A handful of ways to stop foreign currency leakage for faster economic growth

The only possible way to save something is by not spending it, but can we survive without spending? or can we limit the amount we spend and the same time benefit from it? Let’s dive in;

First and foremost; the only possible way to do this is to increase the value of Maldivian Currency (Maldivian Rufiyaa – MVR), and the best way to increase appreciate the value of money is to create an abundance of foreign currency in the economy. Luckily, we have a golden egg laying chicken that lays foreign currency like anything (tourism sector), but, but, what is wrong?

Here are few ways that I think if implemented appropriately would create the required abundance of foreign currency.

1. Limiting the outflow of foreign currency

It is important to find and close all the leaks before filling up a container. Same goes to currency. The key areas where most foreign is flowing out of the country must be identified and minimized or stopped.

1.1 Medical Tourism

Outbound Medical tourism is one of the major areas where foreign currency (USD) in the country is dragged outside the economy. So much so; according to Maldives Travelling Abroad Survey 2016, 51% of Maldivians traveled to outside the country are for medical purposes.

Majority of the Maldivians are traveling to neighboring India and Sri-Lanka for medical purposes. The figure is slightly low compared to the statistics of 2011 which shows 61% traveling for medicals. People traveling for medicals would spend a minimum of $1000 (MVR15,000 equivalent) during every trip, not to mention the added costs that government pays with Aasandha cover to overseas hospitals for the patients.

The total amount spent by these travelers would add up to a significant amount which is going out of the country. Although, the health sector has improved a lot in the recent years, the number of people of traveling for medical purposes is not reducing at a reasonable rate. Let’s hope the completion and operation of IGMH 25 story building or (s) would put an end to this problem!.

An estimated 110,000 Maldivians travel outside the country for medical purposes every year, each person will spend at least $1000. The total amount spent would exceed 110 Million USD (1.6 Billion Rufiyaa) every year.

The biggest hurdle to minimize the travel for medical is the perception that majority of the population have about locally available medical treatments. Often, people are traveling abroad for treatments that are readily available locally, such as for (almost everything). The only thing that drives this decision is a false perception that better services are offered abroad. There are however areas where the government needs to put more effort in producing qualified local doctors in niche areas such as in kidney, heart, and other internal treatments.

1.2 Minimizing imports

Maldives is renowned for the crazy number of imports we do, that is not surprising considering the fact that Maldives is naturally not capable of producing most of the products that are essential.

However; there are areas where we can improve and reduce the drastic amount of 32 billion Rufiyaa (2.12 Billion Rufiyaa) we have spent on imports during 2016. Here are few ways I recommend we give a thought to improve in this area;

1.2.1 Minimizing Energy Costs / Oil imports

According to Customs Statistics 2016, Diesel Oil is the largest import product with over 445 metric tonnes imported within the year costing upwards of 2.9 Billion Rufiyaa (USD192 Million).

A fair share of this import is the for the purpose of running diesel electric generators that powers the country and the rest is distributed mostly towards vessels that run on diesel. Here are some of the ways we could reduce this big chunk of sweet dollars going out to the UAE (largest oil/ diesel importer); Exploring alternative ways for sustainable renewable energy (power)

While Maldives is thinking about taxing solar products, the rest of the world is moving towards clean energy production by harvesting energy from renewable sources. Whilst there is no known natural gas deposit or oil deposit in the Maldives EEZ, there is plenty of other ways we could switch to clean energy;

Parhaps it is not too late to ask the private sector and enthusiastic individuals to come up with innovative ideas to replace diesel engines that are clearly hurting the economy and the mother nature.

Air –  Kite Power Systems

No! not air turbines. Installing air turbines will be costly and will not be effective both financially and in producing electricity. Kite Power Systems is the answer and other technologies that take advantage of the versatility of wind.
Click here to read more about Kite Power Systems 

Kite Power System works by having two kites up in the sky with its string tangled to a motor in the ground. The pull and push actions of the kites rotate the motor and generate electricity. This technology is tested and proven and can produce enough energy to easily replace diesel engines we use today with a fraction of the cost compared with other methods.

Kite Power Systems Website

Hydro – Tidal Power

Hydropower is nothing new to the world. It has been around from 18th century in the form of large dams holding massive bodies of water in different areas of the world. In fact, hydropower is one of the very first inventions of man that lead to automation.

Hyrdopower Plant – Photo Credits to http://www.ieahydro.org/

However, in Maldives building, a damn would be almost impossible. But there are plenty of ways we can harvest the massive amounts of energy available to us, from the ocean. There are multiple companies with working models of tidal energy production concepts that have the potential to cater for the worlds energy requirements indefinitely. (so long as the moon is around)

Power from sea current

Tidal Power

The basic concept of harvesting electricity from sea current is; a turbine is placed underwater where tidal changes create strong currents. The pull/push force of the current rotates the turbine creating electricity the same way as wind.

