Maldives WT/TPR/S/110
Page 29
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) OVERVIEW
1. Tariffs are the Maldives' main trade policy instrument and a major revenue source, accounting
for about two thirds of tax receipts.  Applied MFN rates have seemingly been reduced, and averaged
(unweighted) 20.8% in 2002.  Almost all tariff lines (95%) are in the range 5% to 25% (the most
common rate).  The tariff remains relatively complex, involving 11 different rates;  ten are
ad valorem,  and one is a specific duty.  Consequently, the tariff remains a potential distortion to
domestic efficiency, both as a trade and tax measure (its main objective according to authorities).
Lower and more uniform tariffs would enhance resource-use efficiency by reducing the risk of
resources being attracted into relatively highly protected activities.  The scope for substantial tariffcuts may be limited by their importance as a government revenue source.
2. All tariff lines are bound.  A large gap between bound and applied rates imparts a degree of
uncertainty to the tariff;  the Government retains fr eedom to raise applied rates within bindings.  This
uncertainty is compounded as applied tariff rates on 149 tariff lines exceed the bound rates by asmuch as 170 percentage points;  the authorities indicated their intention to rectify this situation.
3. The transparency of the tariff structure is undermined by the extensive use of duty
concessions largely benefiting foreign investors;  well over one third of tariff revenue is forgone by
such concessions.  Customs has yet to fully implement WTO commitments (including use of
transaction value), and minimum prices are used.  A fixed rate tax of US$6 per bed night is levied on
foreign tourists (as defined by the World Tourism Organization).  Contingency protection measureshave not been used.
4. Wide-ranging State involvement in the economy and the government procurement regime
(although seemingly more transparent), may create considerable trade distortion.  State-owned
enterprises (SOEs) engage actively in trading activities to, inter alia,  ensure supplies.  Import quotas,
combined with price-control measures and privileges for SOEs, are maintained for staple
foods (mainly rice, sugar, and wheat flour).  A small number of items (alcoholic beverages, pork, used
cars and motorcycles) are prohibited or restricted for safety, security, environmental or religiousreasons.
5. The export regime is relatively open;  export controls (on timber), taxes (on ambergris), and
regulations are minimal, although some foreign investment royalties apply only to exports
(e.g. clothing).  MIFCO's (an SO E) export monopoly, at national level (Chapter IV(2)(ii)(a)), on
canned and frozen tuna was abolished in 2000.
6. No intellectual property legislation exists but efforts are being made in this area; there is
particular interest in the protection of Maldives fish as a geographical indication.
(2) M
EASURES DIRECTLY AFFECTING IMPORTS
(i) Registration, documentation, and customs clearance
7. Any entity or person, including non-nationals, may import goods commercially for a
registered business activity or outlet to sell imports, provided that it has a general import license fromthe Ministry of Trade and Industries.
1
                                                     
1 The Law on Outlets Selling Imports and Food Serving Outlets of 1978 (No. 60/78) requires all such
establishments to be registered with the Ministry of Trade and Industries.WT/TPR/S/110 Trade Policy Review
Page 30
8. Since 25 May 2000 , Customs has authorized registered users to access the customs
declaration processing software system for processing forms online.  This has enabled import (and
export) documents to be submitted through electronic data interchange (EDI) or direct trader input
(DTI).  This has worked well and reduced considerably processing times, as well as improving data
analysis.  Some 85% of declarations from substantial importers are submitted electronically, either
using EDI, (only available at the airport) or floppy disc.  Commercial transactions involvingmisrepresentation or duplicity in the manufacture or export of products likely to damage the national
image or reputation are prohibited in principle.  However, this provision is effectively non-operative
and customs assumes that all imported products are genuine.
9. The main documents required for customs clearance include:  the original commercial invoice
(or a legible fax copy) and three copies;  the bill of lading or airway bill;  the packing list, if goods arepacked in more than one case;  and bank and insurance documents, where letters of credit and insured
shipments are involved.  The shipping and bank documents should be provided on request for
valuation purposes.  Customs approves the documents for valuation purposes and issues the importer
with an endorsed commercial invoice that stipulates the value of the goods for duty purposes as
determined by Customs.  Once obtained, it is subm itted by the importer along with two sets of the
Customs Declaration Form.  Once verified, the duty is assessed and the importer given an endorsed
copy of the declaration for duty payment.
10. The Maldives Customs Service inspects imports for clearance after payment of duty.  All
single-item consignment goods and direct-delivery cargo, such as river sand and cement, are released
on a risk-assessed basis.  About 25% to 30% of consignments of reliable parties judged on past
importing history are physically inspected.  There are no preshipment inspection (PSI) requirements.
2
The Maldives has commenced computerizing customs operations, and UNCTAD's Automated System
for Customs Data (ASYCUDA++) was to be fully implemented during 2002 supplemented, where
necessary, with merchandise classifications unique to the Maldives.  According to authorities, import
clearance times depend mainly on the completeness of the documents and information provided by
importers, but take less than two hours on average.  The Maldives has post-entry audit arrangements
and import declarations are checked after release.  Importers must pay the duties in full on shipmentssubject to valuation disputes while seeking court relief.  No system of security guarantees exists.
