Running a business in the Maldives is hard

Doing business in the Maldives is hard

Yes. Running a business in the Maldives is pretty hard. Especially on young SMEs.
There are more hurdles than possibilities that discourage many aspiring entrepreneurs. Here is a look into nits & bits of getting into a business & surviving in the mordis.

First, the business idea

This is where all the fun begins. Basically, if you have a lucrative business idea you should NEVER SPEAK OF IT. This step is very important. Only discuss your idea with your business pals in a secure environment as you cannot guess who might be listening to your conversation from the other side of the wall.

More importantly, you must carefully choose with whom you are sharing the business idea, make sure you trust them 100%, not 99%. That one percent is tricky. Not all of your friends will support you, but that ok. You can always accept their opinions & make them understand why the idea can be successful with facts & data.

This brings us to the primary problem in this state;

As of now, there are no effective patent protection practices in the Maldives. Every idea & plan is up for grabs.

The Business Plan

This is one step many young entrepreneurs skip, and it is a BIG mistake. Having a professionally written business plan will not only help you make smart decisions but will always be a guide to when making business decisions. Business plans consist of everything funding sources, supply chain recommendations, market studies, SWOT, financial projections & other crucial information for your business. Most importantly, the market study will help you make informed decisions based on actual market data if the plan is done accordingly.

Not to mention, a proper business plan is required if you are approaching a bank or a lender to finance your idea/ project.

Long story short, get a proper business plan made with actual market data with Bluebell Business Consultancy and get a 10% discount just for readers of this blog.


Now that you have a great idea and a detailed business plan, what’s next? Funding. Yes. This is where the majority of the ideas are killed. But, let’s make sure you navigate through this phase pretty quick.

There are quite a few ways to raise capital for your business plan. Almost all of it depends on the industry and the business type. Let’s dive in. Tourism industry pulls in the majority of investments, even unaccounted for major resort establishments tourism industry comes to top with a big margin.

1. SDFC (SME Development & Financing Corporation)

SDFC or SME Development & Financing Corporation aka SME Bank is the preferred & the only corporation that is willing to lend to young entrepreneurs without a mortgage (which, tbt most young entrepreneurs would not have).

SDFC accepts application for start-ups under its “Fashaa Viyafaari” loan scheme designed to provide start-up capital to completely new and existing businesses in operation for not more than 2 years. The Bank (SDFC) requires a considerably low equity contribution from the borrower while offering an interest rate lower than the base lending rate in the Maldives.

The equity contribution (the amount borrowed has to turn up, or spend for the project) largely depends on the project and may vary on the bank’s discretion. The bank is usually happy to lend up to MVR 1,000,000.00 for projects without mortgages with repayment up to 10 years. This is a biggie, and exciting for young entrepreneurs.

2. Bank of Maldives, State Bank of India or Commercial Bank of Maldives

BML provides businesses with demand loans backed by mortgage and strong financials. These loans are suitable for people with established businesses not attractive to new-comers & startups.

The same applies to SBI & Commercial Bank as well. These banks generally do not like to take the risk with start-ups.

3. Maldives Islamic Bank

MIB is also on the train with other banks when it comes to supporting young entrepreneurs & start-ups. Generally, if unemployed or no business account history with MIB, it is almost impossible to secure a credit facility with them.

4. Private Investors

This is the most fun part of the funding state. When you submit your business to plan to private investors, NEVER SEND IT ON EMAIL & BE DONE WITH IT. Always remember that the guy to whom you are sending it has enough wealth to carry out your proposed project without you. Always carry a printout & discuss it in person. It is wise to keep a draft NDA with you at all times with no copying clauses biding the addressed the person from stealing the idea.

Download a free NDA (non-disclosure agreement format) here. For more customized versions or in Dhivehi get in though with Bluebell Business Consultancy to get one made by professional lawyers.

Investors care more about returns, not the business itself. Most of em at least. Talk numbers backed by real data and always refer to current market statistics. Never assume a number without any data supporting it even if you are certain. Be real and know how much you need, and ask for more than that. Give estimated ROI numbers and estimated time to recover the full investment. Always be open to discuss the % share you are selling. Never offer more than 25% of the total shares. Never agree to that. 24% is the limit and anything above that may put in risk of getting into legal problems with minority shareholder rights in the future.

Give the investor a fixed timeline to get back to you & move on. In my experience, if you approach 100 investors 99 will reject or never call back. You are lucky if that one person is on the front page of the 100 investors list.

