Economic Overview Of The Maldives Economics Essay

scotch Overview Of The Maldives Economics EssayThere ar many an opposite(prenominal) an opposite(prenominal) factors in the macro analytic thinking environment that lead effect the decision of the managers of any makeup. The macro flip-flop includes such as measure transform, bargon-assed laws, calling barriers, demographic metamorphoses and giving medication form _or_ system of government changes. To identify and analyze do between these factors executives be able to categorize the factors that impact such asPolitical factors- which refer to political sympathies policy such as storey of intervention in the sparing and what goods and service does a organisation wants to bid.Economic factors- which includes interest rates, assessation changes stinting growth, inflation and exchange rate. Economic change can start out major impact to the domain.For exampleA real gold may make effecting goods practically difficult as it may raise the price in terms of for eign currencyInflation may incite higher wage demands from employees and raise re renderSocial factors- change in tender trends can impact on the demand for a firms products and ease of use and motivation of individuals to black market.Technological factors- untried technologies create smart products and new process.Example when arranging advances in technological, the staffs skills and fellowship behave to improve quality and guide to innovation. These developments can benefit regimen as well as the organization.Environmental factors- include the weather and mode change. Change in temperatures can impact on many industries including tourism, serve for and import and export of goods to and from region.Legal factors- these be related to the legal environment in which organization function. Introduction of new establishment and procedures such as staff development policy that affect organization fill and change will have slightly costs to the goernment and the organiz ation.This chapter is base on brass economic policies, monetary policy and more(prenominal)over it talks closely the Maldives Customs Service (MCS) role and relation to government policies and mission, goals and objectives of the MCS and the SWOT analysis of the organization. Furthermore this chapter mentions the call issues which related to the policy implementation. presidential term economic policiesThe Maldives has scoop shovel economic rights over some 859,000 km of surrounding the islands, which contains vast fishery picks. The islands are an attractive tourist desti province due to their sandy sporty beaches and clear lagoons. Land pot is express to 300 km and dust over an 850 km North-South fairly narrow stretch. This peculiarity of land mass and its distri plainlyion is a server maket to the development of local markets, change magnitude transport costs with implication for the competitiveness of the economy.Direct Foreign investingThe government has adopted a reasonable foreign climate the yield, the result has been non enough in the sense of that most foreign carry investment (FDI) is tied to the tourism sector. In regard of this save truly little FDI is seen in other sectors. For example the domestic market opportunities, given(p) the restrictions of a population of 300,000 approximately. Therefore FDI has been drive in the direction of sectors attain worldwide market. Tourism is one of the trump examples in the landed e render. The investment brass section consent to free currency exchange rate and repatriation of makes and crown assets. The financial sector 30% profit tax is composed and in that location is no corporate tax.At present the government there is improper practice of integration of investment procession and regulation as both roles are hand over to the Foreign Investment Services chest of drawers (FISB) of the Ministry of Economic and Development and Trade (MEDT). Therefore the existing legal environ work of Direct Foreign Investment (DFI) is inadequate to house ego motivated investment environment to the investors. Other than tourism investments all other sectors all the responsibility attains FISB and tourism investments Ministry of Tourism and Culture (MTC). Hence it is spanking to revise and modernize current DFI guide line policy to more conducive to declamatory scale investment.The financial sector of Maldives is cool it in its immaturity. There are five international bank operators in the outstanding city Male but all this banks are branch offices of their levy organization and take on only financing of commerce. At the present time there is no investment bank in Maldives, but a private firm, the Maldives Finance Leasing Company (MFLC) that provides capital financing for only small and medium scale operators. At present the Bank of the Maldives has conciliate more than 12 branches in different islands in the rude.Export promotionIn the existing regime Maldivian exporters invite in accessing world markets relative to competitors in other countries. The rules of origin governing preference, when defined as a value-added obligation for the most part difficult to satisfy country bid Maldives facing extremely far above the ground priced imported inputs and with limited relative advantages on labour cost.As mainly Maldives depend on imports for consumption, the lack of import substituting industries and industrial capability for export outcomes in existing account deficit of the country. The deficit for two hundred8 made k presentlyn at US$651.3 million and 2005 it was US$273.0 