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Maldives is a chain of 1190 coral islands, spread over an area of roughly 90,000
square miles in the Indian Ocean, off the south western coast of India. Tourism was first
introduced to the Maldives in a very small scale in 1972. What initiated as a small business
venture with only one resort and tourism concentrated near the capital city, tourism industry
has now expanded throughout the country. With more than 100 resorts so far, the industry has
transformed into a multi-million dollar industry contributing to the majority of the total Gross
Domestic Product (GDP) of the country.
This report highlights the impact of tourism in the economic development of the
Maldives and critically analyse the role of tourism in the globalization process.
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The Direct Contribution of Travel and Tourism to GDP primarily reflects the
economic activity generated by industries such as hotels, travel agents, airlines and other
passenger transportation services (excluding commuter services) in Maldives. But it also
includes the activities of the restaurant and leisure industries directly supported by tourists.
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Maldives also saw a huge increase in tourism revenue in 2011, mainly due the
changes brought to the tourism lease rent formula and introduction of Tourism Goods and
Services Tax (T-GST). According to the Tourism Year Book 2013, published by the Ministry
of Tourism, Arts and Culture of Maldives the resort lease rent formula was revised in 2011
from a bed capacity based rent to a land based rent where US$ 8 is charged per square meter
of the island, the T-GST rate was increased from 3.5% in 2011 to 6% starting from January
2012.
With the mentioned changes in effect, the government revenue in 2011 was 9,172.10
Million Rufiyaa, from which 36% was revenue generated from tourism. And in 2012, the
total Government Revenue stood at 9,366.50 Million Rufiyaa, out of which 3,574.02 was
tourism contribution. The table below shows the percentage share of tourism revenue in total
government revenue.
Year
2008
2009
2010
2011
2012
Total
Government
Revenue
6,939.30
5,313.30
6,392.40
9,172.10
9,366.50
Land
Rent
Tourist
BedNight Tax
1,202.50
1,034.24
566.50
531.41
594.36
750.74
804.72
Tourism
Goods &
Services Tax
(T-GST)
836.52
1,566.35
Lease Period
Extension
Fee
Total
Tourism
Revenue
511.26
168.71
1,969.70
1,429.81
1,713.86
3,301.01
3,574.02
% Share of Tourism
Revenue in Total
Government
Revenue
28.4
26.9
26.8
36.0
38.2
In addition to T-GST, Tourism Revenue also includes earnings received from Tourist
Bed-night Tax, Tourism Land Rent and Lease Period Extension Fee.
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Year
Tourism Receipts
Exports,
FOB
Imports, CIF
2008
2009
2010
2011
2012
1,558.50
1,472.70
1,712.89
1,867.89
1,873.36
2.90
-5.51
16.31
9.05
0.29
125.87
76.37
73.91
114.81
161.03
1,382.11
962.53
1,090.86
1,328.55
1,548.94
Tourism expenditure refers to the expenditure made on tourism from the central
government budget. According to the Tourism Year Book 2013, published by the Ministry of
Tourism, Arts and Culture of Maldives, the tourism expenditure had been declining over the
years when compared to the tourism revenue. The table taken from this same publication
shows the tourism expenditure in relation to total government expenditure from 2008 to 2012.
As seen from the table, although the total government expenditure has been increasing
steadily, the expenditure made on tourism has declined considerably. In 2012, the total
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government expenditure was recorded to be 14.2 billion Rufiyaa, out of which only 47.3
million was spent on tourism.
Government Expenditure on Tourism, 2008-2012 (Million Rufiyaa)
Year
Government
Expenditure
Tourism
Expenditure
% Share of
Tourism
Expenditure
2008
2009
2010
2011
2012
10,342.40
11,104.30
10,996.40
12,663.70
14,215.90
93.3
78.5
46.90
33.70
47.3
0.9
0.7
0.4
0.3
0.3
The table below shows a comparison of the Tourism Revenue and Expenditure of
Maldives from 2008 to 2012. From the table it is clearly seen that the expenditure by the
government on the tourism industry is lower than the tourism revenue.
Tourism Revenue & Expenditure, 2008-2012
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In the Maldives tourism industry, there are currently four types of accommodations
available to guests; namely tourist resorts, tourist hotels, tourist guest houses, and live a board
safari vessels. With the rapid growth in the industry, the bed capacity of these facilities have
also been increasing, especially in the area of tourist guest houses and live a board safari
vessels.
According to an article by the Ministry of Tourism, Arts and Culture (MoTAC) of the
Maldives, at the end of 2012, there were 105 resort islands with a total bed capacity of 22,889
registered in MoTAC. There were 1101 beds in 75 guest houses registered at the MoTAC at
the end of 2012. Although, guest houses contribute only a few percent to the total bed
capacity, this form of accommodation has been rapidly increasing within the Industry. At the
end of 2012, there were 154 safari vessels registered at MoTAC, to accommodate tourists in
the Maldives.
In terms of employment, tourism sector accounts for most of the total employment in
the Maldives. According to a survey conducted by MoTAC on 25 November 2006 to find the
baseline data of tourist resorts and to study the current human resource situation in the
tourism sector of Maldives, there were a total of 15,716 staff in 74 resorts (15,324 beds). The
table below shows the number of staff employed in the tourism sector according to this study.
No of Staff
In this survey, it was also found that 54 percentage of those employed in the tourism
sector was local and foreign employees represented 46 percentage. However, according to the
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survey foreign female employees were 2 percent more than the local females in the tourism
sector of the Maldives.
