Financial Times

Revamped tourist board to get more trade representation
By Pani Seneviratne
The tourism law, that set up the institutional framework for the national tourism administration and prescribed the mode of tourism development way back in the 1960s, may soon be replaced by new legislation that would drastically alter the structure of the national tourism organisation, Ceylon Tourist Board.

A cess on the travel and tourism industries will fund the operation of the restructured national tourism organisation (NTO), making it more independent with better private sector representation. The proposed law, which the former government was to have presented to parliament just before parliament was dissolved, is likely to go before the Cabinet and then presented to Parliament.

The scheme - that has long been in the making and whose implementation the private sector has been eagerly awaiting - will create three institutions each charged with the responsibility for the principal functions of the NTO, whose original legal name Ceylon Tourist Board still survives although those anxious for change have taken the liberty of calling it the Sri Lanka Tourist Board.

The functions of the tourist board will be divided into three broad categories, Overseas Marketing and Promotion, Infrastructure Development and Hospitality Training. The new legislation will create the following institutions to handle these functions:

Sri Lanka Tourism Development Council (SLTDC) - will be the apex body, responsible for tourism infrastructure development and regulation of industry standards. It will be headed by a Chairman with a Board comprising the Director General of Tourism, three representatives of the Tourist Hotels Association and two from the Travel Agents' Association.

Regional Tourism Development Councils will be set up under this apex body. (As the unit of administration has been identified as the Province this will now be amended to Provincial Tourism Development Councils). Sri Lanka Tourism Promotion Bureau - responsible for overseas marketing and promotion. It will be structured on the lines of a private sector company with liability limited by guarantee instead of by shares.

It will be headed by the Chairman of the SLTDC. The Board will consist of the Director General of Tourism and five representatives of the travel industry, a representative of the Ministry of Finance and a Managing Director.

Sri Lanka Institute of Travel and Tourism - will be structured on the same lines as the Promotion Bureau. The Board will comprise of the Chairman of the SLTDC, the Director General of Tourism, eight members appointed in consultation with the Tourist Hotels Association, Sri Lanka Association of Travel and Tourism and the Hotel School Graduates' Association.

The new law would give a greater say in the operation of the NTO to travel industry players through representation on the Boards and aims to transform the NTO into a self-supporting institution. It now runs on government funds.

The funding mechanism that would ensure this is already operational. It came into effect on September 1, 2003 following the enactment of the Finance Act No. 25 of 2003.

The Act empowers the Department of Inland Revenue to collect a cess of one percent on the turnover of all tourism establishments currently registered with the Sri Lanka Tourist Board. The monies so collected will be credited to the budget of the SLTB.

In addition, the airport embarkation tax was recently increased to Rs. 1,500, of which Rs. 500 is being allocated to the NTO by the Civil Aviation Authority.

Asked whether this would make the NTO totally independent of the government budget, Chairman, SLTB, Udaya Nanayakkara said: "That is the intention, but the degree of independence from government funding will depend on how much is collected through the cess. It remains to be seen."

The re-organised NTO is expected to apportion its budget for the three functions in the following ratio: 75 percent for Marketing and Promotion; 10 percent for Development and 15 percent for Training. In order that the new dispensation may come into effect the original legislation, the Tourist Board Act No. 10 of 1966 that set up the Ceylon Tourist Board and the Tourism Development Act No. 14 of 1968 that prescribed the mode of tourism development, must be repealed.

This will be achieved when a new Tourism Development Act is passed in Parliament. The draft new law has been ready for several years and even survived several changes of government precisely because there is virtual unanimity on its merits.

Being an idea first mooted over ten years ago, a chorus of voices from the tourism industry claims that its implementation is long overdue. There is wide acceptance in the industry for the scheme. This is the impression gathered when Jetwing's Shiromal Cooray, Walkers Tours' Wasantha Leelananda and Gehan Perera of the Association of Inbound Tour Operators were asked for their opinion.

Sri Lanka Tourism Promotion Bureau - responsible for overseas marketing and promotion. It will be structured on the lines of a private sector company with liability limited by guarantee instead of by shares. It will be headed by the Chairman of the SLTDC. The Board will consist of the Director General of Tourism and five representatives of the travel industry, a representative of the Ministry of Finance and a Managing Director.

The funding mechanism that would ensure this is already operational. It came into effect on September 1, 2003 following the enactment of the Finance Act No. 25 of 2003.

In addition, the airport embarkation tax was recently increased to Rs. 1,500, of which Rs. 500 is being allocated to the NTO by the Civil Aviation Authority. Asked whether this would make the NTO totally independent of the government budget, Chairman, SLTB, Udaya Nanayakkara said: "That is the intention, but the degree of independence from government funding will depend on how much is collected through the cess. It remains to be seen."

In order that the new dispensation may come into effect the original legislation, the Tourist Board Act No. 10 of 1966 that set up the Ceylon Tourist Board and the Tourism Development Act No. 14 of 1968 that prescribed the mode of tourism development, must be repealed. This will be achieved when a new Tourism Development Act is passed in Parliament.

The draft new law has been ready for several years and even survived several changes of government precisely because there is virtual unanimity on its merits.

Back to Business