There are other ways than the just tidal power that we can harvest from the ocean surrounding us, wave energy solutions and high-pressure water turbines are also ideal for Maldives.

One of the biggest challenges with renewable energy sources is the storage medium. How the excess energy is stored for later usage. Over the years we have seen potential solutions that can essentially remove this hurdle. Products such as the Tesla Home Battery Powerwall with the potential to store enough energy to keep the home run in a case of an outage. Electricity generated from renewable sources can now be commercially stored in such a battery and have it readily accessible when needed.

The government must encourage the private sector and enthusiastic individuals to explore and innovate in this area to bring out, even more, ideas and eventually have an alternative to the expensive diesel engines we use at the cost of economy and environment.

Reliable Solar Power & Batteries

We have spent 12.1 Million Rufiya on importing solar products throughout 2016.

Tesla Solar Tiles – Credits to https://www.tesla.com

Solar panels are great. But they are not reliable enough to completely replace the grid electricity (power from burning diesel). Our mainstream solar panels are less efficient and require an excessively large surface to generate usable electricity, which is an added cost most people cannot afford. This problem has also been addressed by Tesla (unsurprisingly) and launched Telsa Solar Roof which performs much better than conventional solar panels and is aesthetically pleasing. Switching land transport to electric

Most common means of land transport in the Maldives is gasoline city bike. These bikes are petrol hungry. According to Customs statistics 2016, we have imported 47,794 metric tonnes of petrol by spending MVR404 Million rufiyaa. Whilst this amount may not seem a lot when compared to other listings highlighted in this article, the significance of this amount does not end with just the cost of importing petrol. This is associated with the added costs of importing petrol consuming vehicles and the cost of burning fossil fuel, including the health hazards and the spending for it as well which ultimately outflows from the country.

100 Million Rufiyaa was spent outside the country during 2016 for purchasing Motor Bikes. A total of 7,268 Motorbikes were imported during the same period.

Embracing electric cars would reduce a significant amount spent on purchasing gasoline. At this day and age, where electric car performance and mileage is much better than competitive gasoline cars there is absolutely no reason why this change cannot be embraced in the Maldives. Yes, it is pricey, but a person who could afford a BMW Sedan would be able to afford a Tesla or a BMW i3 (electric car).

1.3 Replacing foreign employment with Maldivian talent.

Every year more than 2000 Maldivian students graduate from colleges and universities and enter the labor force. However, for some reason still, 29% of the total workforce is still occupied by foreigners. And most importantly or unfortunately; most highly paid jobs are fulfilled by foreigners.

When taking into account, even small Maldivian companies (not necessarily doing business in the resort sector) are also hiring foreigners for technical/ key positions such as accountants, IT professionals and others.

Let’s assume each foreigner sends $800 (to an average) outside the country every month. When considered the number of foreigners in the workforce (registered expats), 59,813 to be precise (as of 2014 census), the total foreign currency (USD) drawn outside the country passes more than 574 Million (8.85 Billion Rufiyaa).

The resort sector;

Over the years many have speculated that Maldivian resident workers are paid far less compared to the foreign employees, and are often discriminated (not hired) over foreign employees in the resort sector.

This has been an area seemingly the regulators are not much concerned with, despite hundreds, if not thousands of students graduate from Faculty of Hospitality and Tourism and other private institutions from tourism studies every year and often ends up doing a job far less deserving the time, energy and resources spent on acquiring the education.

The regulators must ensure Maldivian talent is employed over foreign employment in all the sectors, and not just save the Billions of Rufiyaa that is flowing outside the country but empowering more Maldivian citizens, eventually benefiting the economy.

The Private Sector

Try calling a local accounting firm, or a pest control company, or the administration department of a local supermarket. Chances are you will be greeted by a foreigner. This is the sad truth. Most of the foreigners in the private sector (non-tourism) are from Accounting and Information Technology fields. However, every year a significant number of students graduate with accounting and IT degrees. Most of these graduates often end up working under foreigners or work completely in a different field due to unavailability of qualified jobs.

The goverment must ensure graduating students are prioritized over foreign employees when selecting jobs in the private sector as well.


The road to saving 1 Billion USD, is far detailed then expressed above.
In simple terms, if we can manage to reduce the sum of money we spend on medical tourism, imports and the amount we so generously pay to foreign workers, the road to saving 1 Billion USD is not far, just needing the right-minded people doing the right things.


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