Role of Tourism in the Globalization Process
United Nations World Tourism Organization (UNWTO) defines tourism as a social,
cultural and economic phenomenon which entails the movement of people to countries or
places outside their usual environment for personal or business and/or professional purposes.
As such, tourism has implications on the economy, on the natural and built environment, on
the local population at the destination and on the tourists themselves.
By looking at this definition, it is clear that tourism is a driving force to globalization.
It is safe to say that tourism industry helps a nation in the globalization process by
overcoming border barriers and establishing relationships with providers and tourists as well
as with travel agencies and tour-operators.
One of the major aspects of globalization is the development of the transportation
industry and as such, in Maldives, the tourism industry has played a significant role in
improving the transportation industry. As such Maldives now have three international airports
and according to Tourism Year Book 2013 by Ministry of Tourism, Arts and Culture, thirty
international scheduled carriers fly to Maldives as of the year 2012. Moreover, there are more
than thirty international chartered carriers flying to Maldives. Based on the findings
published in the Tourism Year Book 2013, the charter sector registered a huge increase of
20.8% in their movements to the Maldives during 2012. Connecting all the passengers from
these international airlines to almost all parts of Maldives are the seaplanes operated by two
major seaplane operators; Trans Maldives and Maldives Airtaxi and also by two domestic
airlines; Maldivian and Flyme operating to six domestic airports. In addition to this, a major
emphasis was given by the government to link all the islands with a ferry system.
The tourism industry have also brought considerable technological advancement to
the industry, further enhancing the globalization process of the country. This is evident from
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the fact that all the international and domestic airlines, including seaplane operators in
Maldives, operates online booking websites. Even though there has been no research done, it
is safe to say that most of the tour operators and travel agents in Maldives uses the Global
Distribution System (GDS). Global Distribution Systems (GDSs) are computerized,
centralized services that provide travel-related transactions. They cover everything from
airline tickets to car rentals to hotel rooms and more.
International hotel brands operating in the Maldives is also a strong indication of the
role of tourism in the globalization process of the country. Some of the international brands
include Hotel Pioneers such as Hilton, Sheraton, Park-Hyatt, Shangri-La, Viceroy, Jumeirah,
Four Seasons and Taj Hotel Resorts and Places.
Maldives also have a healthy market share in the Europe, as well as Asia and the
Pacific. According to the Tourism Performance of Maldives in the Year 2012, published by
MoTAC, European Market being the largest market, contributed about 54% of the total
visitors to the Maldives in the year of 2012, while Asia and the Pacific makes 40.1% of total
visitors.
Moreover, the Ministry of Tourism, Arts and Culture (MoTAC) of Maldives reported
that on 24th November 2013 Maldives has attained its goal of attracting one million tourist.
The Tourism Ministry announced that 1,000,203 tourist had visited the country as of Sunday
(November 24).
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Conclusion
Maldives has experienced rapid economic growth and development in recent years,
supported by a dynamic tourism sector. It has moved from an under developed country to a
developing country in 2011 due to increased productivity, seized from the immense benefits
from tourism.
According to the World Tourism Organization (WTO), even though Europe and
America remains as the worlds best tourist destination, South Asia is forecasted as a
promising region for tourism. For this reason, all stakeholders in the Maldivian tourism
industry are aware of the importance of tourism industry to the Maldives economy and has a
vision for creating and operating a sustainable environment friendly tourism industry.
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References
Definition of TOURISM. Available from http://media.unwto.org/en/content/understandingtourism-basic-glossary [Accessed 4 December 2013]
Ljiljana Radulovic, THE ROLE AND POTENTIAL OF GLOBAL DISTRIBUTION
SYSTEM AMADEUS FOR TOURISM DEVELOPMENT AT THE GLOBAL LEVEL,
Singidunum Journal of Applied Sciences, Singidunum University. Available from
http://journal.singidunum.ac.rs/files/2013-10-1/the-role-and-potential-of-global-distributionsystem-amadeus-for-tourism-development-at-the-global-level.pdf [Accessed 30 November
2013]
Ministry of Tourism, Arts and Culture Republic of Maldives. TOURISM PERFORMANCE
OF
MALDIVES
IN
THE
YEAR
2012.
Available
from
http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/maldives_country_report_2012.pdf
[Accessed 27 November 2013]
Maldives Monetary Authority. OVERVIEW OF THE MALDIVIAN ECONOMY. Available
from http://www.mma.gov.mv/stat.php [Accessed 1 December 2013]
Ministry of Tourism, Arts and Culture Republic of Maldives. TOURISM YEAR BOOK
2013. Available from http://www.tourism.gov.mv/pubs/Yearbook_2013.pdf [Accesses 5
December 2013]
Maldives Monetary Authority, MONTHLY ECONOMIC REVIEW NOVEMBER 2013.
Aaviable from http://www.mma.gov.mv/mmr/nov13.pdf [Accessed 3 December 2013]
Statistics & Research Section Ministry of Tourism & Civil Aviation. HUMAN RESOURCE
SITUATION IN THE TOURISM SECTOR OF MALDIVES. Available form
http://www.tourism.gov.mv/downloads/reports/survey_report_final_2008.pdf [Accessed 6
December 2013]
Suresh Kumar Kundur. [2012]. DEVELOPMENT OF TOURISM IN THE MALDIVES,
International Journal of Scientific and Research Publications, Volume 2, Issue 4. Available
from http://www.ijsrp.org/research_paper_apr2012/ijsrp-apr-2012-73.pdf [Accessed 5
December 2013]
TRAVEL & TOURISM ECONOMIC IMPACT 2013 MALDIVES. Available from
http://www.wttc.org/site_media/uploads/downloads/maldives2013_2.pdf
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