11. Importers may appeal valuation and classification disputes to customs.  Such appeals are
heard by an internal committee, which also consists of representatives from the private sector and
other government agencies.  The Committee meets daily.  If still dissatisfied, the importer may appeal
to the courts.  The court may authorize a refund, without interest , where deemed necessary.   
Importers found to be fraudulently under-valuing imports are fined an amount not exceeding twice the
value of goods imported.  For repeated offences, the importer may also be barred from importing
goods for up to two years.  After payment, importe rs may appeal such fines to the courts, which may
order the Government to refund the fine.   Fines and imprisonment for up to two years are provided for
in the legislation for smuggling.
12. There are two international ports in the Maldives;  Male International Airport at  Hulule and
the Male commercial seaport.  Despite the large number of islands, smuggling is not seen to be a
major problem by the authorities.  Vessels carrying cargo to the outer islands must clear goods
through Male and pay the customs duty.  Two customs officers for cargo inspection and an officer
from the Port Security Police usually accompany such shipments.
                                                     
2 WTO document G/PSI/N/1/Add. 8, 28 September 1999.Maldives WT/TPR/S/110
Page 31
13. The Maldives became a member of the World Customs Organization in September 1995.
While it is not a member of the ATA Carnet System, similar procedures and privileges are followed.
The Maldives is considering joining this system.  The Maldives and other SAARC members have
approved the Customs Action Plan to harmonize the application and simplification of customs
procedures and practices.  This is to be achieved through the progressive implementation of the Kyoto
Convention on Customs Procedures and developing a coordinated and cooperative approach tocustoms, including adoption of standardized forms and simplified procedures.   According to the
authorities, the new customs legislation due to be passed in 2003 will be consistent with the Kyoto
Convention.
(ii) Tariffs, other duties, and taxes
14. All tariffs are ad valorem, levied on the import's c.i.f. (cost, insurance, and freight) value,
except for cigarettes where a 50% tariff rate was replaced in May 2000 with a specific duty of
Rf 0.30 (US$0.023) per stick.  The Maldives implemented the Harmonized System (HS) in the early
1990s.   However, the legislation to replace the old tariff classification with the HS was not
implemented until the current export and import legislation (No. 31/79) was amended in May 2000.
The Maldives acceded to the Harmonized Convention in July 2000.  It has not (under waiver)submitted HS96 documentation to the WTO Secretariat.
3
15. The customs tariff is classified to the eight-digit level, and there are 5,321 tariff lines.  It
contains only one column of tariff duties, the MFN applied rate.  The schedule does not indicate the
preferential duties provided to imports from other SAARC members.  Since the Maldives has no
indirect commodity taxes, tariffs are the only tax levied on imports.  The customs tariff is published
on the Customs website, and hardcopies and CD versions can be purchased.4
16. Tariffs are the main source of government revenue, accounting for about two thirds of total
tax receipts and about one third of total government revenue in the year 2000.  These ratios remained
generally unchanged during the 1990s.
17. The Maldives submitted its 2002 customs tariff to the WTO Integrated Data base (IDB) in
April 2002.5
(a) MFN tariff levels, structure, and escalation
18. The Maldives last changed its tariff structure at the end of May 2000, when the tariff
commodity classifications were substantially altered and many rates changed, up or down.6  I t s
applied MFN tariff in 2002 comprised ten bands:  free, 5%, 10%, 15%, 20%, 25%, 35%, 50%, 100%
and 200%.  The simple average applied MFN tariff rate in 2002 was 20.8%, with a standard deviation
of 12.5% (Table III.1 and Chart III.1).  The coeffici ent of variation of approximately 0.60 indicated
moderate dispersion of tariff rates from one category of products to another.
                                                     
3 WTO document G/MA/TAR/2/Rev.29, 17 September 2002.
4 Maldives Customs Service online information.  Available at:  http://www.customs.gov.mv.
5 WTO document G/MA/IDB/2/Rev.15, 17 September 2002.
6 A few of the major reductions in tariffs were :  from 20% to 5% on electrical and electronic
equipment, and information technology products;  fr om 100% to 20% on air-conditioners; from 200% to 100%
on motorcycles and passenger motor vehicles and their components;  and from 50% to 10% on musical
instruments and parts thereof.  Many tariffs were also increased, some substantially, such as from 35% to 100%on some specialized tyres and certain special purpose mo tor vehicles. In the absence of a workable version of
the previous customs tariff, it was impossible to verify the impact of these changes on the overall tariff structure,
or whether average rates declined, as indicated by the authorities.WT/TPR/S/110 Trade Policy Review
Page 32
Table III.1
Tariff structure
(Per cent)
Indicators 2002 U.R.a
1.  Bound tariff lines (per cent of lines) 100.0 100.0
2.  Duty-free tariff lines (per cent of lines) 0.1 0.0
3.  Non- ad valorem  tariffs (per cent of lines) 0.0 0.0
4.  Simple average bound tariff rate 39.0 39.0
Agricultural products (HS 01-24) 41.2 41.2
Industrial products (HS 25-97) 38.6 38.6
5.  Simple average applied tariff rate 20.8 ..
Agricultural products (HS 01-24)b17.8 ..