million, which means canvas to deficit in 2005 it has emergenced 139 per centum. The present account deficit averaged in the golf-club of 40 part of gross domestic product between 2004 and 2008. In 2008 more than 98 percent of Maldives commodity export well thought-out of fish and its related products amounting US$125.9 million, when compare to 2005 it has increa sed 29 percentThe total export of Maldives rise in 2008 by MRF 384 million to MRF 617 million a growth of 16.8% over the stratum 2007. The past forms average growth rate is 18.8% and marine products are the main exports with 98 percent. On the other hand due to tsunami misadventure there was a minor protrudeturn in the exports in year 2005. But starting from in the year 2006 there is rise and alight trend until 2008, with an approximate of 16.8% increased.In the existing situation of Maldives it is zippy to have regional integration initiatives that value to the country by the assistant of key issues that affect trade, including the cost of transport and customs clearance issues. Regional institutions provide a snappy support in the development of a system of standardization in Maldives, with the cooperation a tenacious with official recognition bodies on practiced Barriers to Trade (TBT) and organisation on the application of sanitary and phyto sanitary measures (SPS) ag reement issues.Social security measureAt present Maldivian social fosterion is in truth much favoritism in the direction of government employees who constitute roughly a quarter of the working population of the country. The government has priorities to make ecumenical primary education and develop a national wellness condole with system. The health expenditure has accounted for 10-12 percent of GDP over the last tenner years. The government is aware of the social protection issues and is keen to develop an legal social protection system consistent with the take aim of income and implementation capacity.The government intention for restructuring civil service is not only to grow macroeconomic stability but also is springy to sustaining the countries impressive progress in pitying development. Poverty rates, as measured by the headcount ratio, have fallen steeply, from 40 percent in 1997 to 16 percent in 2005. To maintain this trend in poverty reduction, improvements in exi sting social protection programmes and development of new programmes will go together with the fiscal hardship measuresCultural inheritanceThe Maldives is prosperous in inheritance sites, although in the in the beginning period of few decades the significance of safeguard Maldivian cultural heritage has been completely understood by Maldivians. On the other hand interrogation and documentation of Maldivian cultural heritage and history is still developing in the country. At present the country also lacks the legal framework to amaze problems coupled with heritage management in the country. The heritage Act is vital for a better protection of the Maldivian cultural heritage. A book providing a tentative list of heritage sites in the Maldives has been recently published.There is an ever-increasing lean to promote heritage values surrounded by Maldivians as a value of a heritage site forms the central core of its management. cerebration globally, Maldives is gearing to step into t he world heritage arena and almost today will have a tentative list submitted to the world heritage committee.Trade FacilitationIn the Maldives today, there has been a change from the Profitable protection function of customs to an extended protection of community. That is, trade facilitation effects more than just customs facilitation it includes all the contributing factors of the international supply chain. As a result, stakeholders usually comprise those government and business entities that are entailing in the administration or guide of international trade. In other words, in the style of early 20th centuries role of customs as the gatekeepers has now been becoming different by the new and more demanding role that is based on three decisive concepts trade facilitation, border protection, and tax collection.The MCS is tutelage up a conscious of international issues and their ability of strong effects on the nation, and it must be well-informed about national constrain power of a law to trade and transport treating and conventions. In many expressive styles, customs organizations are connected with their counterparts in other countries that they do with agencies in their own government. They often look to customs administrations internationally and in populate countries for assistance and for ideas on how to improve operations trade facilitation, border protection, and tax income collection.Revenue CollectionThe Maldives experience move backward and forward in economic activity that are wider than those of the region overall. When economic clock are good, economy outperforms the average of the region and when economic times are bad, economy legs behind. Although countries taxation collection are not only the means of comparing economic activity, that provide snapshot of the health of economy in a particular atoll or island. Generally stronger economies with greater economic activity urinate increase in the rate of the growth of tax revenue colle ction at the country level.An examination of the subsequent time series of revenue change make known that, in terms of revenue collection of the country go one better than the region overall in times of economic growth and retained strength revenue collection of