Ministry of Economic Development breaks silence; responds to tourism, BOI issues

Wide publicity has been given to the events unfolding at the Sri Lanka Tourism regarding the resignation of the Chairman from Sri Lanka Tourism Promotion Bureau, Sri Lanka Institute of Tourism and Hotel Management and Sri Lanka Convention Bureau and the performance of the Board of Investment.

The media reports have given the impression that the organisations are unable to perform due to the interference by the Ministry of Economic Development and on promotional matters due to Treasury involvements.

The Ministry of Economic Development denies this completely and wishes to make the following clarifications to enable public to come to informed conclusions.

With regard to Sri Lanka Tourism, following the recent meeting the Sri Lanka Tourism Promotion Bureau had with the Committee on Public Enterprises (COPE), Minister of Economic Development summoned the Chairman and all members of the Board of all four organisations involving tourism and the Ministry officials who attended the COPE meeting.

The Minister, while expressing his concerns over the performance of the organisations and issues that continue to come up at the COPE meetings, explained to the participants that all organisations must strictly work according to the Government vision and strategy of the industry.

Government strategy

The Minister in his various briefings and more explicitly in the Tourism Development Strategy 2011-2016, which was prepared by the Ministry with the participation of the relevant organisations, has explained the strategy of the Government towards the development of tourism.

The Minister explained that the Government strategy is to promote Sri Lanka as a model tourism destination to improve the global image of Sri Lanka by creating a conducive tourism environment and improving domestic tourism, benefiting from the country’s natural, cultural and historical diversity and ensure to cater 2.5 million tourist arrivals by 2016.

The strategy comprises the promotion of a safe and clean environment in the country with special emphasis on popular tourist locations, the promotion of tourism products representing the country’s biodiversity, targeting high spending tourists through the promotion of wildlife, adventure, culture, business, sports, etc., the promotion of home stay programs, the initiatives to create positive impression among all tourists visiting the country to promote tourism through tourists themselves, promotion of web page contacts improving direct connectivity through increased flight operations by SriLankan and other international airlines and expanding road connectivity linking the tourism to the rest of the economy, developing a gift industry, expansion of SME based products, popularising local fruits, vegetable and other consumables among tourists, event promotions throughout the year based on Sri Lankan cultural and religious festivals, attracting international events and internationally known hotel chains. The strategy also promotes facilities to local tourists at affordable prices to increase the turnover of tourism industry beyond the targeted 2.5 million foreign tourists.

The Ministry considers that these integrated components are vital to promote tourism. In this regard, the development of zoological and botanical gardens, wildlife parks, cultural triangle, and expansion of common facilities at major cities have been done by the Government. Further, long standing issues pertaining to granting licences, visa processing matters were solved by the Ministry to assist the industry. Minister also expressed his desire to see that the big players in the industry themselves take a lead in promotional activities similar to apparel and tea.  

Good governance

The Minister at this meeting also emphasised the need for a strict administrative and financial discipline in the organisations coming under the purview of the Ministry, to ensure that the Ministry is not subject to undue criticism.

The Minister explained that since a number of private sector corporate personalities and trade representatives are on the Board, he expects best practices and corporate approach in management. He explained that his expectation is that the Board members discuss issues sufficiently, develop corporate plans and strategies and give leadership to effective implementation in a pragmatic manner within the overall strategy of the Government ensuring good governance.

Minister also responded to various concerns raised by several members of the boards, including administrative matters such as filling vacant positions which have to be done in terms of accepted procedures. The Minister also decided to meet the Board regularly to improve the formal interactions and performance of the organisations which most of the Board members thought a good step.

Godahewa’s resignation and new appointments

A few days after this meeting, the Minister decided to reconstitute the organisations and requested Dr. Nalaka Godahewa, Chairman, to resign from the Tourism Promotion Bureau, Sri Lanka Institute of Tourism and Hotel Management and Sri Lanka Convention Bureau. Consequently, he sent his resignation. The Minister also appointed Chandra Mohotti as Chairman, Sri Lanka Institute of Tourism and Hotel Management, Bashwara Senanka Gunaratna as Chairman,  Sri Lanka Tourism Promotion Bureau and Neil Rupasinghe as Chairman,  Sri Lanka Convention Bureau.