Industrial products (HS 25-97) 21.2 ..
6.  Domestic tariff "peaks"c1.4 3.3
7.  International tariff "peaks"d59.9 100.0
8.  Overall standard deviation (SD) of tariff rates 12.5 48.4
9.  Coefficient of variation (CV) of tariff rates 0.6 1.2
.. Not available.
a Based on the 2002 tariff schedule.
b Under the definition, used in the WTO Agreement on Agriculture, the simple average applied tariff on agricultural imports is
18.5% in 2002.
c Domestic tariff "peaks" are defined as those exceeding three times the overall simple average MFN rate.
d International tariff "peaks" are defined as those exceeding 15%.
Source: WTO Secretariat calculations, based on data provided by the Maldivian authorities.
19. Based on WTO sectoral definitions7, non-agricultural products had, on average, higher
applied MFN tariff rates than agricultural products.  The respective rates in 2002 were 21.1% and
18.5%.
20. Approximately 95% of tariffs, range in rate from 5% to 25%; the modal or most common
duty is 25% (Chart III.2).  The main staple foods of rice, wheat flour, and sugar are duty free.8  The
highest rate of 200% applies to only a few plastic packaging materials considered to be ofenvironmental risk, especially bags.  Passenger motor vehicles, buses, motorcycles and their
components, are subject to a tariff of 100%, and tobacco and tobacco products, apart from cigarettes,
are subject to a tariff of 50%.  The fourth highest tariff rate of 35% covers live pigs and pigmeat,
alcoholic beverages, food preparations containing pork or alcohol, explosives, film projectors,
firearms and ammunition.  The authorities indicated that the higher rates reflect environmental andhealth concerns;  for example, the imposition of the specific duty on cigarettes led to a 12% decline of
cigarette imports.
21. The Maldives' tariff structure has a degree of built-in escalation whereby duty rates increase
with the degree of processing.  The average duty in 2002 on fully processed products was about 23%
and that on semi-processed products was 17%.  However, de-escalation was evident between
unprocessed and semi-processed products, on which the average tariff rate was 20%.  The breakdown
of the tariff schedule to the ISIC two-digit level depicts positive escalation, mainly on:  textile,wearing apparel and leather industries, with average applied MFN tariff rates ranging from 17.6% on
semi-processed products to 24.7% on fully processed goods;  chemicals, petroleum, coal, rubber, and
                                                     
7 The WTO definition of agriculture covers HS Chapters 1-24 (less fish and fish products) and several
processed items all of which are found in Annex I of the Agreement on Agriculture.
8 Imports of the Holy Quran are also duty free.Maldives WT/TPR/S/110
Page 33
plastics, with an average of 23.4% on fully processed products, well above the rate of 14.8% on
semi-processed;  and other manufacturing products, where the average of 21.7% on fully processed
products is more than double the rate on semi-processed products (Table III.2).
22. Although the Government has used tariffs primarily as a revenue-raising measure, they are an
inefficient tax.  Tariffs risk distorting the Maldives' resource allocation by protecting inefficient
activities producing import substitutes for the domestic market, and providing a bias against exports.
Although the Maldives' very small and narrow production base may imply that such distortions areminimal, this may not be the case, especially if those in production patterns within the manufacturing
sector are taken into account.  Such inefficiencies will also increase if the main manufacturing
expansion is because of tariff protection.  Efficient exports, such as tourism, may also be adversely
affected by these tariff policies.  A relatively high tariff level that provides escalating protection may
distort producer incentives in favour of processed goods for domestic consumption, and is unlikely tofoster economic efficiency or exports.  Even as a tax measure, lower more uniform tariffs would be
also less distorting.05101520253035404550
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21Chart III.1
Average MFN tariff rates by HS section, 2002
Per cent
Total applied average 
(20.8%)
01 Live animals and prod.        
02 Vegetable products
03 Fats and oils      
04 Prepared food, etc.05 Mineral products06 Chemical and prod.07 Plastic and rubber
08 Hides and skins
09 Wood and articles
10 Pulp, paper, etc.11 Textiles and articles12 Footwear, headgear13 Articles of stones
14 Precious stones, etc.
15 Base metals and prod.
16 Machinery17 Transport equipment18 Precision instruments19 Arms and ammunition
20 Miscellaneous manuf.
21 Works of art, etc.
Source :  WTO Secretariat caclulations, based on data provided by the Maldivian authorities.WT/TPR/S/110 Trade Policy Review
Page 34
23. Tariff and tax reforms are intertwined.  Broadening the Maldives' internal tax base to reduce
the Government's heavy reliance on border taxes would facilitate further tariff reductions.  While
tariffs tax only foreign products, a true consumption tax, such as a conventional value-added tax),
would be non-discriminatory and tax both imports and domestic goods equally.  Thus, the protectiveeffect of the tariff could be removed and the revenue base preserved by converting tariffs to a
consumption tax and extending the same rate to domestic products (although in practice many of these
goods would not be produced locally).  Moreover , a broad-based consumption tax or VAT with the
usual adjustments to exclude exports would ensure ne utrality with regard to exports.  The potential
economic benefits in improved efficiency for such a switch may be substantial.