the country began to experience downturns between 2007 and 2009. Hence the government aims to reduce the reliance on import revenue as an income source for the government expenditure and in recent times projected to a great extent and salient tax reform proposal. In this regard, in June 2009 government proposed modifications to the export-import law to pass import duties on food items and lower it for other commodities. This plan is an broker of much wider amendments government resolve brings to the export-import law in the next devil to three years.This proposal is part of a much wider amendments government will bring to the export-import law in the next two-three years, where government intends to bring down all applie d rates to a level which have a positive impact on the economic development wishings of the country and in compliance with international obligations including World Trade Organization (WTO). shore fosterionTariffs are the major instrument of border protection in the Maldives. With the exception of in the case of cigarette, on which has precise duty of MRF.0.30 per pulsate and all the other duties are ad valorem obligation levied on CIF (cost, indemnity and freight) import value. In the current structure of applied ad valorem tariff have ten bands such as duty free, 5 percent, 10, 15, 20, 25, 35, 50, 100, and 200 percent. The three main staple foods such as flour, rice and sugar and all other imports intended for commercial re-export come in the country free of duty.Maldives has increased its maximum tariff on all goods (excluding alcohol and tobacco) from 112 to 142 percent. In 2006 this maximum tariff was applied to plastic packaging materials. The trade policy space, as m easured by wedge between destined and applied tariffs has decreased slightly since 2000, now standing at a relatively low 16.8 percent, compared with 54.8 percent on average for its regional neighbors and 29.5 percent for lower-middle-income countries. Regarding the extent of its trade liberalization in services, the Maldives ranked 142nd out of 148 countries harmonize to the GATS Commitment Index.The discussion on the upcoming direction of tariff restructuring is much in line with expected view. It simply call attention to the need for enlargement the internal tax base to diminish the government flagitious dependence on border taxes which would facilitate further tariff reduction, without examining revenue effects of tariff reduction. Enlarging the internal tax base to diminish the governments heartrending dependence on border taxes would, obviously facilitate further tariff reduction.Fiscal policyThe Maldives has neither a corporate tax not either a broad based sales tax estab lishment in the country. The bank profits are subject to profit tax of 25 percent. In the highest degree recent year largely tax revenue as a percentage of GDP was 20.5 percent. Revenues are collected from customs duties. Conversely, the worsening fiscal signs are worrying as massive budgeted deficit stems not only from renovation, however more over from long standing structural issues such as growth of the civil service, large pay rises and subsidized social services. Therefore, if not the government attend to these subjects earlier than its debt get to unsustainable levels, far above the ground economic growth cannot be sustain.Broadening the tax baseThe government is planning to increase revenue by broadening the tax base. Government revenue is expected to increase 33 percent of GDP in 2010, 37 percent of GDP in 2011 and 36 percent of GDP in 2012. Currently the government revenue generation bases are mainly import duties, tourism tax, dividends from state-owned opening move and resort lease rentals. The government has argument of implementation of the business profit tax and goods and service tax is look forward to bring in early 2011. The government expects to increase the revenue with reference to the impact of new taxes it would be 15 percent of GDP.Rationalization of import dutiesIn the Maldives government revenue connotations are a main alarm over and over again voiced as an argument further rationalized of import duties. It is argued that import duties are a vital source of government revenue and the stop number with which customs duties are reduced needs to be resolved in harmony with the speed and effective of domestic tax reforms at exhaustively examined the condition of the revenue structure to compensate lost revenue. If not the look forward to economic gains from reform could well be erased by ill budgetary arising from revenue shortfall.Over view of the Maldives Customs Service (MCS)The MCS plays vital role in protecting and enhancing Mald ives economic prosperity, security and unique way of life. The border management has an effect on economic performance and the public assistance of community and MCS is committed to ensuring that Maldives entry points actively supports government priorities.In order to achieve MCS vision of achieving excellence in contributing to the social and economic well-being of the nation by providing passe-partout, quality assured customs service. MCS has to be ready for the future and to be able to respond quickly and in effect to unexpected situations and conditions, and have to realize the effective ongoing stipulation of service.In order to support the social and economic well-being of Maldives, MCS continue to work in coordination with other agencies, and maintain relationship with customs administration, international organization and industry stake holder. It is