DEVELOPMENT GOALS FOR MALDIVES

UNCLAS SECTION 01 OF 03 COLOMBO 002132 SIPDIS SENSITIVE SIPDIS STATE FOR SA/INS MCC FOR D NASSIRY AND E BURKE GENEVA PASS USTR E.O 12958: N/A TAGS: ECON EAIR ENRG EWWT SENV EINV ETRD MV SUBJECT: DEVELOPMENT GOALS FOR MALDIVES ¶1. (U) Summary: The importance of creating a stable economy before Maldives' 2011 LDC graduation, diversification beyond the fisheries and tourist industries, and promoting environmental protectionism were the main topics of Assistant U.S. Trade Representative (USTR) to South and Southwest Asia, Ambassador Douglas A. Ambassador Hartwick's visit to Maldives. ¶2. (U) In a series of meetings held in Male', Maldives on December 5-6, 2006, Ambassador Hartwick and USTR Special Assistant Manpreet Anand, accompanied by Econoff and Econ specialist, met with President Maumoon Gayoom, the Ministers of Tourism and Civil Aviation, Finance and Treasury, Economic Development and Trade, Atolls Development, and Foreign Affairs, and the Attorney General's Office to discuss the USTR's interest in promoting and strengthening bilateral economic links and trade opportunities between the U.S. and Maldives. The Ambassador also consulted with U.N. and World Bank country representatives to follow-up on the tsunami-recovery programs related to the Bush-Clinton Fund. End Summary. Economic Expansion -------------- ¶3. (U) Ambassador Hartwick articulated the USG's support of the Government of the Republic Maldives' (GORM's) goals of global economic expansion and the USG's interest in assisting the GORM to create a market-friendly environment that would increase trade between the two countries. GORM officials responded favorably, noting that these ideas aligned with the GORM's national goal of becoming a top-ranking middle-income country by 2011, the year Maldives graduates from LDC status. Driving forward its Reform Roadmap to achieve their "Vision 20/20" national goals, the GORM is proposing a plethora of new legislation to further their political and economic reform agenda. ¶4. (U) The GORM faces multiple economic challenges, including its attempt at simultaneous political (see septel) and economic reform, its disparate topography, its lack of specialized and vocational training, and its two-sector economy based on tourism and fishing. Nevertheless, some progress is being made in drafting economic legislation, establishing schools of higher education, and exploring ways to diversify its economy. Preparations for Graduation from LDC Status -------------- ¶5. (SBU) In late November 2006, the GORM participated in a workshop sponsored by the IMF, ITC, UNCATD, UNDP, World Bank and the WTO to develop an Integrated Framework to guide the GORM's graduation from LDC status. Based on workshop recommendations, the GORM seeks to diversify its economic portfolio with its neighbors. The GORM does not plan to pursue the recommendation of the workshop to peg the Maldives ruffiya against the euro. Currently, it is pegged against the dollar. U.S. - Maldives Economic Links; a Mission in DC -------------- -- ¶6. (U) Ambassador Hartwick noted that few of the 600-700,000 tourists coming to Maldives each year are US citizens. The GORM wants to develop a strategy to increase interest in Maldives for both the American tourist and investor. Riding the wave of free publicity generated by Katie Holmes and Tom Cruise's recent honeymoon to Maldives, the Ministry of Tourism and Civil Aviation plans a Maldivian promotion night at the Four Seasons Hotel in Hollywood. Further, the GORM plans to participate in more trade fairs in major cities across the U.S. which they have neglected in previous years. Other areas of promotion Ambassador Hartwick suggested included media engagements, airline promotions, travel agents and the internet. ¶7. (U) To further enhance engagement with the U.S., Ambassador Hartwick was told that the GORM is establishing a mission with a trade office in Washington D.C. in January 2007. The GORM also COLOMBO 00002132 002 OF 003 plans to open missions in Japan and Switzerland in 2007. Ambassador Hartwick praised this initiative, stressing that a physical presence in the U.S. capital city will greatly enhance both political and economic ties between the countries. American Investments and Opportunities -------------- ¶8. (U) Following are current or potential investment opportunities for US businesses: -- HOTELS: Three major U.S. hotel chains are planning to build in Maldives in the next 3 to 5 years: Sheraton/Westin, Ritz-Carlton (with Sri Lanka's Ceylinco managing the construction) and Holiday Inn. Ambassador Hartwick stressed that the Maldives should focus on promoting to the longer-term tourists instead of the single or double night stop-over business executive. -- BANKS: Qasim Ibrahim, Minister of Finance and Treasury, requested Ambassador's Hartwick's assistance in organizing American investors from the financial sector to visit the Maldives. A visibly excited Ibrahim described the opportunity to establish full-fledged banking services in the Maldives as a "golden opportunity" since international banks in-country "have yet to lose 1 USD since arrival." He specifically requested the U.S. Embassy to ask the Mumbai-based