9
                                                     
9 Although a consumption tax and a tariff both raise prices of domestic goods, tariffs benefit home
producers by enabling them to sell at a higher price eq ual to the duty-paid import price, whereas consumption
taxes accrue as revenue to the Government. 0.1% 43.1%
11.7%21.5%
14.6%
0.1%3.9% 3.4%
0.2% 1.3% 
02505007501,0001,2501,5001,7502,0002,2502,500
Duty
free5 1 01 52 02 53 55 0 1 0 0 2 0 0Source :   WTO Secretariat calculations, based on data provided by the Maldivian authorities.Number of tariff linesChart III.2                   
Distribution of MFN tariff rates, 2002
Tariff rates  (%)Number of lines (% of total)Maldives WT/TPR/S/110
Page 35
Table III.2
MFN tariff escalation by ISIC 2-digit heading, 2002
(Per cent)
ISIC
codeDescription Number of lines Simple average Range Standard
deviation
Total 5,321 20.8 0 - 200 12.5
11 Agriculture and hunting 216 17.9 5 - 50 6.3
12 Forestry and logging 27 21.7 15 - 25 4.8
13 Fishing 61 18.8 15 - 25 4.9
21 Coal mining 4 25.0 25 - 25 0
22 Crude petroleum and natural gas production 3 20.0 10 - 25 8.7
23 Metal ore mining 23 25.0 25 - 25 0
29 Other mining 79 24.3 10 - 25 3.1
31 Manufacture of food, beverages and tobacco 476 17.9 0 - 50 8.1
- First stage of processing 83 16.6 0 - 25 4.7
- Semi processed 65 14.5 0 - 25 3.4
- Fully processed 328 18.9 10 - 50 9.2
32 Textile, wearing apparel and leather industries 886 21.2 5 - 200 8.3
- First stage of processing 38 18.9 15 - 25 5.0
- Semi processed 412 17.6 15 - 25 4.4
- Fully processed 436 24.7 5 - 200 9.7
33 Wood and wood products, including furniture 88 18.2 15 - 100 9.6
- First stage of processing 5 15.0 15 - 15 0.0
- Semi processed 33 15.0 15 - 15 0.0
- Fully processed 50 20.7 15 - 100 12.2
34 Paper, paper products, printing and publishing 152 16.7 0 - 50 8.7
- First stage of processing 19 25.0 25 - 25 0.0
- Semi processed 68 11.5 10 - 25 3.8
- Fully processed 65 19.8 0 - 50 10.1
35 Chemicals, petroleum, coal, rubber, plastics 1,061 17.5 5 - 200 14.4
- First stage of processing 57 21.3 10 - 25 5.1
- Semi processed 706 14.8 10 - 200 9.8
- Fully processed 298 23.4 5 - 200 21.2
36 Non-metallic mineral products except of petrol. & coal 187 23.4 5 - 100 11.5
- First stage of processing 2 25.0 25 - 25 0.0
- Semi processed 33 19.5 10 - 25 7.3
- Fully processed 152 24.2 5 - 100 12.1
37 Basic metal industries 375 21.2 15 - 25 4.9
- First stage of processing 16 21.3 15 - 25 5.0
- Semi processed 357 21.2 15 - 25 4.9
- Fully processed 2 20.0 15 - 25 7.1
38 Fabricated metal products, machinery and equipment 1,469 24.0 5 - 100 16.6
- Semi processed 6 22.5 10 - 25 6.1
- Fully processed 1,463 24.0 5 - 100 16.6
39 Other manufacturing industries 213 21.7 5 - 50 6.8
- First stage of processing 15 25.0 25 - 25 0.0
- Semi processed 4 10.0 10 - 10 0.0
- Fully processed 194 21.7 5 - 50 6.9
Source: WTO Secretariat estimates, based on data provided by the Maldives' authorities.
(b) Tariff bindings
24. The Maldives bound its entire tariff in the Uruguay Round, mainly at a rate of 30%.
However, some 3% of tariff items were bound at 300% (mainly meat, alcoholic beverages, tobacco
products, plastic bags, passenger motor vehicles, buses, motorcycles and their components).  The
large gap of some 18 percentage points between applied and bound rates imparts a high degree of
unpredictability to the tariff by leaving the Gove rnment scope to raise the former (Table III.1).WT/TPR/S/110 Trade Policy Review
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25. Applied tariff rates for 149 eight-digit items exceed the bound rate of 30% by 5 (most cases,
including swine meat products, chocolate preparations, juices containing alcohol, special vehicles,
video projectors), 20 (including cigarette paper, smoking pipes), 70 (including pneumatic tyres, inner
tubes of rubber, safety glass, engine parts, seats for vehicles) or 170 percentage points (including
polyethylene sacks/bags/tube rolls).  The authorities explained that this was inadvertent and the
situation is to be rectified in the context of the on-going revision of the tariff.
