Foreign Direct Investment (FDI) is the standard entry route for foreigners seeking to set up a long-term business operation in the Maldives. Here are some key points to know about FDIs.
Relevant Laws and Authorities
FDIs are regulated by the Foreign Investment Act and Foreign Direct Investment Policy (FDI Policy). The Ministry of Economic Development and Trade is the government authority responsible for overseeing FDIs.
Sectors Open for FDIs
Maldives allows foreign investment in all major sectors, with certain sectors reserved exclusively for local investments. In certain key sectors, foreigners can own 100% equity, while in others, there is a limit on foreign equity ownership. For sectors with ownership caps, foreigners can still operate through joint ventures with local partners. To safeguard your interests and investment in these joint ventures, consider entering into a joint venture agreement with the local partner to govern operations, management, and profit sharing.
For the full list of sectors that are open to foreign investment, refer to the FDI Policy. Below is a list of the sectors reserved only for Maldivians.
- retail trade
- wholesale trade in sectors except construction materials
- land transport services and transport via pipelines
- logistic activities (in transportation and storage)
- operating picnic islands
- food and beverage service activities (café, restaurants, bakeries, and other eateries) with the exception of food franchises
- rental and leasing activities (including lease of heavy-duty machineries, etc.)
- employment agencies and recruitment services
- travel agency, tour operator, reservation service and related activities
- clinics except physiotherapy clinics
Minimum Initial Investment Amount
Under the FDI route, you are required to make an initial investment in accordance with the amount prescribed in the FDI Policy. The minimum initial investment amount varies based on the sector. This amount must be invested in the business established in the Maldives within a period of 5 years or an agreed period and proved by audited financial statements.
Steps for Entry via FDI Route
- Obtain Foreign Investment Approval: submit the Foreign Investment Application Form along with supporting documents to the Ministry of Economic Development and Trade. Note that most key sectors are subject to automatic or guaranteed approval whereas others are subject to approval after wider government consultations.
- Pay the Foreign Investment Application Processing Fee: pay a fee of US$ 5,000 to the Maldives Inland Revenue Authority.
- Register the business by incorporating a business entity: foreigners can choose to register a company or a partnership. Foreign enterprises can re-register as a company if the sector allows 100% foreign equity ownership.
- Execute the Foreign Investment Agreement: once the business is registered, a Foreign Investment Agreement is formalized between the business entity and the Ministry of Economic Development and Trade. After the agreement is signed, the foreign investment company typically has a period of six months to commence operations.
Applicable Government Fees for Entry via FDI Route
- Foreign investment application processing fee of US$ 5,000
- Company registration fee of MVR 2,000 (approx. US$ 130)
- Partnership registration fee of MVR 2,000 (approx. US$ 130)
Key Incentives for Foreign Investments
- no restrictions on repatriation of profits and capital proceeds
- no restrictions on foreign exchange
- easy process for business incorporation
- digital government services
- ability to own 100% equity in major sectors like tourist resort operations
- adherence to a common law-based contract system, allowing flexibility in preferred choice of law and dispute resolution mechanisms in contracts
- availability of international arbitration center in the Maldives for dispute resolution
- modernized civil procedures for litigation
- customs duty exemptions for large projects
- income tax exemptions for specific projects and industries approved by the President
- ease of hiring foreign workers for managerial, technical, and unskilled positions
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