President of Maldives invites Indian companies to invest in Maldives

Addressing CEOs of Indian Industry at a meeting organized by the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in New Delhi today, H.E. Mr. Abdulla Yameen Abdul Gayoom, the President of the Republic of Maldives invited Indian industry to invest in his country.

 

He stated that the Maldives strategic location – a stone’s throw away from India – made it an ideal location for Indian investment. He highlighted corporate India’s long association with his country. The first Indian corporate to open an office in the Maldives was the State Bank of India over 35 years ago. Since then the number of Indian companies in Maldives has grown significantly.

He stated that his country had made rapid strides since then and are no longer classified as an LDC. Maldives has the highest per capita income in South Asia and has met most of its Millennium Development Goals. However, Maldives remains heavily dependent on imports and is very susceptible to external shocks. The economic base of Maldives is very narrow and relies on a few select industries.

To broaden the economic base of the country, Mr. Gayoom’s government had decided to open up the economy for foreign investment especially from India. He stated that areas such as fisheries, tourism and hospitality, transport and energy were some of the the focus sectors. He also highlighted the country’s goal of becoming a global financial sector hub. He was of the view that Maldives was more suited to be a hub for the services sector rather than manufacturing.

While addressing the participants during the Q&A session, the President stated that the GMR’s Male Airport issue was in arbitration and the two parties were seeking an out of court settlement. This, he hoped, would, remove a major irritant in bilateral trade and economic ties.

Addressing the participants, Dr. E M S Natchiappan, Minister of State for Commerce and Industry, Government of India highlighted two major initiatives taken in respect to the Maldives. The first was the lifting of the ban on the export of stones to the Maldives. Mr. Gayoom welcomed this step as the stones were critical to the construction industry in his country.

The second major initiative highlighted by the Minster was the launching of negotiations for a Bilateral Investment Promotion and Protection Agreement (BIPPA) with the Maldives.

Addressing the participants at the meeting, Mr. Ambuj Chaturvedi, Member, FICCI and Executive Director, Overseas Infrastructure Alliance (India) Pvt. Ltd. outlined a five point agenda to enhance the economic engagement with the Maldives which included Signing of the BIPPA, Increased exchange of business delegations between the two countries, Sharing of development experiences in the field of health and education and Improved air connectivity between India and the Maldives.

Mr. S C Aggarwal, Senior Managing Committee Member, ASSOCHAM and Chairman and Managing Director, SMC Group highlighted the close relations that the two countries enjoyed. He felt that the two countries had enormous potential in stepping up their engagement in areas such as fisheries, tourism and agriculture among others.

While proposing the Vote of Thanks at the meeting, Mr. Subodh Bhargava, Past President, CII suggested that the two countries explore newer areas of cooperation. This would  include the Fisheries, Tourism, IT industry, promoting Maldives as a location for Bollywood movies, creation of bonded warehouses among others. According to Mr. Bhargava, promoting Maldives as a film location would eventually lead to an increase in tourist traffic to the island nation.

Let’s dance with the dragon!

Over the last decade, a series of top-level political visits between India and China has established a new trajectory of engagement. A conducive atmosphere for bilateral economic cooperation has been created and strengthened. Trade between the two Asian giants has soared from just over $7 billion in 2003-04 to $67.8 billion in 2012-13. Indian companies have entered the Chinese economy with cumulative pledges of over $1 billion. Chinese investments in India aggregated $657 million by October 2012.

The scope for further investments in both directions is high, and industry of the two countries should leverage the strong direction shaped by the governments to take our multidimensional economic engagement to a new level.

To translate new opportunities into mutual gains, both sides can now aim at going beyond trade and investment to real development cooperation. Sharing of best practices and models in areas such as skill development, healthcare, participatory governance, and other development fields could offer rich benefits.

India has made good progress in life sciences industries such as biotechnology and pharmaceuticals. By sourcing drugs from India, China could offer better healthcare services to its citizens. Similarly, China has taken great strides in rural development through its town and village committees, which have decentralised economic development. India could learn from this model for empowering its 600,000 villages.

Likewise, while China has developed high capacity in advanced manufacturing and technology-rich electronics, India has built an impressive software and IT services sector. The convergence of the two is already taking place as global companies source hard and soft inputs from both countries. A real partnership between the two countries could take this convergence to the next level.

China’s cities and urban development has been one of its major success stories. Transport, low-cost housing, sanitation, water management and related sectors have attained high efficiencies in the country. India too is embarking on an ambitious project of building clean and green manufacturing townships. The participation and investments of Chinese companies could go a long way in devising best models for India.

We also need to learn from China’s renewable energy prowess. We see opportunities for growth across all conventional areas such as manufacturing, services, infrastructure and the financial sector.

The current bilateral trade scenario offers some concerns with respect to the trade imbalance, low value addition of Indian exports to China, and concentration on a few items. To redress this imbalance and make trade more sustainable, it is necessary to incentivise Indian exports to China. More transparent laws and procedures, mutual recognition of standards and harmonisation of conformity assessment procedures, and greater cooperation in trade finance could help this process.

India and China stand at a historical juncture where global affairs are transforming. Innovative cooperation mechanisms, especially in economic engagement, could stimulate a new sustainable partnership within this changed context.

Author: Chandrajit Banerjee is Director General of Confederation of Indian Industry (CII)