China Special Envoy Visits Maldives: Increased Trade & Development Ties Expected
The new Maldivian President is likely to agree a China FTA and new BRI infrastructure projects
The Chinese Special Envoy to the Maldives, Shen Yiqin, has attended the inauguration of the new Maldivian President Mohamed Muizzu at Male on Saturday and expressed Beijing’s readiness to promote the Belt and Road Initiative projects and push for new progress in the bilateral ties.
Muizzu had fought the Maldives Presidential election on anti-Indian platform, vowing to remove an Indian military presence from the islands. Muizzu had previously been instrumental in permitting Chinese investment into the Maldives for infrastructure development under the Belt and Road Initiative (BRI), including the much needed Sinamale Bridge.
Prior to his swearing in, Muizzu has said he looks forward to scripting further strong ties between the Maldives and China. Given the perseverance of China in cultivating ties with the Maldives, the incoming government may be inclined to accept or agree to major Chinese proposals for investments.
The primary objective of the new Muizzu administration will be to re-activate the China-Maldives Free Trade Agreement. Signed in December 2017, the FTA was pushed through in the Maldives Majlis in violation of constitutional provisions as the majority of opposition leaders were absent at the time of voting. It is a comprehensive document that covers the trade in goods, services, and investment as well as economic and technical cooperation. Foreign ownership of land has been included as a commitment in the agreement along with “unbound” access for Chinese nationals in the services sector. Significantly, the FTA provides for an overarching “security exemption” (Article 86) relating to the disclosure of any information which is determined to be contrary to the security interests of either party. Further, there are clauses for security exceptions under “trade in services” relating to supply of services for the purposes of provisioning a military establishment.
The next project which China had proposed and is under consideration is the Joint Ocean Observation System, for which the Yameen government had signed a protocol in December 2017. This protocol envisaged the deployment of oceanic buoys throughout the EEZ of the Maldives with transmitters networked to a centrally located control station in Makunmudhoo around 115 km from Minicoy. China had proposed for the observation system to be a part of the BRI Observation and Surveillance networks covering the IOR. The Maldivian Defence Ministry and AGs office had objected to the Chinese proposal in the initial draft protocol that Chinese research vessels and submersibles be allowed access to Maldivian waters for conducting research. The text was then modified to read that Chinese vessels were required to inform the Government of Maldives prior to entering Maldivian waters.
China’s interest with the BRI and Maritime silk route extended to the Maldives also when they projected the Ihavan Integrated Development project in 2014. This project was originally envisaged under the Gayoom government and taken forward by the Yameen government. A Singapore firm, Surbana Jurong was tasked to develop a master plan for this strategically located atoll along the Eight Degree channel. The project was planned in three phases covering a total area of 4,112 hectares of land which 3,870 hectares would be reclaimed connecting various islands. The project was planned to be developed over a period of seven years from 2017 to 2024 and include a port, airport, industrial zone and township. Muizzu will seek to revive the project and seek investments from China and Saudi Arabia.
China has also been eying a permanent presence in Laamu Atoll and other nearby islands. Laamu is located along the One and a Half Degree Channel in South Maldives. Of the seventeen islands leased to Chinese companies by the Yameen government, eleven are in Laamu Atoll. China has already built a communication tower in Gadhoo Island, where the Maldivian government has made plans to develop another trans-shipment port. China has also constructed a 15 km road linking different islands in the atoll.
China has also shown an interest in developing nation-wide links for which the Maldivian government had developed a strategic action plan. This plan includes the upgrading and expansion of the Velana International Airport in Male. The Yameen government had signed two agreements, one with China and another with a Malaysian company. China’s Temus Group in collaboration with US-based Bain Capital had finalized a takeover of 40% stake of US Blackstone Group in the Trans Maldivian Airways (TMA) in December 2017. Subsequently, China state-owned enterprise AVIC negotiated a takeover of 60% stake in the Maldivian state-owned Island Aviation Services Ltd. The objective of these acquisitions is to dominate inter-island transportation in the Maldives. TMA caters to 45% of tourist traffic transportation and over 50% of the country’s tourist resorts.
It is not just the transport sector that China is interested in. Huawei, through its Sri Lankan subsidiary, signed an MoU with the Maldives National Centre for Information Technology (NCIT) to develop IT infrastructure in the Maldives under the SMART Maldives Project with an EXIM Bank of China loan of US$57 million. The project includes introduction of “smart cards”, an all-in-one driver’s licence, identity and ATM card and building of a data centre capable of hosting all the hardware for government-wide access control. Qatar’s Ooredoo has also partnered with Huawei Marine to launch the Nationwide Submarine Cable Project in the Maldives. China was also keen to establish ground stations for its Beidou Navigation Systems in the Maldives.
In the security and defence front, the Maldives and China signed a five-year defence cooperation roadmap in 2015 for gratis military assistance worth US$ 4.2 million. China would want to sign similar agreements with the Maldives National Defence Forces besides offering surveillance aircraft and providing training and capacity building to the Maldivian police. China also has an active interest in obtaining basing facilities in the Maldives. Admiral Wu Shengli, then Commander of PLA Navy accompanied by a ten-member delegation visited the Maldives in November 2015. The delegation included a Deputy Chief of Staff, Deputy Commanders of a Nuclear Submarine and several others. The composition of the delegation represented all spectrum, surface, sub-surface and aviation expertise which was likely to be on a scouting mission to identify a suitable location for a basing facility.
Another delegation led by Vice Admiral Tiang Zong, then PLAN Deputy Commander visited the Maldives in April 2016. The delegation met with, amongst others, the Maldives Transport and Contracting Company (MTCC), one of the largest public companies in the Maldives, doing work on dredging and harbour construction. The first Chinese PLAN ships to visit the Maldives was in August 2017. The visit of three warships was undertaken in great secrecy and the ships were given berthing facilities much closer than the anchorage area generally provided to visiting ships. Chinese scientific research vessels have visited the Maldives at regular intervals in the period 2016-2018. More recently, China has sought permission for the visit of research vessel Xiang Yang Hong 03 to conduct marine scientific research in the Maldives’ EEZ from February to April 2024. It is expected that Muizzu administration will approve this request.
China’s investment proposals in the Maldives are indicative, and many more proposed and in the pipeline, can be listed. However, visit of China’s Special Envoy is to suggest the most important ones from the perspective of the Muizzu Presidency, which will certainly want to take forward some of these proposals. Ratification of the FTA with China will be a top priority for the Muizzu administration.