Identifier
Created
Classification
Origin
03COLOMBO1266
2003-07-21 10:30:00
CONFIDENTIAL
Embassy Colombo
Cable title:  

Excitement over Maldivian economic growth

Tags:  PREL PGOV ECON ETRD SOCI MV 
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C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001266 

SIPDIS

DEPARTMENT FOR SA, SA/INS
NSC FOR E. MILLARD

E.O. 12958: DECL: 07-21-13
TAGS: PREL PGOV ECON ETRD SOCI MV
SUBJECT: Excitement over Maldivian economic growth
tempered by development worries

Ref: (A) Colombo 1244; (B) 02 Colombo 2329

(U) Classified by James F. Entwistle, Charge d'Affaires.
Reasons 1.5 (b, d).

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001266

SIPDIS

DEPARTMENT FOR SA, SA/INS
NSC FOR E. MILLARD

E.O. 12958: DECL: 07-21-13
TAGS: PREL PGOV ECON ETRD SOCI MALDIVES'>MV
SUBJECT: Excitement over Maldivian economic growth
tempered by development worries

Ref: (A) Colombo 1244; (B) 02 Colombo 2329

(U) Classified by James F. Entwistle, Charge d'Affaires.
Reasons 1.5 (b, d).


1. (C) SUMMARY: During recent Embassy meetings in the
MALDIVES, government and business interlocutors spoke
about the positive social and economic developments in
the country in recent years, spurred especially by the
growth of the tourism industry. These contacts worried,
however, about the government's ability to continue this
development trend and generate opportunities for the
growing youth population. The government will face some
serious logistic and social challenges to provide for
all Maldivians, a task which contacts feared would
become extremely difficult if LDC status were lost. END
SUMMARY.


2. (C) VISIT TO MALE: Charge Camp and emboffs visited
the MALDIVES, July 13-15. The U.S. team met ministry
officials, as well as business and non-governmental
organization contacts. The meetings took place in the
Maldivian capital of Male, an island that is home to
one-quarter of the country's population of approximately
300,000 people. During the visit, Male was bustling and
its streets were full of life. There was also much
evidence of construction, especially of apartment
buildings to house the city's expanding population.
(Note: Though the government tries to discourage it,
there is considerable migration from other islands to
Male, which is part of the most prosperous atoll in the
country.)


3. (C) PROS OF DEVELOPMENT: Our contacts in the
government, non-governmental organizations (NGOs) and
business sectors all spoke of the positive economic
developments within the country in recent years. The
Ministry of Planning cited a tripling in GDP per capita
income over the last decade while several sources
reported that electricity, phone service, primary
education and health clinics are now present on all 200
inhabited islands. The tourism industry continues to
expand -- numbers suggest annual visitors will soon be

double that of the population -- and recent new
investment has led many interlocutors to feel that these
development trends are likely to continue in the near
future.


4. (C) NEW "ISLAND" IN ATOLL: Some of this economic
prosperity can be seen in the opportunities available in
Male, and its attraction to residents from other
islands. As a result, the increasing population on Male
has created a serious problem of overcrowding. (Note:
Male, on a .77 sq. mile island, is home to 74,000 people,
resulting in a population density 50 percent greater
than that of Manhattan.) In response to this issue,
government contacts were eager to share plans about a
neighboring "island" that is being reclaimed from a
lagoon in the sea. Called Hulhumale, the development
project is scheduled to continue for the next 15-30
years on this former lagoon located two islands
northeast of Male. Government plans call for the first
250 houses, with municipal infrastructure and some local
business, to be completed by the end of 2003. When
finished, the island will have triple the area of Male
and many of its residents are expected to commute by
ferry to Male. One foreign ministry official said he
was already looking forward to moving there, to have
more space than he currently had on Male.


5. (C) WORRIES ABOUT CONTINUED DEVELOPMENT: At the same
time, many sources expressed reservations about the long-
term ability of the government to sustain such
development trends. The unique problem of having a
population spread over 540 miles from north to south on
200 inhabited islands makes many development efforts
economically challenging and commercially infeasible.
Ministry officials said that telecom service on an
island, for example, may be limited to a single public
pay telephone and the cost of building an island school
was six times that of a comparable Sri Lanka one. NGO
and government contacts stated that some economic figures
were misleading, as they included expatriate wages and
foreign corporate profits which do not get recycled in
the Maldivian economy. Rather, some NGO officials said
20 percent of the population is estimated to live on less
than one USD a day. (Note: Official statistics cite an
average 2100 USD per capita annual income.) Ministry
officials were also concerned that continued investment
funding by major development banks and favorable trading
status crucial to this pace in growth would be in
jeopardy if the country lost its LDC status.


6. (C) SOCIETAL PROBLEMS IN THE WAKE OF GROWTH:
Perhaps the most significant problem mentioned by all
interlocutors was a lack of opportunities for young
Maldivians. More students are now able to go abroad for
higher education opportunities, but return to find very
little productive work. Even those who complete only
secondary education find their liberal arts-focused
curricula lacking in necessary trade skills. With 55
percent of the population under 20, contacts admitted the
employment problem would only increase. Foreign Ministry
officials feared that a growing population of idle youths
could eventually provide fertile ground for Islamic
fundamentalist movements to gain a foothold in the
moderate Islamic country.


7. (C) COMMENT: A number of factors stand in the way of
the development of the MALDIVES. Among these are vast
inequalities in wealth between residents of Male and
those of the outer atolls, and the enormous costs of
providing even basic services to the distant communities
which make up the majority of the country's population.
The achievements of the last decade look impressive on
paper and have indeed benefited the Maldivian people.
Realistically, however, the development of the MALDIVES
continues to hinge on the international aid and
favorable trading agreements it receives as a result of
its LDC status. END COMMENT.


8. (U) Minimize considered.

ENTWISTLE