(c) Other duties and taxes
26. No other duties or surcharges are levied on imports.  The Maldives does not levy any indirect
taxes on domestically produced goods or services except for the fixed-rate bed tax of US$6 per bed
night levied on foreign tourists;  this flat rate le vy affects disproportionately tourist resorts with lower
room rates.  There is no income tax, apart from a profits tax on banks.
(d) Tariff preferences
27. The Maldives grants tariff preferences on imports  from countries participating in the SAARC
Preferential Trading Arrangement (SAPTA).  These apply to 390 tariff items, covering mainly certain
vegetable oils;  leather or textile products, such as bags;  timber and timber products;  footwear;
headwear;  and umbrellas.  Margins of preference consist of mainly 7.5%, but also of 10%,  of the
MFN tariff rate.  The Maldives applies the same preferences to imports from LDC members of
SAARC, except for certain paints and varnishes, perfumes and toilet waters, and toothpaste.  On these
products, imports from LDCs receive a preference margin of 15%.  Most products covered by
SAARC tariff preferences have MFN rates of 25%.
28. To be eligible for such preferences, imports mu st comply with the rules of origin specified in
the agreement.
(e) Rules of origin
29. The Maldives does not use any non-preferential rules of origin for the purpose of levying
import duties.10
30. Preferential rules of origin affect imports eligible for tariff preferences under SAPTA
(Chapter II(6)(iii)).  An appropriate certificate of origin issued by the designated authority in the
exporting country in accordance with specified certification procedures, must accompany the imports.Otherwise, they are dutiable at the MFN tariff rate.
(f) Duty and tax concessions and exemptions
31. Under the customs legislation, the President may grant duty-free importation of items used for
any "economically productive activity" commencing in the Maldives, for a period of up to ten years.
He may also allow items to be imported duty free in "special circumstances" where it would benefitthe total population.   The main beneficiaries of these measures have been the fishing and tourism
                                                     
10 WTO document G/RO/N/22, 16 September 1998.Maldives WT/TPR/S/110
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sectors.11  The customs legislation allows the Government to provide duty exemptions under other
legislation.  Goods imported for the purpose of re-export are exempted from tariffs.12
32. Duty-free inputs imported by the tourism sector include many building materials (such as
cement, glass, plywood, plumbing items, and electrical equipment), machinery (including commercial
kitchen appliances), engines valued at or over US$1,000, outboard engines, desalination plants,
electric cables, incinerators, and compactors.  Imports of  sea vessels for tourism, fishing, and
domestic transportation are dutiable at  50% of the normal rate and seaplanes are fully exempt from
duty.
33. Revenue forgone through duty exemptions increased from Rf 100 million (US$8.5 million) in
1994 to Rf 248 million (US$20.3 million) in 2001.  This represented about 37% of duty collections in
2001, up from 30% in 1994.  Over half of the duty concessions (59% in 2001) accrued to foreigninvestors.  Government imports through SOEs, offices, and public projects together accounted for
about 20% of the value of duty concessions and th e tourism industry about 5%.  Private companies
and individuals, including local investments, accounted for about 4%.
(iii) Customs valuation
34. The Maldives has not yet fully implemented the provisions of the WTO Customs Valuation
Agreement.  It invoked the five-year transitional period available to developing countries until
31 May 2000 (Annex III, paragraph 1), and on request was granted a two-year extension until
31 May 2002.
13  The Maldives was required to implement by then the detailed work programme
annexed to the WTO Decision and to report to the Committee on Customs Valuation annually by
1 March on implementation progress.  In 2002, the Maldives notified the WTO of its efforts to
implement the WTO's valuation rules on time.14  This included obtaining technical assistance from the
Asian Development Bank, starting March 2001, to:  improve customs administration and operationalfunctions;  develop a supportive legal framework;  and establish a valuation database and price
analysis tool.  Draft customs legislation to adopt the WTO valuation provisions has been prepared as
well as draft regulations and the customs handbook.  Customs officers have been trained and a series
of public awareness campaigns conducted.  A price valuation database has also been created and is
being used for analysis and reference purposes.  The WTO Customs Valuation Agreement is to beimplemented as soon as the new customs legislation is enacted by parliament, which is expected in
2002.   The Maldives was also to have applied, by 31 May 2002, paragraph 2 of the Decision on the
Valuation of Carrier Media Bearing Software for Data Processing Equipment.
35. The current customs legislation states that imports of goods for which prices are not given or
that have been "under-invoiced" will be valued for customs at the "market rate".  Customs valuation isbased on average current market prices, and these are substituted for lower declared invoice values.
