MALDIVES TOURISM INDUSTRY GETTING BACK ON TRACK

Haveeru Daily web site, Male, March 15, 2005

Text of report by Ian Gill by Maldives newspaper Haveeru Daily web site on
15 March

Male, Maldives: Ten weeks after the tsunami, tourists are beginning to
arrive in the Maldives in greater numbers. "Flights are fuller and hotels
are reporting 50 per cent occupancy, up from around 30 per cent after the
tsunami," says Richard Vokes, a director in ADB's Asian Development Bank's
South Asia Department who is helping to prepare ADB assistance for the
Maldives.

This tiny Indian Ocean nation depends heavily on thousands of tourists,
many from Europe, who are drawn to its spectacular atolls, groups of
islands set amid sandy beaches, clear shallow waters and necklaces of
coral. Tourists helped this isolated country with few natural resources to
triple its per capita income in over two decades to reach 2,400 dollars in
2003, enabling it to graduate from "least developed" status last year.

Tourism is by far the biggest contributor to Maldives' gross domestic
product - demonstrating not so much its strength as the vulnerability of
an economy so dependent upon one sector. That susceptibility was brutally
exposed on 26 December 2004 when high waves washed over a country that is
1.5 metres above sea level at its highest point.

The tsunami affected one third of the country's 100,000 people. It
destroyed many homes. It washed topsoil off agricultural plots and home
gardens and saltwater covered the earth. Floodwater disrupted drinking
water supply, contaminating wells and infiltrating freshwater aquifers.
The giant wave hit key sectors hard. It cut down fishing, which accounts
for half of exports, after sweeping away fishing fleets on over 50
islands. It affected more than 100 agricultural islands.

But it hurt tourism most of all, causing direct damage of 100m dollars,
according to a joint government-donor assessment. The next worst hit
sector was housing at 65m dollars. The tsunami damaged 20 per cent of the
country's 91 resorts - and tourist arrivals plunged. By end-January, the
country counted only 7,600 tourists, a big drop from 17,000 at the same
time a year earlier.

On the ground, the effects are distressingly clear, as ADB Vice-President
Liqun Jin and Mr Vokes observed during a recent reconnaissance mission. On
Guraidhoo Island, part of the South Male atoll, lassitude hangs over the
main street as shopkeepers wait for tourists, whose numbers have dwindled
to a trickle. Fishermen sit around idle and dejected because the wave not
only destroyed their homes and boats, but also closed down a nearby resort
where tourists bought their catch.

The cash flow situation is serious for a government faced with escalating
costs for the relief effort and sharply reduced income. For ADB, Mr Jin
was able to reassure the government in January that ADB will provide swift
assistance of 20m dollars in grants for reconstruction and rehabilitation
in 2005. This is three times the amount of loan assistance that ADB
provides to the Maldives in a year.

Key to Maldives' recovery is the swift return of tourists. "Tourists may
stay away, not because they fear another tsunami, but because they may
think that services are at a low level because of the disaster," says Mr
Jin. "It's important to re-open the damaged resorts and lure the tourists
back again through advertising."

Already, he notes, 80 per cent of the resorts are now functioning
normally. Dr Ralf Corsten, a former major tour operator who is now adviser
to the World Tourism Organization, believes that, with proper marketing,
the Maldives can recover from the tourist downturn in months rather than
years.