Male, Sep 14 (PTI) Maldives has signed a Memorandum of Understanding with People’s Bank of China to establish a framework for current account transactions and direct investments in their respective currencies and announced that it may soon have a branch of China’s biggest bank, ICBC.
China, which is Maldives' one of the largest trade partners with bilateral trade exceeding USD 700 million, and the top source of tourists to the Maldives, stands to benefit significantly from this agreement, state-run Public Service Media (PSMNews) said here on Friday.
The MoU between the Ministry of Economic Development and Trade of the Maldives and the People's Bank of China (PBOC) aims to facilitate smoother and more efficient trade and investment relations between the two countries by promoting the settlement of transactions in local currencies, PSMNews said.
“Work is underway to open a branch of China’s biggest bank, the Industrial and Commercial Bank of China (ICBC), in the Maldives,” news portal Sun.mv quoted Maldivian Economic Minister Mohamed Saeed as saying.
“Negotiations remain in progress,” Saeed added.
The MoU follows the state visit of President Mohamed Muizzu to China in January 2024, where he met with President Xi Jinping to discuss strengthening the comprehensive strategic partnership between their countries and highlighted a mutual commitment to deepening economic cooperation, PSMNews said.
The signing of this MoU represents a major milestone in bolstering economic ties and fostering increased trade and investment flows between the Maldives and China, it added.
Maldives is also working out a Free Trade Agreement with China, formalities for which were complete, and would be “activated” at a time of mutual agreement, Saeed added.
The development comes ahead of President Mohammad Muizzu’s scheduled visit to India. Maldives is working out a similar Rupee-Rufiyaa arrangement with India.
Maldives and India witnessed a downturn in bilateral ties since pro-China president Muizzu assumed office last November. On his insistence, India withdrew its military personnel manning three aviation platforms used for medical evacuation by May 10.
However, after External Affairs Minister S Jaishankar's visit here in August this year, the Maldivian foreign ministry had termed it as a "significant milestone" in bilateral ties and underscored that the two countries have expressed their desire to elevate their friendship and strong alliance to new heights.
Jaishankar's official visit to the Maldives was the first high-level trip from New Delhi after President Mohamed Muizzu, seen as a pro-China leader, assumed office in November last year.