The Maldives therefore uses minimum values for customs purposes to uplift import prices for custom
                                                     
11 The 1999 tourism legislation provides the President with discretion to exempt import duties on
materials used to construct or upgrade island resorts or marinas.
12 Re-export is defined in the customs legislation as the export of an imported item in its original
condition.
13 WTO document G/VAL/35, 23 November 2000.
14 WTO document G/AL/N/4/MDV/1, 20 March 2002.WT/TPR/S/110 Trade Policy Review
Page 38
valuation purposes.15  Imported second-hand motor vehicles and cycles are valued according to set
depreciation rates applied to the manufacturers' published prices.16
36. SAARC members have agreed to assist each other to adopt the WTO Valuation Agreement
and to exchange relevant information on its implementation, including on legislative developments
and problems encountered.
(iv) Import prohibitions and restrictions
37. Import restrictions and prohibitions are maintained for health, safety,  security, environmental
and religious reasons.  Restricted imports are:  arms and ammunition;  alcohol and spirits;  pork and
its by-products;  dogs;  and dangerous animals.17  Imports of radio and wireless communication
equipment require approval.  Imports of religious materials offensive to Islam, worship idols,
pornographic material, narcotics, and live pigs are prohibited.18  Imports of used motor vehicles and
cycles over five years and three years old, respectively, are prohibited for environmental reasons.
Imports from Iraq and Yugoslavia (Serbia and Montenegro) are also prohibited.
38. The Maldives maintains automatic and non-automatic import licensing procedures.  Imports
of all goods require an Open General Licence (OGL).  Upon application to the Ministry of Trade and
Industries, OGLs are issued automa tically for a certain value, and permission for additional amounts
is normally granted.  Such licences are now used solely for customs clearance and monitoring
purposes.  Licences are reviewed yearly.
39. The Maldives has few quantitative restrictions.  Most quotas were eliminated from
1 January 1998, except on imports of staple foods, mainly rice, sugar, and wheat flour (70% of the
quota is reserved for the public enterprise, the State Trading Organization), which seem to have been
fully utilized (Table III.4).
40. No replies have been submitted by the Maldives to the WTO annual questionnaire on import
licensing procedures.
(v) Anti-dumping, countervailing, and safeguard measures
41. The Maldives has no specific anti-dumping, countervailing or safeguard laws or regulations.19
Under the Export and Import Law, the Ministry of Trade and Industries may take anti-dumping action
against imports from any country on an ad hoc basis.20  Any concerned party may appeal the
Ministry's decision in the courts.  No such action has been taken so far, and no mechanism exists for
protecting domestic producers against subsidized or dumped imports.
                                                     
15 The WTO decision extending the transitional period for the Maldives to implement the customs
valuation provisions noted that the Maldives did not apply minimum values and its intention not to do so in thefuture.  See WTO document G/VAL/35, 23 November 2000.
16 For motor vehicles, the maximum depreciated value is 62.5% of the published price after five years.
17 Operators of resorts and hotels mu st import alcohol under special licence.
18 Law on Prohibited Imports of 1975 (No. 4/75).
19 WTO documents G/ADP/N/1/MDV/2, 10 February 1999 and G/SCM/N/1/MDV/2, 22 January 1999.
20 WTO documents G/ADP/Q1/MDV/1 and G/SCM/Q1/MDV/1, 8 January 1999.Maldives WT/TPR/S/110
Page 39
(vi) Standards and other technical requirements
(a) Standards, testing, and certification
42. There are no known Maldivian standards, and no formal mechanism exists on standards.
Australian, United Kingdom, and United States standards are sometimes required.
43. The Maldives, along with other SAARC members, has agreed to a Regional Action Plan on
Standards, Quality Control and Measurement aimed at  identifying trade in products adversely affected
by variations in national standards, and their harmonization, including the prospects of developing
regional standards.  Members' national standards are to be based on international norms or their own
assessment of requirements.  Efforts also incl ude the promotion of mutual acceptability and
recognition of certification schemes and accredited testing.  Initial focus is on agricultural and food
products, building materials and household electrical appliances.
(b) Sanitary and phytosanitary (SPS) requirements
44. Imports of live animals, birds and plants require a phytosanitary or sanitary certificate.  The
Maldives is not a member of the FAO's Codex Alim entarius, OIE, or IPPC.  No further information
on the regulatory/institutional framework within which SPS requirements are set, selected, and
enforced, was available from the authorities.
(c) Marking, labelling, and packaging
45. The Maldives has no special marking, labelling, or packaging requirements.
(vii) Government procurement
46. The State Trading Organization (STO), the largest SOE by turnover, was until recently the
central purchasing entity responsible for all governmental trading and commercial activity.  However,
these arrangements were changed recently and all government procurement of goods and services
above Rf 5,000 must now be awarded by open competitive tender in accordance with regulations setby the President's office.   Evaluation procedures for each project are published and the Tender Board,
which consists of representatives from relevant agencies, evaluates tenders.  No further information
on the size of the government/public entities procurement market/methods, suppliers requirements,
preferences, and relevant statistics, were available from the authorities.
