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What Makes the Maldives So Expensive?

The Maldives is a country made up of 1,200 small coral islands, known as atolls, in the North Indian Ocean. This country has around 5.5 lakh citizens and is considered one of the smallest and richest in South Asia. In spite of its small land area of 298 square kilometer compared to its long coastline of 650 kilometers, the country has become a popular tropical holiday destination mostly because of its geographical beauty. The crystal clear waters of the Indian Ocean, coral reefs and underwater ecosystems have made the Maldives one of the world’s most popular recreational scuba diving destinations as well. The country also provides world class accommodation for tourist attraction which makes the country very popular worldwide as a high class tour destination. In 2019 alone, the country was able to attract more than 1.7 million tourists. But the Maldives is much more expensive than all the other holiday destinations in Asia. According to Everest holidays, the cost of a 5 day / 4 night tour package from Bangladesh to Maldives ranges from BDT 1 lakh – 1.5 lakh per person. Let’s have a quick look at what makes the Maldives expensive.

Maldives attracted more than 1.7 million tourists in 2019

Overview of Maldives

In 1965, the Republic of Maldives gained political independence from the British and started its journey as an independent country. The journey of the country’s tourism industry began in 1972 with the establishment of Kurumba, the first resort in the Maldives, approximately 4.2 km from Male International Airport.The crystalline waters, perfect white sand beaches and the gentle waves of the Indian ocean makes Maldives one of the most beautiful countries in the world, which positioned Maldives on the top priority lists of the travel enthusiast peoples around the world. Maldives’ government also realizes how important tourists are to the economy, which is why they have taken steps to make sure that Maldives is a haven of peace, serenity, isolation, comfort, and safety. As a result, the number of tourists in the Maldives is increasing every year.

According to financial express, despite the pandemic, from 1st January 2021 to 13th October 2021, a total of 923,146 tourists arrived in the Maldives, which is almost double the total population of the Maldives. According to the Maldives Ministry of Tourism, China had the highest number of tourists (31,744) in the country in 2020. According to a UNWTO source, the country had received the highest number of tourists from Russia in February 2021 (22,365). In addition, the Maldives is one of the most popular tourist destinations in Italy, Germany, USA, France and Saudi Arabia.

According to the Maldives Ministry of Tourism, China had 31,744 tourists in 2020

Due to the fact that an excessive number of tourists visit per year, tourism has become the largest sector of Maldives’ economy. According to CNBC, tourism provides for more than 28% of GDP and 60% of foreign exchange receipts for Maldives. More than 90% of the state government’s revenue comes from import duties and tourism-related levies. The tourism sector also directly and indirectly employed about 50,000 people in the Maldives.

However, from the tourists’ perspective, Maldives seems quite an expensive holiday destination if compared to other Asian holiday destinations such as Thailand, Indonesia, Japan and the Philippines. According to Amazing Tours BD, a 3 day – 2night Bali, Indonesia tour package costs BDT 49,000 per person. Besides that, the 5 day – 4 night Dubai special tour package costs BDT 96,900 per person. Whereas, a package of 3 days – 2 night dhaka-maldives-dhaka island package tour costs per person around BDT 125,000. So What makes the Maldives so expensive?

More than 90% of the Maldives government’s revenue comes from import duties and tourism-related levies.

What Makes the Maldives So expensive?

High Transportation Costs

The transportation cost of Maldives is also significantly higher than other countries. As it is a water-locked, island country and situated on a remote location of the Indian ocean, aviation is the main transportation mode to reach to the Maldives. Although one can reach the Maldives by cruise ship from both India & Sri Lanka, they are also relatively more expensive and time consuming. On the other hand, even after arriving at Male Airport in the Maldivian capital, a tourist has to use a seaplane, private yachts or speedboat to reach the island resorts. Besides that, when people travel from one island to another, the available options are only seaplanes, and speedboats, which don’t come cheap. According to jtgtravel, a speedboat trip costs around $100 per person per trip in Maldives. Additionally, seaplanes are much more expensive, and one has to spend at least $500 per person per trip. The excessive travel costs raises the overall trip cost in Maldives and makes it expensive.

Expensive Accommodations

Hotels in the Maldives are also pricey due to the fact that they are mostly constructed right on the ocean or on the beach. To construct real estate on such coastal areas, and make it luxury with all the modern facilities to attract tourists requires a massive investment. According to travelgreatness, A reasonable 3 star beachfront hotel in Maldives can cost an average $60-100 per day. However, if anyone wants to stay in a Maldives iconic overwater bungalow, it can cost him around $1000 per day without tax. Besides that, due to the high demand, these captivating resorts usually get occupied all around the year, which makes these accommodations more expensive.

Everything is Imported

As the Maldives is a water-locked desert island, the country is not at all self-sufficient in food and other necessities. With the exception of a few local fish, fruits and vegetable items, almost all the essential products of the country have to be imported. Maldives’ total import of goods in 2019 was $2.15 billion against a total export value of $253 million. In addition, the government charges high import duty on these imported products, so the price of any product in the country is relatively high.

High Taxes

Maldives is the lowest country in the world with only 1.8 Meters or 6 Feet average elevation from the sea level. As a result, Maldives is at most risk due to the climate change from all other countries in south asia. According to ADB, a rise of one meter in sea level would completely submerge 66% of the archipelago’s land area, causing devastation and leading to community dislocation. That’s why Maldives’s government devotes half of its national budget to initiatives to mitigate the worst effects of climate change, such as building sea barriers to protect coral reefs. The government raises this hefty amount of money in forms of taxes. And this high taxation is mainly imposed on tourists and foreigners. Tourists in the country have to pay a mandatory extra 12% as Goods & Services Tax, and a further 10% as service charge on the purchase of any product. In addition, if tourists are staying at a resort, vessel or hotel, they have to pay ‘Green Tax’ of $6 per day. Such taxes have made the Maldives so expensive for tourists.

Michael Walker
Michael Walker
Michael Walker has made a name for himself as an independent journalist and economist. He is a Stanford University graduate and has built a career as a contributor for MSNBC and The New York Times. Now, he spends his time writing articles for several renowned publications and primarily focuses on the on-goings of different companies, businesses, and the general happenings of the world.

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