Former Deputy Minister of Economic Development under President Ibrahim Mohamed Solih (MDP), Riyaz Mansoor, claims that the Maldivian economy is deteriorating under President Mohamed Muizzu’s administration. He warned of serious repercussions arising from what he described as poor governance and damaging international agreements. Mansoor specifically cited the Maldives-China Free Trade Agreement (FTA) and the full unrestricted opening of the tourism sector to Chinese businesses, eroding local employment opportunities, and jeopardising the nation’s long-term economic stability.
A technocrat with a background in software engineering, international consultancy, and trade regulation, Mansoor brings both credibility and urgency to critiques targeting neglected transparency, economic imbalance and a harmful rush to political policymaking – alienating key development partners and specifically targeting India. Mansoor was also the Chief Negotiator for the Government of Maldives during Free Trade Agreement (FTA) negotiations with both the UK and EU.
When Ceylon Today met the former Deputy Minister of Economic Development in the Maldives recently, to talk about the foreign policy adopted by the Maldivian Democratic Party (MDP) during former President Solih’s tenure and now, Mansoor said despite the MDP being seen as pro-India, the MDP’s strategy was deliberately balanced: While reinforcing close ties with India which garnered significant development assistance in terms of new infrastructure projects including housing and bridge connectivity, “we continued existing and new projects with Chinese partners in a beneficial relationship – there was no anti-China sentiment,” he recalled. In contrast, he argues, “That balance is now visibly missing”. The MDP-era approach—walking a practical middle path—allowed ongoing engagement with both India and China, without being overtly polarising.
A flawed FTA
Describing that the China–Maldives FTA was originally negotiated during former President Abdulla Yameen’s administration in 2017, and was implemented about eight years later, on January 1, 2025, during President Muizzu’s administration, Mansoor criticised the lack of any awareness creation about the FTA’s impact.
Discussing the benefits of FTAs to Maldives and especially with key trading partners, Mansoor said the ultimate success of an FTA is measured by how much a country benefits from it. Here, he criticised the Muizzu administration for the positions adopted in the FTA as “lacking in understanding of the economic realities of the country”.
The vociferous politician pointed to a lack of transparency, with the FTA being ratified with minimal public consultation or industry input, with detrimental opaque trade concessions made by the Muizzu administration resulting in key local industrial sectors being caught completely unaware of the overarching impact of the FTA.
“When we reviewed the FTA, we found it did not protect local industries. Yet this (Muizzu) administration has rushed to implement it fully.”
Mansoor called out the Muizzu administration’s public relations FTA blitz about the coming of much cheaper consumer prices as “wishful … imaginary”. Between the time the FTA was negotiated and then implemented about 8 years later, the “MDP government had completely overhauled the import duty regime. The average import duty dropped to about 6%, and excluding cigarettes the average import duty stood at about 4%”. A strong analytical indicator is that consumer prices would be scarcely affected at the macro level, if at all. “This administration has not released any report or data indicating that consumer prices have decreased or changed because of the FTA”.
Local Fisheries: A difficult road with heightened risk
A cornerstone of the economy, the fisheries sector employs a large number of workers and is the primary commodity export of Maldives. Naturally, the fisheries sector figures prominently in the FTA.
Mansoor continued: “While still early to call, there is no indication that fisheries exports (to China) are going to take off. Just basic due diligence reveals many obstacles to entering the Chinese market” and argued the case that “(fisheries) exports to China are not limited due to (Chinese) market access” which stood at just 5% import duty against Maldivian canned fish, but rather due to the high local cost of production.
“China is a global fisheries superpower with incredibly low production costs. Our fishers use sustainable methods, which are more costly. Competing with Chinese fish on price is impossible.”
He also pointed out an uncomfortable reality: “Even countries with older FTAs with China, with established fisheries export industries—like Vietnam or Malaysia or even Thailand—have struggled to export fish to China. Why would tiny us, so far away, be any different?”
Yet, this was not his biggest concern for the fisheries sector. Mansoor emphasised: “My biggest concern was the total negation, an unbelievable concession by this Muizzu administration to allow zero tariff canned fish imports from China, to locally compete with our environmentally friendly prized product”.
He explained: “The Maldives used to levy a 35% import duty on all fish imports. No previous Government or President had relaxed this principle, not even for SAFTA”, the 2006 South Asian Free Trade Agreement which includes both Maldives and India. “Even with that 35% tax in place, it was still possible to import canned fish from South East Asia including China and have a viable business … as can be easily seen on the shelves in local supermarkets. So what happens without the 35% import duty?”.
Even as the Maldives awaits actual fish exports to China, local operators now face a potential onslaught of cheaper fish imports competing directly in local markets.
Mansoor criticised the Muizzu government on their lack of transparency, stating that “every single fisheries industry expert I talked with stated that they were caught completely unaware about this import duty tariff change”.
New Tourism Status Quo: Completely open to Chinese businesses
Tourism has been the growth engine of the Maldives economy for many decades. Famous among tourists and honeymooners, it is an industry where the world’s leading brands have set up shop, and their resort hotels in the Maldives. The FTA impacts deeply within the tourism sector in completely new ways.
“As a country, we have always welcomed foreign investment. We have welcomed many foreign investments in the resort sector, where a resort development could minimally cost about 40 million dollars. But we must be careful not to measure the whole tourism industry by the resort standard.”