5. Investment Platforms

Investment Platforms like are a great option if you are not afraid of publicizing your business plan. Often overseas and rarely local investors find businesses listed on the platform and take it up from there. SMERGERs will verify every listing and help you connect with as many interested investors possible if your business plan fits any of the “big money industry” it almost always ends up funded by one of the foreign investors. People have successfully connected with investors who have invested in guesthouses, hotels, other tourist properties, and construction. If your proposal fits anywhere in the tourism, construction or transportation the chances are high.

Though there is no guarantee when you will be able to find an investor, or how the process is going to be shaped, this is worth a try.


Assuming that you have successfully secured an investor, or a loan the next part is registering & acquiring various licenses to start the operations. Here is how you can get it done. The government has improved a tac in this area in the past 5 years, digitalizing the most part of the business registration & licensing part.

You can register a Sole Proprietorship (SP), a Partnership (LLP) or a Company (Pvt Ltd) depending on the requirement of your business. If your business involves 2 or more partners we suggest opting for the option of registering a company. The company has various advantages including being recognized as a legal body in addition to shareholders. Let’s assume this is your option.

Step 1: Register eFaas account on the Business Portal if you haven’t already. Log in to Business Portal using your ID & the provided password.
Step 2: Search a business name & reserve it as a Company Registration.
Step 3: (when the name is approved) you can fill out the info online, fill, print & scan the document set & submit online.
Step 4: (when the request is approved) you can either pay online or visit the Ministry of Economic Development to make the necessary payment & collect registration documents.

With regards to licensing & permits. Not all permits can be obtained online. The most efficient way is to visit the counter at the Ministry of Economic Development if you are in Male’ or any dedicated business center, or island offices in atolls.

This process can be intimidating for some individuals & time consuming for others, therefore forks at Bluebell Business Consultancy happily provide this service with various addons to kick start into the business. Check-out here. 

The operations (the pain)

This is the trickiest part. The lack of proper infrastructure dedicated to supporting small businesses and start-ups is one BIG fat reason many SMEs find it extremely difficult to keep up with existing players in the industry. Depending on the type, the business may require an office or a dedicated customer service center to deal with customers & carrying out day to day operations.

No co-working spaces

Rent is one reason most start-ups fail. SMEs and one start-up are also required to pay the same rental rates as established businesses turning the business heavy on the fixed costs. There is no infrastructure such as co-working spaces or cubicle rentals unlike the rest of the world. Such facilities will immensely help and empower SMEs to compete with established players and worry less on the strain of high fixed costs.

Recently, the government has built a number of parking spaces in previously abandoned plots in the city of Male’, which really helped manage traffic. However, these spaces can be used in much better ways both economically and socially. The government should invest in building a few stories high co-working spaces with 2-3 floors of dedicated public parking space in a few of these plots. Such a product is high in demand and, the government can easily rent-out such spaces at rates affordable for start-ups and SMEs whilst directly contributing the surplus rent to national reserve and indirectly receiving more tax contributions from both VAT and in BPT.

It looks like a win-win situation for all. The only reason such a project has not surfaced for so long is a mystery for another post.

Since there are no such projects, even projected in the 2020 budget lets assume you have to rent out space for current market rates.

Government Contracts (the cash cow)

The government is one of the major customers for many local businesses. No matter the industry, the government is a customer. In the 2020 budget alone the government has committed billions of MVR to be spent on infrastructure and equipment, which is big business for both SMEs and large established enterprises.

At first glance, this seems like a pretty good thing, right? well! NOO. Here is why!

Payment delays

It is a good thing for established players, but not for start-ups and SMEs. The government has a reputation for making payments way past the due date on invoices, which hurts where it hurts the most. SMEs generally work with very little working capital, and when a large portion of that amount is pilled up in account receivable tagged as government the business is no longer able to provide credit to other clients who are more likely to pay quickly.

There are major SMEs and, established businesses as well who have suffered their demise due to the sole fact that the government piled up their bills.

After the recent change in government, the situation has been improved but not to the point SMEs should feel comfortable taking a major risk with the government. For this reason, most SMEs are at bay when it comes to benefiting from the government cash.

Bid Security

Bid security is something that government offices use as a weapon to discourage SMEs from submitting bids, despite the president’s promise to empower SMEs. Many offices ad the clause to bid announcements even for the purchase of standard products that SMEs can easily supply but are unable to because of the requirement to block a certain amount of cash with the hope that the project will be awarded. That is too much to ask from SMEs.

I’m not against big security altogether. There are scenarios it has to be added to ensure the right players are submitting bids. But, it doesn’t have to repeat to every tender, and the amount has to be reasonable.

There is a lot to talk about in this segment. To sum it up, the government has to have a better policy to empower SMEs which involves eliminating these pain points, especially the rental part. Other areas that require massive reconstruction are information technology and statistics. It is a nightmare to get crucial information to perform analytics to make informed business decisions. But, that’s a topic for another day.

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