47. The Maldives is neither a member of, nor observer to, the WTO plurilateral Agreement on
Government Procurement.
(viii) Local-content requirements
48. As indicated earlier (Chapter II(7)), foreign investors are encouraged to use domestic raw
materials, but only where commercially viable, a nd to employ Maldivian citizens.  The authorities
indicated that limitations in the availability of domestic raw materials do not allow for the applicationof this requirement in most instances.
(ix) State trading
49. State involvement in the economy is pervasive and raises concerns over the
development/viability of the weak domestic private sector.  The State participates in a wide-range of
trade and trade-related activities, with some twenty state-owned enterprises (twelve are fully state-WT/TPR/S/110 Trade Policy Review
Page 40
owned) currently operating in many important sectors of the economy, including trade, banking,
construction, insurance, fishing, and utilities;  they employ directly some 8% of the labour force
(Table III.3).  The Government also purchases many  goods and services from SOEs.  According to the
authorities, the growth in SOEs reflects the hi storical development of the Maldives when state
involvement was necessary due to the very narrow and non-competitive private sector, which also
often lacked the funds needed to invest in major activities.
50. Some SOEs receive competitive advantages over the private sector, such as:  statutory or de
facto monopoly positions in certain commercial activities (STELCO/electricity, STO/trading,
Dhiraagu/basic telecoms, management of sea and air ports, water and sewage);  free or nominal rent on
use of state land;  and government guarantees over domestic and external loans.  Such privilegesundermine the private sector by limiting effective competition and sowing the seeds of inefficiency.
Despite these advantages, several SOEs seem to have performed poorly and accumulated large losses,
and have been unable to service their debt without substantial government financial assistance.  This
performance reflects many factors, including w eak management, overstaffing, cost-padding, poor
investment decisions, including uneconomic diversification pursuits, partly due to having to meetcertain non-commercial or government objectives.
Table III.3
State involvement in enterprises, 2002
Entity Degree of state ownership
Goods
State Trading Organization (STO) 97%;  3% private equity
Maldives Cement Joint venture;  Swiss interests and STO
Fisheries
Maldives Industrial Fisheries Company (MIFCO) 80%;  20% owned by STO;  studies being undertaken for MIFCO's restructuring
and privatization
MIFCO Boat Yard 100% owned by MIFCO
Services
State Electricity Company (STELCO)a100%
Bank of Maldives 60%;  25% owned by STO
Allied Insurance Company 100% owned by STO
Male Water and Sewerage Company Ltda70%;  30% owned by Danish interests
Maldives National Shipping Limited 100%;  studies being undertaken for privatization
Building Construction and Mechanical Works 100%
Dhiraagua55%;   45% owned by UK Cable and Wireless
Maldives Post Ltd 100%
Maldives Airports Company Ltda100%
Island Aviation Services Ltd 100%;  formed after closure of Air Maldives Ltd
Maldives Ports Authoritya100%
Maldives Transport and Contracting Company 52.5%
Maldives Inflight Catering Pty Ltd Joint venture;  Airports Company Ltd (60%) and Singapore Airport Terminal
Services (40%)
Hulhule Island Hotel Joint venture;  Singapore Airport Terminal Services and Airports Company Ltd
Nasandhura Palace Hotel 100%
Maldives Gas Ltd Joint venture involving STO
Book Production Unit 100%
Maldives Academy of Performing Arts 100%
a Exclusive rights.
Note: No further information was available from the authorities.
Source : Maldivian authorities.Maldives WT/TPR/S/110
Page 41
51. Although no SOE appears to enjoy monopoly rights per se  in foreign trade, the Government
and the SOEs are major importers, accounting for some 26% of total imports in 2000 and 30% in
2001.  SOEs accounted for 88% of these imports, which benefited from duty concessions
(section (2)(ii)(f)).  Until the late 1990s, the STO had a monopoly on the importation of staple foods
such as rice, sugar, and wheat flour.21  Although these products are now subject to import quotas, the
STO remains by default, usually, the only importer, and is allocated 70% of import entitlements(section III(2)(iv) and Table III.4).  This share has declined from, on average, 85% in 1998, especially
for rice.  The Government's objective in allocating this share of the import quota to the STO is to
ensure that staple foodstuffs are continuously available at stable and affordable prices.  Although it
does not have an import monopoly on petroleum fuels, several of the largest fuel users, such as
MIFCO and STELCO, purchase their supplies exclusively from the STO.  The STO is by far thelargest public importer, accounting for over half of total state imports in 2001.  In 2001, its imports of
the three staple foodstuffs amounted to Rf 80.7 million (US$6.6 million);  about half was rice.
Imports of staple foods represented about 13% of the STO's total imports in 2001.  The major
imported product was fuel, which accounted for some 60%.  Other significant imports by STO in
2001 included salt, iron and steel, electrical and electronic equipment.