Mansoor explained: “Guesthouses were introduced by the MDP government during President Nasheed’s tenure – aimed at boosting the small island economies by allowing tourism guesthouse business operations on inhabited islands. It was a great success”. Local guesthouse business has been thriving and foreign investments were not allowed in the guesthouse sector. “But now, under this FTA, 100% Chinese-owned companies can operate guest houses anywhere in the Maldives, no different to a Maldivian company".
He stressed: “Another such example is the safari (liveaboard) business. With an active small safari industry, foreign investment in or ownership of small safari vessels (less than 40 beds) was strictly prohibited. The FTA has removed this barrier, placing small local operators potentially in direct competition with much larger Chinese companies.
“The essence of community empowerment and developing a vibrant small business sector … has been lost”.
Describing how the tourism industry could see groundbreaking changes, Mansoor wondered: “With the unlimited concessions made by the Maldivian government, can Chinese companies now bid on tourism island properties that the Maldivian government releases to the local market? Possible? Unclear? … It is quite startling to hear from industry types that they are not aware of these concessions made by this administration”.
Underlining the starkly different positions taken by the two parties in the FTA, Mansoor added: “Congratulations to China for doing well in protecting their businesses and interests. They have specified ownership restrictions, staffing restrictions, location restrictions and other unspecified restrictions on Maldivian businesses to operate in China. Why did this Muizzu administration fail to place even one restriction to safeguard our Tourism sector?”
Burgeoning fiscal strain
Mansoor does not dance around the figures: “The Maldives recorded its largest ever annual debt increase in 2024 and a budget deficit comparable to the Covid-era deficit. With no international crisis, this was the result of a manufactured internal mismanagement bungle”.
The Maldives has recently lost its standing with the international credit rating agencies with a lowered ‘C’ rating since the Muizzu administration took office. In contrast, for the preceding three years post-Covid, Maldives held onto a “B” rating.
Compounding this situation and suggesting diplomatic isolation and faltering relations with traditional allies, Mansoor stated: “It is a fact, that within this one and half years of the Muizzu administration, they have been unable to raise any financing from abroad”.
The strain of the huge budget financing shortfall has manifested itself in gravely questionable practices and embarrassing situations. Mansoor highlighted some of these situations.
“We have seen contractor-financed projects, but with a unique twist. The payback starts some four years after, which of course means the payback amount has bloated to many times the normal amount. The politically intended impact – is that the following government is left to shoulder these oversized debt payments. Former Minister of Finance Ibrahim Ameer has described this process as ‘looting the national treasury’.”
“We have seen prized tourism properties drastically marked down in value, hoping for a quick buyer. Comparatively sized properties whose lease sold for 37 million dollars in 2023 have been valued at 15 million dollars under the cross-subsidy scheme. This too for defence contractors which means that under the guise of national security, nothing will be disclosed.”
These were concerning observations but the bombshell news was yet to come. Mansoor continued: “In their fervour to raise foreign finance and put forward positive news, the Muizzu administration literally rolled out the red carpet without doing due diligence. Social media carried the news as a scam when the investing individual, was wrongly received with the royal title of the Saudi Royal Family in a much hyped event. Social media was in an uproar, but the administration remained silent, only to later remove the news articles quietly from government websites. No further news has been released about the multi-billion dollar investment in question.”
In its efforts to raise finance, the Muizzu administration is now preparing to offer a new bond to raise capital. However, the existing Sukuk bond has been trading well below the nominal price, even going as low as 35% below the nominal price. So the question remains, who will purchase it? And at what terms?
Policy shifts and drifts
Despite this strain on finances, in a move depleting the national reserves, the Muizzu administration has acquired military drones and armoured vehicles from abroad, all without disclosing costs under the pretext of national security.
“We’re seeing parades of military hardware—but who is the enemy?” Mansoor asked sharply. “This is a performative government playing on nationalist and populist sentiments that is stalling economic growth”.
“We are facing a double blow from an incompetent administration. The inability of this administration to raise any external financing and a missing economic development plan. Small businesses languish while the administration’s flagship projects such as oil bunkering have failed. No new infrastructure projects have been launched while many announced major infrastructure projects like bridges and tunnels are being walked back”.
“Economic development is achieved when it is driven by the needs of the economy, not by opaque politicking. Steered by the former Minister of Economic Development Fayyaz Ismail, we pursued an FTA with the UK on behalf of the fisheries sector to achieve a specific objective – eliminate the 20% tariff on our value-added fish product”. The Maldives exports more than 50% of their value-added fish products to the UK. “The benefit would be instantaneous with huge economic value. And we had an understanding to exclude services (Tourism sector)”.
The latest update from the Muizzu administration indicates that the Maldives-UK FTA discussion was not on the agenda of their most recent bilateral talks. A significant blow to the fisheries sector, to whom the Muizzu administration promotes the Chinese market, even when the trade data shows almost no existing fish export.
It remains to be seen how South Asian Free Trade Area (SAFTA) countries, most notably India, will react to the FTA concessions given to China by Maldives.
Mansoor surmised: “With these fiscal and economic challenges, with a pronounced foreign currency shortage problem where the US dollar trades 25% higher in the black market than the official rate … just maybe … we are not attractive enough at this moment. But things can turn with a more stable economy”, implying that Chinese companies could still make their presence felt.
As this island nation stands at a crossroads—buffeted by global giants and domestic fault lines—voices like Mansoor remind us that development cannot be achieved with slogans of nationalism and populism. They require vigilance, clarity, stakeholder participation and above all, the courage to demand transparency in the name of future generations.
The views expressed above belong to the author(s).