The Maldives - sustaining growth & improving the investment climate
Watson, Ricardo Lara
The main objective of the investment climate study in the Maldives is to develop a better understanding of the constraints to support more rapid expansion and growth of investments in the formal enterprises in the Maldives, provide input to the Seventh National Development Plan, and identify priority areas for funding for the country's development partners, including the World Bank. Compared to the rest of the region, the Maldives has been able to provide a relatively better policy environment for investors. However, the results of the study will be useful for the government and the private sector in the Maldives and donor organizations for creating an even more conducive policy environment to further improve the investment climate over time. Developing small states share a number of characteristics that pose special development challenges. They are especially vulnerable to external events, including natural disasters, which cause high volatility in national incomes; many of them are currently facing an uncertain and difficult economic transition to a changing world-trade regime; and they suffer from limited capacity in the public and private sectors. The Maldives has achieved remarkable economic growth without compromising its social development. However, experiences from other countries demonstrate more scope for improvement. In terms of severity however, (i) access to finance, (ii) cost of finance, (iii) access to land, (iv) lack of skilled labor, and (v) corruption appear to be the five most severe obstacles to growth and expansion of business activities in the Maldives. The lack of a strong legal framework also appears to be a severe obstacle relative to several others.
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