. MIRA and ADB is collaborating on a report on the local taxation system titled, "Fast track Tax Reform - Lessons from Maldives". The Minister said the report will be released this year.
Minister attributed the success of the tax system introduced in 2010 to the hard work carried out by MIRA employees. Munawwar said the system was robust, citing doubling of state earnings as evidence of this. However, he said the system was in need of reform. As such, the Minister said the system needed to protect the rights of all, be well rounded and balanced and a change to tax appeal principles as well as better incentives for small and mid sized businesses.