Former President Mohamed Nasheed has said the Maldives-China Free Trade Agreement (FTA) which came into force in January will not benefit the Maldives and its neighbours.
Speaking to an Indian media outlet during his ongoing official visit to the country, Nasheed expressed concerns about the FTA.
"This is very unfortunate and we don't think this Free Trade Agreement is beneficial to either the Maldives or our neighbours specifically India...The trade balance does not give us an advantage to have a free trade agreement with China," he stated.
Nasheed, who maintains close relations with India, said the Indian government would be extremely concerned about the agreement.
"This would be a matter of concern for the Indian Government and they will wonder why the government of Maldives has done this [FTA] and I am hopeful that the government can have this discussion..." he said.
Meanwhile, Foreign Minister Abdullah Khaleel is also currently in India. Khaleel and Nasheed met during the visit.
Khaleel also met Indian External Affairs Minister Dr. Subramanian Jaishankar for official talks. However, it is not clear whether they discussed the FTA.
India has previously expressed concern over the FTA and said it will be taken into account "while framing our own policies."
"Recent agreements that are likely to result in revenue loss for the Maldives government are obviously a matter of concern and do not bode well for the long-term fiscal stability of the country," said Indian External Affairs Ministry spokesperson Randhir Jaiswal.
"We would obviously need to take that into account while framing our own policies," he added.
India believes the FTA with China "will dent Maldives revenue as customs forego will be USD 30-40 million per annum."
India is also concerned about the Maldives preferential trade agreement signed with Turkey which could also result in a similar revenue loss.
Official figures show import duty revenue has declined since the beginning of the year.
According to the Finance Ministry's figures released on Thursday, the government received MVR 436 million in import duties till March 6. This is a decrease of MVR 164 million compared to the same period last year.
Economic Minister Mohamed Saeed earlier said he did not know the projected impact of the FTA on import duty revenue.
