Tourism 2020’s top forex draw!

Chaminda Perera

Sri Lanka's tourism sector which was battered by the protracted conflict that ended in May 2009, has started to pick up giving an impetus to the economy. The industry has started to boom while injecting life to the tourism related Small and Medium Enterprise(SME) sector.

Whale watching, a great tourist attraction

Tourists at the beach

Foreigners at Sigiriya

The contribution of the SME sector to the country's economy is of paramount importance since around 80 per cent of the businesses in Sri Lanka fall under SME. Since the dawn of peace the tourism sector has been playing a prominent role in the economic development of the country. Last year tourist arrivals exceeded the one million mark and the government is targeting 2.5 million tourist arrivals by 2016 and four million by 2020.

It is anticipated that the tourism sector will generate US$ three billion by 2016 and US$ eight billion in foreign exchange by 2020 turning the sector into country's top forex earning source surpassing foreign remittance.

Employment opportunities

The anticipated boom in the tourism sector by 2016 will also create more than 50,000 employment opportunities and US$ three billion foreign direct investment in the tourism industry.

To achieve this objective, the government has paid special focus on rectifying the serious shortcomings in the industry. The Economic Development Ministry has paid serious attention to make tourists coming to Sri Lanka happy. Highly satisfied and contended tourists are vital for the success of the industry. They in turn will be promoters of Sri Lanka's tourism.

The government has taken serious note of the fact that the SME sector which forms over 70 per cent of the industry is facing difficulty in raising funds for the improvement and maintenance of the tourism infrastructure although the corporate sector is flush with funds.

Preserving cultural values

The Ministry is geared to develop the tourism (SME) sector while preserving local culture, ethos and the country's rich natural environment as outlined in the Tourism Development Strategy 2011 - 2016.

With the growth in tourism, a void is being observed between adventure and leisure particularly considering that the modern day tourist prefers to have eco-friendly goods and services, special food varieties and souvenirs made in Sri Lanka.

The Ministry's objective is to turn this sector into a vital contributor to the country's economy while preserving cultural values, natural environment and local ethos.

It is with this objective that the Ministry is implementing the Matching Grant Scheme worth Rs. 2,000 million to assist the tourism related SME sector, on a cost sharing basis. The eligible SME enterprises will receive 50 per cent of the cost to a maximum of Rs. 10 million as a grant. This grant is aimed at financing more than 1,500 such enterprises, creating over 2,000 employment avenues and improve the skills and competence of more than 5,000 persons within the industry.

The matching grant scheme is implemented under the Sustainable Tourism Development project of the ministry with financial support from the World Bank and the fund administrator will be the People's Bank of Sri Lanka.

SME centres

The Bank has been selected based on its performance in other donor funded SME support financing projects and their widespread branch network and SME centres.

The Bank is fully authorized to receive, appraise and approve the applications for this grant based on the criteria outlined by the Economic Development Ministry. The Bank will also report the progress of the project to the ministry.

The fund administrator is expected to complete the disbursement of the total grant by the end of September 2014. The applications from eligible SME enterprises are entertained by all branches of the People's Bank from May 16 till July 31, 2013.

It is expected that the local economy will receive a huge boost with the creation of new enterprises, employment avenues and higher demand for the local product and services.

This scheme is also aimed at the development of tourism related activities such as tourist vessel operation (Whales and Dolphin watching), water based, air based and land based adventure and road side stations.

New business ventures

The existing tourism related businesses such as tourist guest houses, independent tourist restaurants, holiday resorts, bungalows for foreign tourists, gift and souvenir products/craft and folk arts related enterprises, wildlife related products and Human Resources Development in the industry, communication and promotion activities etc which are in operation for more than one year will be eligible under this scheme.

The new business ventures such as tourist vessels operations, water based, air based and land based adventure activities, road site stations etc will qualify to receive this grant.

The 2 star graded hotels or the hotels below the 2 star grade, and ungraded tourism enterprises with a maximum 50 rooms, the tourism related SME projects including tourism service providers having an annual turnover below Rs. 10 million and subsidiary companies, sister companies and associate companies of larger companies where the aggregate annual turnover of the entire group is less than Rs. 150 million are eligible for grants under this scheme. Through this scheme, the ministry expects the SME sector related to tourism would be infused with efficiency and improvement of product and services resulting in a shift in the SME sector from informal to the formal sector.