Navigating the New Foreign Investment Landscape in the Maldives
Ministry of Economic Development and Trade has officially published new entry requirements pursuant to Section 11 Foreign Investment Law (Act No. 11/2024), marking a significant shift in the country's investment landscape. These changes, announced by the Ministry of Economic Development & Trade, introduce updated frameworks for foreign investment while establishing transparent transition arrangements for existing investors whose operations may be affected by newly restricted or closed sectors.
The updated policy introduces a tiered system for foreign participation in real estate development, balancing market openness with domestic protection.
For commercial and industrial real estate, foreign shareholding is now directly linked to the project's scale. Mid-sized developments ($15M - $30M) require a local partner, with a foreign ownership cap of 65%. However, large-scale projects above $30 million are eligible for full foreign ownership.
Notably, the residential real estate sector remains largely reserved for local investors, with all projects valued under $100 million defined as a closed area for foreign capital.
A significant new category, "Strata Asset Investment," was created. This allows foreign investors to purchase individual units from a resort property, such as private villas, with a minimum investment of $250,000.
Also, a noticeable change within the tourism sector affects Dive Centers and Dive Schools. The permitted level of foreign shareholding has been revised downward, now capped at 65%, compared to the previous limit of 75%.
Many sectors remain fully open, particularly those requiring significant capital investment, advanced technology, or specialized expertise. These include:
- Tourism & Hospitality
- High-value manufacturing
- Infrastructure & energy
- ICT
While the new foreign investment law introduces challenges for some existing businesses, the ministry has introduced a transition arrangement for those investors.
Transition Arrangements for Existing Investors
The Maldivian government has acknowledged that these changes directly impact existing foreign investments. In response, they have established a structured and time-bound transition framework.
Key Elements of the Transition Policy:
- Sector-Based Timelines: The grace period you receive depends on your industry and investment scale:
- 1 Year: For service-based businesses, sales agents, and wholesale/retail trade.
- 3-7 Years: For businesses with substantial capital investments (e.g., in sea transport, logistics). Larger investments (>$10 million) qualify for longer transition periods (up to 7 years, with possible extensions).
- Project-Based Terms: For real estate, the transition period will align with existing project agreement terms.
- Important Restrictions During Transition:
- During any transition period, no new expansions or opening of new outlets in the restricted or closed sectors will be permitted. The approval is strictly for the continuation of your currently approved scope of operations.
- Application process:
- Clients are required to submit a Transition Application form which will be reviewed by the internal transition committee. The committee will issue a formal decision and finalize the Transition Arrangement Letter.
