Business Times

Tourism entrepreneurs cry foul over shoddy treatment by authorities

By Chanaka de Silva

Visit Sri Lanka 2011 tourism year looms closer but small players like SME’s are in dire straits.
Though the ‘Mahinda Chintanaya’ has stated that the SME will be helped up to now nothing has been forthcoming. Authorities such as the Sri Lanka Tourism Development Authority, Ministry of Tourism and the Treasury Secretary have up to now not provided any of the promised assistance to the SME sector, a leading SME entrepreneur told the Business Times last week.

He said the SME sector is what makes up of about 80 % of the tourism industry. Of the 250 to 300 tour operators, SMEs make up around 70 %. This sector suffered badly during the last 25 to 30 years with the war by not having the sufficient numbers of tourists coming in. This has now led to the point where many of these SME’s have gone out of business and those who are surviving barely can sustain themselves.

During a discussion with Treasury Secretary, the SMEs were led to believe that loans will be given at between 10 to 12 % interest against the present prevailing rate of 18 %. The ‘Saubagya’ scheme which is expected to give loans at 12 % interest have informed the SMEs that only Rs. 500,000 would be given when the requirement is Rs. 5 million and above.

Though both state and private banks have several loan schemes, this has been for the sole benefit of the bigger players in the field. The SMEs when contacting the banks are told that there are no such loan schemes. This has been the situation that has persisted for the last 3 to 4 years. If the ‘Visit Sri Lanka’ is to be a success the existing facilities have to upgraded fast, he said.

As the large companies are able to upgrade their facilities without government assistance this leaves the SME’s in a severely handicapped position. Tourist arrivals in 2009 were 450,000 while this year it is expected to rise by 20 %. The 2011 ‘ Visit Sri Lanka Year’ is targetting a 40% increase while the magical target of 2.5 million is in 2016.

The entrepreneuer said its the SMEs that provide the backbone of the tourist industry and if in 2016 the anticipated 2.5 million tourists are to be accommodated a further 30,000 rooms have to be built.
The present number of available 15,000 rooms is not sufficientand this should increase by at least another 35,000. These are not only from the resorts as the middle class tourists are catered to by the SMEs, he added.

Presently there are around 350 to 375 wayside restaurants, 500 Guest Houses with 5200 rooms, 110 Classified Hotels with 9300 rooms and 140 unclassified hotels with 5350 rooms in operation, he said.
Further he added that the present cost of a liquor license is Rs. 200,000 which many SMEs are finding difficult to afford. Over and above this an addition 15% tax on liquor is also levied while the electricity tariffs have increased by 30 %.

SMEs do not provide simple accommodation to the tourists but all other services required.
With aim of clarifying the position of the government, the Business Times spoke to S.Kalaiselvam, Director General, Sri Lanka Tourism Development Authoriity, who said as far as the government is concerned the development which is being carried out will benefit the SMEs as well. There are airports, seaports and roads being developed now. Domestic flights with seaplanes is also on the cards.

Even the power projects of both Upper Kotmale and Norachcholai are to make this on coming boom a success, he said. As a further development the handicrafts sector is also being helped. The present Zoological Garden will be shifted to Pinnawala as part of the master plan, he added.

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