Table III.4
Imports of staple foods, 1998-01(Per cent)
Wheat flour Rice Sugar
YearSTO Private STO Private STO Private
1998 79.6 20.4 90.6 9.4 86.6 13.4
1999 80.0 20.0 80.1 19.9 79.9 20.1
2000 70.8 19.2 69.8 30.2 68.7 31.3
2001 70.1 29.9 70.1 29.9 70.1 29.9
Source: WTO Secretariat, based on data provided by the Maldivian authorities.
52. The Maldives has not notified to the GATT/WTO any state-trading activities undertaken by
entities within the meaning of Article XVII:4(a) of the GATT 1994.
(x) Other measures
53. No official countertrade or offset arrangements, or agreements designed to influence the
quantity or value of goods and services exported to the Maldives are currently in force.
54. The Maldives does not seem to have strategic reserve stocks.
(3) MEASURES DIRECTLY AFFECTING EXPORTS
(i) Registration and documentation
55. Exporters must hold a general Export Licence issued by the Ministry of Trade and Industries.
Any legal exporter is eligible for such a licence.
56. The exporter must submit to Customs three copies of the Application for Export Cargo
Examination together with relevant forms for pref erential trade where applicable.  Within 24 hours of
                                                     
21 The STO is responsible for ensuring a stable supply of goods, especially of staple foodstuffs, fuel
and lubricants, and construction materials.  In addition to activities indicated in Table III.4, the STO has also
diversified into several other commercial activities, including consumer electronics and pharmaceuticals, and isa joint-venture partner in a cement packing business.  It also has equity in MIFCO and suppliers of banking andinsurance services.WT/TPR/S/110 Trade Policy Review
Page 42
export, the exporter must also submit the goods declaration form with the invoice (with f.o.b. value
included), exporter's copy of the Examination Form, airway bill or bill of lading, packing list, trade
firm and for live fish, the pro-forma Aquarium Fish Export Form issued by the Marine Research
Centre.  Exports are examined by Customs.
(ii) Export taxes
57. Since 1996, there have been no export taxes other than a 50% duty on exports of ambergris.
However, some royalties paid by foreign investors as part of investment agreements, such as for
garments, work effectively as export taxes as they apply only to exports (Chapter IV).
58. Where an export value is unknown, the Government may determine "revalued export prices"
to avoid fraud.   The exporter may appeal to the courts if the revalued price is disputed, but must first
pay the assessed duty.  The court may authorize a refund, if deemed necessary.  Fraudulentundervaluation of exports, to evade duty, is subject to a fine of up to double the value of the exported
goods and imprisonment for up to two years for repeat offences.  Such fines may be appealed to the
courts.
(iii) Export prohibitions, controls, and licensing
59. Exports of live fish have been subject to licensing.  Timber exports (and imports) are
seemingly controlled.  Export bans apply to a few marine species for environmental reasons.  No
other export prohibitions, except with respect to Iraq and Yugoslavia (Serbia and Montenegro), or
quotas apply.
60. Exports of illegal or unlicensed goods are subject to a fine and/or imprisonment.  The
exporter may appeal such fines to the courts.
(iv) Export assistance
61. No specific trade finance facilities are available in the Maldives.  However, commercial banks
are obliged to lend to exporters (and importers) subject to constraints stipulated by the MMA.
(v) Export-processing zones
62. The Maldives has no export-processing zones.
(vi) State trading
63. SOEs accounted for about one quarter of total exports in 2000 and 2001.  The main SOE
involved in exporting is MIFCO.  However, its remaining export monopoly (at national level(Chapter IV(2)(ii)(a)) over canned and frozen tuna was terminated in 2000.
(4) M
EASURES AFFECTING PRODUCTION AND TRADE
(i) Competition policy
64. The Government has taken some preliminary st eps to implement effective regulation of key
utilities, such as telecommunications, in order to  ensure competition following possible deregulation
and privatization.  Legislation on consumer protection was adopted in 1996.22  
                                                     
22 Consumer Protection Law No. 1/96.Maldives WT/TPR/S/110
Page 43
(ii) Price controls and monitoring
65. Telecommunications, water, and electricity charges provided by public utilities are monitored
and controlled by their respective regulator (Chapter IV).  The State Electricity Company (STELCO)
effectively cross-subsidizes atoll electrification from its Male operations.  Retail prices of staple
foods – rice, sugar, and wheat flour – are controlled.  They are capped at the STO price plus Rf 0.20
per kg. in Male, and for other atolls at the Male price plus freight.
(iii) Protection of intellectual property rights
66. The Maldives lacks the legal and institutional framework for protecting intellectual property
rights, but it intends to comply with the WTO TRIPS requirements by the end of 2005.  It is interested
in registering "Maldive Fish" as a geographical indication.  With assistance from WIPO, it is drafting
copyright legislation.  The Maldives has notified to the WTO the Ministry of Trade and Industries asthe contact point under TRIPS.
23
                                                     
23 WTO document IP/N/3/Rev. 5, 6 July 2001.