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Economic impact of COVID-19 on Maldives tourism

Mohamed Naseem (Nafa Naseem)

This article is part of Covid 19: Stimuli and Beyond edition of the Journal of the Maldives Economic Review, Volume 1, Issue 3, March 2020

With the declaration of global pandemic due to novel corona virus now known as Covid-19, the Maldives tourism industry has been hit badly. Maldives tourism industry has enjoyed its best arrivals during the past year 2019 and it was looking forward for further growth during this year 2020. With the expansion in demand with market growth, many new resorts including new domestic airports began their operation especially for the expected growth in arrivals during the year 2020. However, with the beginning of this devastating virus, starting from its inception in Wuhan, China, the country has been experiencing enormous cancellations, especially starting with the Chinese New Year in early February 2020. Today almost all resorts are experiencing massive drops in number of arrivals, including cancellations of major airlines operating to and from the country such as Singapore Airlines, Emirates Airlines as well as Turkish airlines carrying tourists in and out of the country from all over the world. Industry pioneers like the Champa group chairman Mr. Hussain Afeef was quoted in Mihaaru Daily news on 24th March 2020, that this could be the worst ever hit for the industry and no one is able to predict its negative impact on the industry so far. Probably he was referring to the cancellations and consequent losses experienced by the industry during 9/11 as well as SARS epidemic. So far very few information is available for researchers like us to analyse the situation and in the absence of considerable data it is likely to be difficult to extrapolate the economic consequences of this tragedy. Based on daily news by various local sources, almost all resorts have shut down while some resorts have already laid off its staff, and some others had given their staff unpaid holidays. The government, namely the Ministry of Economic Development has been requesting such employees to register with the employment office and it has promised to help them. But the magnitude and kind of help is yet to be announced or probably decided. Moreover, we need to recall that over 65% of resort employees are expatriates from all over the world. NGOs representing resort workers have raised the issue as irresponsible and unacceptable or unkind actions on the part of the resort owners, as this would put the employees and their families under enormous economic hardship, especially the locals working in resorts. It is a difficult time for all the economic agents without exception. In my opinion this is the time where we need the Government policy makers, the whole industry and resort owners to step in and support each other for mutual benefit. Calamities like this are unannounced and no preparation can avoid it, but we can definitely try to minimise the impact. We should not blame one another but put our efforts together to over come it. The government as well as industry must recognise the importance of the tourism industry as the main source of employment, income generator and profit earner to the investors, entrepreneurs as well as the country. The Golden egg laying Chicken, as commonly referred to in Maldives, the tourism industry can’t be ignored just simply because of a global pandemic. This chicken must be treated, protected and taken care of so that we can get more golden eggs in future! Many people are asking us the students of economics like me on the impact, estimated losses, the future outlook and worst come scenarios, which no one actually knows at the moment, but can only provide an intelligent guess. For me, the most important possible measure now is that all economic agents including the industry players, the government policy makers and the employees must stay put and cooperate with each other in this difficult situation where no one knows what lies ahead of us. Individual loss minimizing measures may not work in this kind of unknown situations. Neither the country nor the industry can sustain this kind of unpredictable hits and losses as it encompasses the whole world economy and not only the tourism industry in Maldives. We can attempt collectively to use various strategies such as temporary paid leave for all employees and or partial compensation instead of laying off the very key people who are behind the lucrative profits earned by the industry players. We must choose empathy, kindness and generosity over our individual selfishness. My humble advice to all of you is that, it’s a difficult time for all of us and we better keep calm, listen to the relevant authorities, and take preventive measures from spreading the virus and infections rather than putting the people into economic and mental hardship through our irresponsible individual actions. God willing, we Maldivians have shown our resiliency during hardships and braved the many storms that have passed this small nation. For that matter I am one hundred percent sure we will prevail this Covid-19 and its destructive pandemic too. About the Author Mohamed Naseem is a pioneer in the field of undertaking public awareness programs on national TV on economic and business issues. Popularly known as Nafa, from the name of his tv program, Naseem has served in senior positions of both Government and private sector.

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