Maldives gives Thilafushi contract to Chinese firm

The Maldives has signed a memorandum of understanding (MoU) with a Chinese company, China Harbour Engineering Company (CHEC), for the development of the first phase of the Thilafushi Port project, abandoning its joint development plans with India. This move has raised concerns in the strategic community, as it could increase China's influence in India's southern neighborhood.

CHEC has a controversial track record, with previous projects in countries like Sri Lanka, South America, Kenya, and the Pacific, often marred by financial and project mismanagement. The Maldives Ports Limited awarded CHEC the project on a single basis, despite the company's poor record. Experts warn that CHEC's involvement could pose governance, fiscal, environmental, political, and strategic risks.

The decision comes at a time when the Maldivian economy is facing challenges, including a rising current account and fiscal deficit, and a projected GDP growth rate below 1% for 2024, down from 6% in the previous year. The Maldives had previously announced plans with India to jointly develop the Thilafushi Port to ease congestion at Male Port, but this agreement was terminated.

The shift in strategy follows President Mohamed Muizzu's recent praise for India's role in the Greater Male Connectivity Project (GMCP), the largest infrastructure project in the Maldives. India has invested significantly in Maldives over the past eight years, providing benefits to thousands of Maldivians.