Business Times

Chaos at Sri Lanka Tourism

By Sunimalee Dias

The controversial tussle within Sri Lanka Tourism has gone overboard with the key issue being promotions or in fact the lack of it, causing clashes at the top. This led to its Chairman Dr. Nalaka Godahewa submitting his resignation on Thursday from three of the four institutions headed by him at the time, informed sources said. Sri Lanka Tourism was faced with a number of issues that evolved even prior to Dr. Godahewa's appointment in 2010 to head the four institutions of Sri Lanka Tourism Development Authority (SLTDA), Sri Lanka Tourism Promotion Bureau (SLTPB), Sri Lanka Tourism Convention Bureau (SLTCB) and the Sri Lanka Institute of Tourism and Hotel Management (SLITHM).

The sources said that some of the issues were those arising from the Indian International Film Awards (IIFA) 2010; lack of promotions as mandated by the SLTDA and repeatedly called for by the industry; cutting down official travel for tourism promotional events; to recent amalgamation plans of the four institutions under one head through the re-establishment of the previous Tourism Act. In all of these issues, these sources believe the Treasury has been involved in causing either too much interference or disruptions to progress.

Industry reactions
Dr. Godahewa was doing a "fantastic job" and since he had "made up his mind to step down we should continue the job he did," said Sri Lanka City Hoteliers Association President Shanthi Kumar. But he was quick to assert there was a need to ensure the government engages in required promotional activity to market the destination. These sentiments were reiterated by Sri Lanka Tourist Hotels Association President Anura Lokuhetty when speaking with the Business Times who added that they hoped the right people would be in place to oversee related promotional work. He noted that these developments should not impact the progress of the industry asserting that "everything depends on the people appointment and if they are capable (of handling the job) or not." Dr. Godahewa had been involved in the creation of the One Stop Shop cutting through bureaucracy to assist investors in getting a smooth start; and also supported to initiate the online visa system this year aimed at giving adequate time for the industry to familiarise itself with the project.

Issues within
Dr. Godahewa in the press release issued to the media on his resignation makes reference to the amalgamation where he said "due to some unavoidable circumstances this amalgamation process seems to have got delayed."

In this respect, he stated they must give the ministry an opportunity to revisit the idea of having one chairman for all four institutions. Industry sources cited instances of the Treasury interference as in the Kalpitiya Integrated Tourism zone where 10 islands were to be given to six investors after careful evaluation but was abruptly halted by the Treasury after the latter influenced the cabinet sub committee to do so. As per investments, the Treasury was stopped from giving lands outright to investors based on a Presidential directive that caused the halt of the CATIC deal.

This directive was issued after the Treasury made an outright sale of the land opposite the Galle Face to Shangri-La Hotels. In fact, early this year, the Urban Development Authority (UDA) stopped sharing information on investments and commenced work on finding investors by themselves due to similar interferences in the projects like Transworks Square, Celestial Towers and Colombo Commercial resulting in losses of prime investments from Four Seasons, Claridges hotels, Delta Corporation, Banyan Trees, the sources said.

The Treasury blocked promotional campaigns from being carried out; halted travel for officials attending key travel trade fairs of World Travel Mart (WTM), International Tourism Borse (ITB) and the Arabian Travel Mart (ATM), the sources said. Further, they noted that World Bank funding for tourism promotions made to the SLTPB in 2009 amounting to Rs.2.2 billion was also blocked by the Treasury. In addition, it was noted that private sector funding for promotions obtained through a cess amounting to 80% of SLTPB funds was also not utilized by the Treasury. For an industry that requires an attractive promotional this has been found wanting and the Treasury has been found to be instrumental in ensuring these activities were halted, the sources added. It has also been questioned as to whether a team of persons within the Treasury have been working towards creating a distorted image of recent developments.

"There is a possible involvement of few interested parties who according to the documentary evidence submitted in the response seem to have repeatedly attempted to exaggerate issues and suppress or distorted information from your high office due to either ignorance or with malicious intention of bringing disrepute to the government, the minister and the ministry," it has been observed.

Treasury blocks BOI progress
The Board of Investment (BOI) is in a Catch 22 situation as the Treasury is blocking its investment drive, sources close to the BOI say. However Treasury officials counter this saying the BOI has been unproductive in securing foreign direct investment (FI) for the past five years and that the Treasury is trying to combat BOI’s lethargy.

“In 2008 with a raging war, the BOI brought in US$ 898 million FDI into the country, but 2011 saw this figure increase marginally by $1 billion. This figure (after the war) isn’t justifiable,” an informed source told the Business Times, adding that ‘trial and error’ policies by Treasury have resulted in the country losing out.

He said that earlier this month for an investment promotion presentation for 150 investors in Singapore, the Treasury had recommended sending an official from one of the BOI zones instead of a promotional team and ultimately the presentation wasn’t made.

“Most often the BOI promotional trips aren’t approved by the Treasury,” he said. He alleged that Treasury Secretary Dr P. B. Jayasundera’s decisions are arbitrary and short sighted. “He makes decisions without facts and doesn’t let the BOI function to its full capacity as he has reduced its powers,” he said. The source added that BOI restructuring which was done last year was unnecessary. “You don’t break the wheel that turns,” he added.

The Treasury official countered saying the BOI has been given a target to raise $2 billion worth of FDI and Dr Jayasundera wanted a plan from the BOI on how they hoped to achieve it on a quarterly basis. “But this too wasn’t done properly,” the Treasury source added.

The source close to the BOI alleged that Dr Jayasundera has appointed his own 10-member team to go on promotional trips which the BOI director board is not aware of. “He simply refuses to work together,” he said.

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