Introduction

The Republic of Maldives is a country of coral reefs, sandy beaches and luxury resorts, with Islam as the State religion. Maldives is an Indian Ocean archipelago of around 1,200 islands, only 200 of which are inhabited. Maldives’ 320,000-strong population (plus 100,000 expatriate workers) is scattered across the islands.

In many ways, the Republic of Maldives is a South Asian success story: a relatively wealthy, educated, moderate Islamic republic that transitioned peacefully from dictatorship to democracy in 2008. Yet the political environment remains fragile: the country’s first elected president resigned in contested circumstances in February 2012, and the ramifications continue.

Maldives has made significant progress in social and economic development, thanks in large part to its sustained focus on high-end tourism. It graduated from least-developed country status in January 2011.

Annual GDP growth in Maldives has averaged over 7 per cent over the past 10 years, and was $2.8 billion (PPP terms) in 2011. Despite this, Maldives is experiencing serious economic difficulties and has had large budget deficits in recent years. While the World Bank rates Maldives as an upper middle-income country, there are widespread disparities between the capital Malé and the outer atolls in the delivery of basic social services.

Maldives is highly susceptible to the effects of climate change. Development continues to rest heavily on two industries, tourism and fisheries, and both are vulnerable to external economic factors, natural disasters and rising sea levels. The country faces high costs for service delivery across the islands and a shortage of skilled personnel.

Government, business and people-to-people links

Australia and Maldives share good links in trade and investment, education, development cooperation and through the Commonwealth. Bilateral relations were established in 1974.

Engagement has increased in recent years, with a focus on democracy building, climate change and other environmental issues. Australia and Maldives cooperate well in multilateral and regional forums on climate change issues, and other issues affecting small-island states.

Australian aid to Maldives is estimated to be $7 million in 2012–13, focusing on human resource development (we provide about 40 scholarships) and climate change adaptation and mitigation efforts through a partnership with the World Bank. Australia also supports partners working on judicial reform and public administration, and volunteers working in the education sector.

The size of the community in Australia is small – with around 450 people registering Maldivian ancestry on the 2011 census. Educational linkages continue to play an important role in deepening the people-to-people links between Australia and Maldives. The number and calibre of Maldivian students applying for and receiving scholarships to Australia continue to increase. Many Maldivian government and business leaders are alumni of Australian universities.

Australia–Maldives bilateral trade has remained steady over the past decade. Total bilateral trade was $31 million in 2011, of which $28 million was Australian exports. The bulk of bilateral trade is Australian food and beverage exports to the Maldivian tourism industry. This is likely to continue in the near future.

Officials from the Maldives Elections Commission have participated in the Australian Electoral Commission training program.

Australia and Maldives work together through the Bali Process to tackle transnational crime, including human trafficking, people smuggling and irregular migration. Australia is providing legal and immigration support to Maldives through this process.

Maldives also participates in South Asian integration processes. Maldives hosted the 2011 meeting of the South Asian Association for Regional Cooperation, at which Australia was an observer.

Towards 2025

The Australia–Maldives bilateral relationship is likely to continue its current trajectory, although the challenges Maldives faces from climate change, overfishing and public finances may affect opportunities for Australia.

People-to-people links should strengthen, particularly as scholarships continue to form a large part of Australia’s development cooperation program. In the short term, Maldives will remain reliant on international tertiary training to develop the skills required for improved governance, greater economic and social growth. Australia’s scholarship program will help fill this gap.

Tourism, which with fishing accounts for almost 30 per cent of Maldives’ GDP, is likely to remain the mainstay of the Maldivian economy out to 2025, so opportunities for Australian investment in the tourism sector may develop. Maldives is likely to remain a market for hotel supplies and allied services for Australian firms in the coming decades.