• Stakeholders say permission to accept foreign currency will benefit tourism industry
• Despite promised ‘export’ status, tourism industry is in two-year waiting game for guidelines
• Sri Lanka Tourism Chief says dollarisation should be done to reach full potential of the industry 
• Points strong collaboration necessary, particularly fiscal decisions
• Aspires to reach a similar module like the Maldives
• THASL Chief says hotel payments still made in local currencies 

By Charumini de Silva

Tourism stakeholders pointed out that the Government should consider permitting dollarisation of the sector to reach its full potential, which will also be another bold step forward to acknowledge it as an export industry.

Although tourism is widely regarded as a key sector for economic development, while in many countries tourism is not treated as an export industry. In Sri Lanka, tourism was recognised as an export industry in December 2019. 

However, the guidelines to fully operate ‘export’ status to the sector still remain unattended.

“I think dollarisation of the tourism industry should be the way forward if the sector needs to prosper,” Sri Lanka Tourism Chairperson Kimarli Fernando told the Daily FT.

However, she pointed out that it cannot be done overnight, as it requires strong collaboration across Government agencies and a whole gamut of different factors to make a successful implementation. 

“This is something we are considering, but we need to study this thoroughly. The process of dollarisation requires fiscal policy decision making and it is a long process. But slowly, steadily we will reach there, like how the Maldives has done,” Fernando added. 

Sri Lanka Tourism Chief said despite making direct online reservations, hotels are mostly paid in local currencies as banks convert and debit the amount in rupees. Whereas overseas tour operators obtain their fee in foreign currencies and convert to pay in local currencies to the hotels.

“One of the drawbacks is that these foreign currencies are not getting into the mainstream and being circulated. Secondly, if the hotels have obtained foreign currency loans, they can repay using those funds,” she asserted.

Fernando said the objective of making tourism an export industry should also be able to collect foreign exchange, adding that calculation of earnings of the industry has become difficult as a result of not having proper regulation in this regard.

On 26 March, the Government published a Gazette under the Foreign Exchange Act No. 12 of 2017 by Mahinda Rajapaksa in his capacity as the former Finance Minister. It permits any hotel registered with the Sri Lanka Tourism Development Authority (SLTDA) to deal in foreign exchange within Sri Lanka and to accept foreign currency from persons resident in the country who have foreign currency in their possession. 

Tourism industry has been given a revenue target of $ 500 million for the financial year ending in March 2022.

The Hotels Association of Sri Lanka (THASL) President M. Shanthikumar told the Daily FT that fulfilling the industry’s potential requires strong and coordinated action around tourism and export strategies.  

“We have made representation to the authorities concerned to permit foreign currency payments. But we have not got any positive response so far. Currently, most of our remittances are made in rupees,” he added. 

Welcoming any such move, Shanthikumar said the stakeholders are yet to see a lasting strategy in terms of the tourism industry. 

“Tourism strategy should not be about the numbers, but about the value. It must be sustainably managed, monitored and updated,” he added. 

Tourism Ministry Advisory Committee Chairman Hiran Cooray also said foreign currency attracted by the industry should be allowed to get into the mainstream, without being converted by the banks. 

“The foreign exchange attracted by the tourism industry is absorbed by the banks and the payments are made to hotels in local currencies,” he added.

 Cooray said the industry had lobbied in this regard to relevant authorities over and over, but pleas have not got any response thus far. 

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