We are at the end of the fiscal year and the tourism industry has been continuously talking about the growth and shortage of rooms for the New Year period, as well as unavailability of parking slots for aircrafts. Amidst current demand for tourism, the black market for United States dollar has skyrocketed over the past few days. Are we heading into a similar crisis as our neighboring countries are facing?

PUBLISHED January 06, 2022

Ibrahim Nizam
Managing Director
The Grand Associate
The Maldives is a global brand in tourism, particularly in luxury travel. While It is a prestige for the international hotel chains to have their presence in the Maldives, the travelers consider it their once in a lifetime dream destination. We the stakeholders and industry professionals should join hands together to ensure that the brand Maldives remains in the hearts and minds of the global travelers for years to come. Wishing everyone a happy new year filled with joy of a healthy and wealthy life.
One reason why we have $ issue is, we have not established a foreign currency retention system in the Maldives, like the system in India. The second is that the dollars coming into the Maldives are controlled by macroeconomic segments at their discretion like how it was in Thailand during 2002. The evidence that this is the case in Maldives is that no matter what rate is determined by the Maldivian Government, dollars are only available for 2 rufiyaa more than the stipulated rate. The case in Thailand and Malaysia also demonstrates that the best option for Maldives is to maintain the rufiyaa pegged to the dollars. This pandemic has demonstrated that due to our geographical distribution we have unique opportunities. If we can increase productivity by improving domestic transport efficiency to divert air traffic to different regional airports and establish a better currency retention system, we can reduce the dollar rate for Rufiyaa in the Maldives.
SME’s are the majority of businesses in the world and it’s a vital part of our economy too. And we are suffering because we have to rely on this black market ‘business’. I think it’s about time MMA allows businesses without tourism operating license to do business in USD as well.
As long as Foreigners run businesses keeping locals behind, we will go down the drain day by day. As long as foreigners are illegally doing handling agency business and many other businesses , this will allow them to avoid paying the correct tax amounts as well. If this continues, Maldives will be in more serious positions due to these hidden business activities.
The economy of Maldives is very much different from its neighboring countries. History is evidence. Our GDP and growth inspire if having slow reform and political situation are amazingly promising even in situations like COVID. Currency Black market is not because of economy or lack of FC inflow but due to poor regulations and corruption. Indeed it has certain impact on business but not on over all economy as a threat. Our economy has never been depending on any of the situation of neighboring countries. Our economy and growth is stable.