Bank of America to establish a full-scale branch in Male'. (Post is working on this.) -- OPPORTUNITIES "FOR ALL:" The Minister of Atolls Development, Mohamed Deen, said that there are opportunities for U.S. products in all sectors. He said that his own company, Orchid Group, uses many U.S. based products such as generators and water plants. These products, however, are brokered through another foreign national agent (usually from Singapore),instead of directly from the U.S. Additionally, Deen noted that both local and tourist consumers are demanding higher-quality products than before; especially from Australia, U.S. and the E.U. Possible Leadership in Environmental Concerns -------------- ¶9. (SBU) Ambassador Hartwick stressed to President Gayoom the opportunity for Maldives to become a leader in environmental protectionism, emphasizing that the tourism industry is based on its unique and pristine environment. Maldives can be the spokesman in leading the region to promote eco-friendly tourism. Ambassador Hartwick suggested that Maldives join regional cooperative efforts and organizations that focus on regulating environmental protectionism requirements. The Minister of Tourism expressed interest in pursuing this topic and asked for additional guidance from Ambassador Hartwick. ¶10. (SBU) Ambassador Hartwick was informed that the GORM has drafted environmental regulations as a part of its reform roadmap. These regulations would institute heavier fines for littering the sea, establish a professionally-designed dumping area for each atoll, reclaim Garbage Island (informally named this since garbage has been used to significantly increase its size),research viable alternative energy and sewage treatment plans, set height restrictions for buildings, and initiate a reef conservation project. The regulations have met with some resistance due to correspondingly higher investment costs. To help mitigate this impact, Ambassador Hartwick suggested that the GORM create economic incentives such as duty-free importation of viable technology and environmental-friendly goods that would ensure support and effectiveness of the programs. Transportation Development Goals -------------- ¶11. (U) International and national transportation issues continue to challenge Maldives as it seeks to unify the country by easing travel for locals and tourists. The government hopes that the COLOMBO 00002132 003 OF 003 expansion of Male' International Airport and the newly-constructed airport in Gaan Adu Atoll (to be open for chartered planes in 2007) will significantly increase the number of tourists. The GORM is investigating the establishment of a national airline and more direct flights from New Delhi, Beijing, Kuwait, and Dubai. Resorts have proposed five new regional airports with private aviation and have offered to subsidize their development. The Ministry of Atoll Administration also plans to build 5-10 public airports to provide nighttime as well as daytime connections between the atolls. The GORM plans to send students to the U.S. for pilot training to support these efforts. ¶12. (U) The GORM also plans to expand Male' port and construct one or two new transshipment ports in the North. As Maldives is strategically located on major oil shipping lanes, China and India have expressed interest in the construction of a transshipment port. Currently only 40,000 containers pass through Male' port. The cost of constructing a new port, according to the World Bank, could be as high as half of Maldives' GDP, making private investment essential. Tsunami- Reconstruction SIPDIS -------------- ¶13. (U) Ambassador Hartwick consulted with the UNDP on the status of Dhiggaru Island, adopted by the Bush-Clinton Fund. Reconstruction delays are blamed on the high cost of materials and transportation, island capacity constraints, and a shortfall in funding. The UNDP considers Dhiggaru Island a model island because it exemplifies UNDP best practices in integrating the community into the reconstruction process, empowering the community to take responsibility, installing a system of peer-pressure and reducing dependency on donors. Reconstruction and rehabilitation programs were prioritized in the following order: shelter, livelihood (fisheries, vegetation); and infrastructure (harbor, soil erosion, sea protection). Almost all of the 161 damaged or destroyed houses on the island are completed. The Dhiggaru harbor rehabilitation project, managed by the MT Hojgaart firm, is completed with a new quay wall and breakwater. Construction of a fish market and community training to boost production of alternative, value-added fish products is underway. ¶14. (U) COMMENT: Ambassador Hartwick's meetings further confirmed the intensity with which the GORM seeks to develop economically. As a small island nation, Maldives has utilized its most obvious assets for economic development: its sand and palm trees (tourism) and its blue waters (its fishing industry). Embassy will continue seeking ways to assist Maldives in its economic diversification and development, while identifying opportunities for US business and investment. ¶15. (U) Ambassador Hartwick did not have the opportunity to clear this cable. BLAKE