INSUBCONTINENT EXCLUSIVE:
Within two weeks of the assurance given by President Maithripala Sirisena to the business leaders that the government would provide
adequate assistance to revive the tourism industry from the blow received from the Easter Sunday terror attacks, a wide-ranging relief
The Cabinet of Ministers approved a one-year moratorium on capital and interest repayment for travel and tourism sector and offered many
concessions including banking sector exposure to leisure sector estimated at Rs
280 billion, two-year working capital loans based on turnover at 3.4% interest rate under Enterprise Sri Lanka programme with govt
subsidizing 75% of the cost and Value Added Tax (VAT) reduced to 5% from 15%.
The tourism industry would benefit from billions of rupees in
support due to this relief package
A week after the Easter Sunday terror attack, President Sirisena called a meeting of tourism sector said that the government was responsible
for working towards recovering and reviving the tourism industry and the hotel chains and other business sectors that were badly affected
due to the recent terrorist attacks.
A Cabinet Sub-Committee was appointed at the very first Cabinet meeting after the terror attack to
inquire on the future steps to be taken towards the development of the field of tourism and the relief package was formulated by
thereafter.
Rebuilding tourism industry
On April 29, President Sirisena held a meeting with hotel owners, officials of the Tourist Board
and Ministry of Finance to discuss the difficulties faced by the entrepreneurs engaged in the tourism sector due to this tragic incident and
to find ways and means of rebuilding the tourism industry.
The agreements reached during the discussions regarding reliefs that should be
given to the tourism industry, postponement of their loan repayment period, and to provide some sponsorship by the government to the
institutions who are not able to pay wages for their employees.
&Moreover, on May 6, I summoned the representatives of the Chamber of
Commerce and discussed regarding the reliefs that could be given by the Government for the entrepreneurs
I should clearly mention that the National Security Council meeting I didn&t hold alone
I have invited the Prime Minister, the Cabinet as well as the MPs from Opposition,& President Sirisena said in Parliament on May 7.
In
accordance with the Cabinet decision, the Central Bank of Sri Lanka will direct banks not to seek capital and interest repayment of loans
taken by all registered travel and tourism businesses for one year, i.e
This is applicable for loans granted to the tourism sector as of April 18, 2019
The Government estimates the banking sector exposure on the travel and tourism sector to be around Rs
280 billion, whilst analysts claimed it could be as high as Rs
400 billion.
The tourism sector employs 500,000 directly and the number dependent on this industry is over two million
The sector accounts for 6% of the economy.
Relief package
Announcing the relief package in Parliament, State Minister of Finance Eran
Wickramaratne said that the one-year moratorium will be granted to loans taken under the Enterprise Sri Lanka programme as well
15 billion had been lent under the Enterprise Sri Lanka loan schemes for the tourism sector
The Value Added Tax (VAT) on the travel and tourism sector has been reduced to 5% from 15% until March 31, 2020
In 2018, VAT collection from the sector is estimated to be Rs
18 billion.
The banks will also allow the borrowers to extend the repayment period for the number of months it was falling due during the
Furthermore, the repayment will start from April 1, 2020, and capital and interest payments falling due during the moratorium can be
recovered from July 2020 onwards
Under Enterprise Sri Lanka, travel and tourism loans registered on or before April 18 will be granted before the end of the current
The interest subsidy of these loans will be borne by the Government.
The package also provides subsidies to travel or tourism business with
different turnover levels in accordance with their capital investments
Those who are with less than Rs
100 million, the maximum working capital available under this scheme is Rs
50 million for those with a turnover of Rs
150 million for those with Rs
250-750 million in turnover, and Rs
250 million for turnovers above Rs
The Finance Ministry and the Central Bank are also exploring options to extend relief for lease repayments of the travel and tourism
sector.
In addition to the above, an interest-subsidized working capital for the travel and tourism sector has also been announced
These working capital loans, based on annual turnover, will be provided under the Enterprise Sri Lanka programme, with a two-year repayment
For these funds, the Government will bear a 75% interest subsidy until March 31, 2020, and the applicable interest rate will be 3.4%.
In
the tourism sector, Sri Lanka earned $ 4.4 billion last year with 2.3 million tourist arrivals
The tourist arrival suffered a loss of 7.5% in April 2019, recording the first-ever decline in the last few years
The tourist arrival averaged almost 20% increase annually during the last decade.
The month recorded 166,975 tourists arriving in the
country compared to the 180,429 arrived in April 2018.AAs at April 30, 2019, 907,575 of tourists had visited Sri Lanka for this year
It is a 2.2% growth over last year when 888,353 tourists had visited the country during the same period.
United Kingdom, India, Germany,
China and Australia were Sri Lanka's top five international tourist generating markets
In April United Kingdom was the largest source of tourist traffic to Sri Lanka with 15% of the total traffic received
India accounted for 14% of the total traffic while Germany, China and Australia accounted for 10%, 8% and 6% respectively.
At the meeting
called by President Sirisena to discuss the issue, Chairman of Hotel Owners& Association, Sanath Ukwatte expressed his gratitude to
President Sirisena and the Government for the swift action taken following the Easter Sunday attacks
Business tycoon Harry Jayawardena thanked President Sirisena for the leadership displayed and the steps taken to restore normalcy in the
country and expressed the fullest confidence that the country could recover quickly.
