A new Foreign Direct Investment (FDI) law in Maldives is expected to enhance investors' confidence and boost the South Asian nation’s economy, according to Maldivian officials and experts.

It prioritizes transparency and investor protection, local media quoted Maldives’ Minister of Economic Development and Trade Mohamed Saeed as saying last week.

Maldives President Mohamed Muizzu has ratified the FDI Act, which will bring new benefits to the country, said the ministry’s press release on Sept 3. The new law will come into effect three months from the date of ratification and will apply to all foreign companies and individuals intending to undertake business on a long-term basis in the Maldives, according to the government document.

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It noted, “The primary objective of the new law is to promote FDI in the Maldives by creating a more transparent and secure environment for foreign investments.”

The purpose of the new act is to establish guidelines on which sectors foreign investors can invest in within the Maldives, outline the regulations for granting investment permissions, and ensure protections for investors, said the release.

“With the new law in place, Maldives is poised to attract higher levels of FDI, driving economic growth and diversification,” it added. “This development is expected to generate new employment opportunities, enhance human capital, and solidify the position of Maldives as a competitive and secure investment destination for international investors.”

The previous law, enacted in 1979, had been in effect for 45 years and is no longer aligned with the present-day global investment environment and economic situations.

Saeed told the media after the rectification of the act that President Muizzu is committed to implementing significant economic reforms aimed at expanding business opportunities, promoting a sustainable business environment, boosting trade, and facilitating business in the Maldives.

"Among his (Muizzu’s) promises are major structural reforms to the economy — expanding trade, making the Maldives an easy place to do business, and developing real estate as a business sector," he was quoted in Avas Online, a local media outlet.

Attorney-General Ahmed Usham said in the meeting, "We have initiated efforts to make major legal reforms to make Maldives an investor-friendly country. Such laws take a lot of time.”

The news was encouraging to investors around the world, including in China, with observers saying that the new law can provide impetus for infrastructure projects and related investments in the archipelago nation.

“I am convinced that the passage of the new law will enhance the confidence of investors from all over the world to invest and do business in the Maldives, and promote the strong support of relevant financial institutions,” Fang Qiuchen, chairman of the China International Contractors Association, told China Daily during the 9th Belt and Road Summit held in Hong Kong from Sept 11-12.

‘It aims to continue to promote a sustainable investment and business environment, the rapid development of trade and investment, and contribute to the economic and social development of the Maldives.”

According to Fang, it is important to give priority to the protection of foreign investors. He noted that more member companies of the China International Contractors Association would like to invest in the Maldives and participate in the infrastructure investment and construction of the nation that has joined the Belt and Road Initiative.

Late last month, Maldives leader Muizzu extended his congratulations on the sixth anniversary of the China-Maldives Friendship Bridge.

The bridge, inaugurated on Aug 30, 2018, has become a symbol of the close relationship between the two nations, he said in a post on the social media platform X.

Muizzu highlighted that the impressive engineering achievement not only connects the Maldivian islands but also represents the enduring partnership and mutual trust between China and the Maldives. He expressed hope that the bridge will continue to serve as a beacon of cooperation for generations to come.

Wang Lixin, China’s ambassador to the Maldives, noted in a social media post that over the past six years, the China-Maldives Friendship Bridge has greatly promoted the social and economic development of the Maldives and brought transformative changes to the lives of its people.

The project has vividly shown how the Belt and Road Initiative and friendly cooperation with China benefit the local people. The ambassador added that she looks forward to more fruitful collaboration in the future.

China and the Maldives have signed an agreement on the expansion and upgrading of the Velana International Airport, the gateway connecting the Maldives with the world, in 2014. In the past 10 years, the airport has renovated and expanded an apron area of approximately 250,000 square meters, and a new reclamation area of about 750,000 square meters, significantly increasing passenger capacity.

Now the airport has a wider apron, more modern functions, and more abundant supporting facilities such as fire stations and fuel depots. The newly built runway can accommodate the takeoff and landing of the largest aircraft in the world.

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Maldives’ new FDI law is also regarded as an incentive for investments in the tourism industry. The island nation has seen its economy recover recently as its tourism industry revived. Maldives welcomed over 1.3 million tourists so far this year, according to statistics from the nation’s tourism ministry. August saw a 10.4 percent rise in visitor arrivals compared to the same period last year, the ministry said.

China remains a top source of tourists, contributing more than 184,000 tourists a year to date, followed by Russia with over 139,000 and Britain with 112,000 plus, it said.

There are currently 1,220 tourism establishments operating in the Maldives, including 174 resorts, 879 guesthouses, 153 safari vessels and 14 hotels, according to the ministry.

Xinhua contributed to this report.

Contact the writer at vivienxu@chinadailyapac.com