outstanding to continue deepen understanding of MCS partners priorities and to ensure that how MCS objectives and those o f partners in the public and private sector can best aligned. burster and VisionTO ENSURE that persons, goods and conveyances enter and exit the Republic of Maldives in accordance with national laws, and that such function is carried out while protecting the state revenue and the rights of the components of the fraternity and in a manner that safeguards the integrity, esteem, dignity and recognize of our Maldivian Nation.ACHIEVING EXCELLENCE in contributing to the social and economic well-being of the nation by providing paid, quality assured Customs service towards the protection of the society and revenue collection, through optimal Information Technology mobilizationGoals and objectivesTo achieve the national goals MCS has to provide staff with relevant academic competency and skills gentility so as to create conducive work environment for generating devotion and motivation amongst them by inculcating and promoting required ethical standards in order for them to dumbfound passkey Customs officers.To facilitate and provide trade-related customs services in a customer-friendly environment, in accordance with the laws and regulation of MaldivesTo protect State revenue through extensive participation in implementation of export/ import policies, strengthening customs control mechanism, and post clearance audit procedures.To be a world-class customs service that complies with all pertinent international conventions, articles thorough cooperation and coordination between Customs of other countries, customs- related international organizations and other international NGOsObjectiveProtect and collect revenue on taxable goods.Detect and deter narcotics.Detect and deter smuggling of goods, pornography, and banned articles.Protect and facilitate legitimate trade and industry to uphold Republic of Maldives commerce integrity.SWOT AnalysisStrengthsWeaknessOpportunitiesThreatMaldives customs service (MCS) is long-dated serving organization in the Maldives. The refore customs has good temper of among all other organization and the customs has brought a valid changesGovernment gives full support to the MCS to maintain its service. Example if customs submit a project for increase revenue the government approves easilyProvide professional training for the officers for their daily work environment which has huge advantages to perform best of their knowledge and experienceLack of Act the most weakness of the organization as there are many improvements which need to bring with the help of actAction and words are not align which causes a huge weakness of the organization as the supervisory level action which makes different ways in same situationMCS gets many opportunities from the government to improve trade facilitation and control illegal activities which enter the countryMCS is the WCO member and many other international authorities such RILO and WTO and other countries provide international training and equipmentsPolitical Influences is one of the difficult things MSC face up today, as the political influence is taking part in some decision making and many political posts in top levelTraders do not keep their business records, so it hides the way for their negotiations, proceeding and other records that need for their business backgroundKey issues related policy implementationCorruption and low integrityCorrupted environmentunethical behaviourRevenue leakageCompliance not measure ineffective decentralizationDecentralized areas staff not empoweredPartially decentralize without uniformityLack of border controlIncompetent staffs and stakeholdersPolicies for rotation force level of staffsLack of technical skillsPoor communication with the stake holders absence of Carrier pathNo succession planHuman resource planDe-motivationKnowledgeable staff turnoverPerformance appraisal not based on objectivesInappropriate recruitment and selectionChapter summeryThe Maldives still face a range of development limitations distinctive to small island nation. These take in a small export market, narrow resource base, and famine of skilled work force, difficult transportation, high unit cost of social, health and economic infrastructure condition and high propensity to external and pictorial disasters.To enhance the efficiency and effectiveness of the revenue collection and trade facilitation it is vital to implement modern techniques to minimize the illegal offences which are carried out through in the Customs control area and prevent the importation and exportation of restricted and prohibited goods and conveyances into and from the country, while providing an excellent service.In addition there are special require developing the quality of the limited human resources. It is apparent that legislation, systems and procedures need to be enforced and implemented by experienced, professional and dedicated people. The commitment, loyalty and integrity of staff are particularly important to an organization in tacklin g challenges, making changes and introducing reforms.Human resources require to be create on a continuous and long-term basis with an analysis to promoting and enhancing staffs qualification, professional ability, management techniques, morale and integrity. In this respect, well planned programmes with an eye on the future for staff training, career development and integrity promotion are essential to the well being of any administration and to serve and protect countries economy