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China, a major trade partner of the Maldives with bilateral trade surpassing USD 700 million and a leading source of tourists, stands to gain significantly from this agreement. (Reuters/File Photo)Month after signing an agreement with India to introduce Unified Payments Interface (UPI) in Maldives, Male on Saturday signed a Memorandum of Understanding (MoU) with the People’s Bank of China (PBOC) to establish a framework for current account transactions and direct investments using their respective currencies.
Additionally, the Maldives may soon host a branch of China’s largest bank, the Industrial and Commercial Bank of China (ICBC), according to state-run PSM News.
China, a major trade partner of the Maldives with bilateral trade surpassing USD 700 million and a leading source of tourists, stands to gain significantly from this agreement. The MoU, signed between the Maldivian Ministry of Economic Development and Trade and the People’s Bank of China, aims to streamline trade and investment relations by encouraging transactions in local currencies.
This MoU follows President Mohamed Muizzu’s state visit to China in January this year, where he met with President Xi Jinping to discuss strengthening their comprehensive strategic partnership and enhancing economic cooperation.
The MoU marks a significant step in enhancing economic ties and boosting trade and investment between the Maldives and China. Male is also negotiating a Free Trade Agreement with Beijing, with formalities nearly complete, and it will be activated when both parties agree.
India and the Maldives signed an agreement to introduce the Unified Payments Interface (UPI) in the archipelago nation in August, during External Affairs Minister Jaishankar’s three-day official visit to the nation. Developed by the National Payments Corporation of India (NPCI), the UPI is an instant real-time payment system designed to facilitate inter-bank transactions through mobile phones.
Meanwhile, the development precedes President Muizzu’s upcoming visit to India, where his government is working on a similar Rupee-Rufiyaa arrangement. Relations between the Maldives and India had cooled since President Muizzu, known for his pro-China stance, took office in November. India withdrew its military personnel from three aviation platforms used for medical evacuations on May 10, at Muizzu’s request. Nevertheless, after Jaishankar’s August visit, the Maldivian foreign ministry described the trip as a “significant milestone” and expressed a desire to strengthen the bilateral relationship.
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