Dr. Nalaka Godahewa will continue as Chairman of the Sri Lanka Tourism Development Authority. The resignation of the Chairman was not due to his inability to work with the Ministry or due to a tussle between Secretary and Chairman as implied in media reports in which case he should have resigned from Sri Lanka Tourism Development Authority as well. 

Clarifications on letter

With regard to the letter sent by the Secretary, Ministry of Economic Development to the Chairman of Sri Lanka Tourism Development Authority, the Ministry wishes to state that the letter was sent to gather information to prepare for the next COPE meeting.

The letter, which is in the public domain now with this reply which appeared in a Sunday newspaper before even reaching the relevant officials, requested information that would be required to address the questions, issues and concerns raised at the COPE meeting.

The formulation of the letter by the officials who attended the COPE meeting is to gather information as they think such information would be useful for their response. These are issues in fact raised by the Auditor General in his reports to which the Ministry now required to respond.

The Minister too instructed that all concerns raised by COPE should be clarified properly as the incumbent Minister needs to put the record straight. The Ministry wishes to assure that the letter is not pointing out at any individual officer in the Sri Lanka Tourism Authority.

Further, correspondence of this nature takes place with the incumbent head of the institution regardless of whether such issues have occurred during his term of office or before he assumed the office. Similar letters have been sent to other organisations as well requesting incumbent heads to give reasons as to what actions that they have taken and if not why, on matters raised by the COPE.

Therefore, the Ministry wishes to clarify that the letter sent to the present Chairman of the Sri Lanka Tourism Development Authority, is only a usual practice in such correspondence and has nothing to do with his involvement in the matter raised therein.

The role of the Secretary to the Ministry and his officials is to interface with relevant agencies coming under the purview of the Ministry under the direction and guidance of the Minister.  The Ministry is duty bound to perform its oversight responsibilities and accountability functions.

The Secretary to the Ministry is the Chief Accounting Officer and all heads of agencies need to cooperate with him in the discharge of these responsibilities. The heads of organisations need to work together with the Minister and through the Ministry Secretary and officials.

Therefore, the Ministry wishes to state that there was no personal animosity, or other motives behind in collecting such information as implied in the media reports. The Ministry regrets to note the manner in which the Secretary to the Ministry has been dragged on to these issues to tarnish the image of the Ministry.

Board of Investment

With regard to the Board of Investment, the Ministry of Economic Development wishes to clarify that the investment promotions and approvals are not constrained by the Treasury. The only aspect in which the Treasury gets involved is the processing of requests involving concessions under Strategic Investment Law. All such proposals have been duly processed by the Ministry of Economic Development with the concurrence of the Ministry of Finance and Planning as required by the law and no delay has occurred whatsoever.

The papers sent by the BOI to obtain Cabinet approval of the Ministers are scrutinised by the Ministry on the guidance and advice provided by the Minister and submitted to the Cabinet of Ministers, unless the Minister has deferred them or requested revision, generally such requests are processed expeditiously. After all, the line ministry secretary is required to take full responsibility of factual content of cabinet papers and other documents.  All investment approvals are undertaken by the BOI within their laws and the concessions are granted under respective legislations.

It is misleading to attribute that BOI performance has been adversely affected by the Treasury. The Ministry officials and sometimes the Minister himself get involved in solving procedural issues and other complexities associated with other line agencies.

Further, the Treasury is represented at the BOI Board by a Deputy Secretary to the Treasury, to improve Treasury coordination in such work. In addition, the Commissioner General of Inland Revenue and the Director General of Customs are also present at BOI Board meetings to address matters coming under the purview of the Ministry of Finance.

The Treasury gets involved directly only on the large projects which involve many stakeholders in the Government and referred to the Ministry by the Government to coordinate the approval. The Treasury has coordinated many such large projects in infrastructure, hotels and industries approved in recent times successfully. 

Promotional aspects

Where promotional aspects are concerned, the Government has gone on record that Sri Lanka’s promotional activities should be carried out by a collective arrangement in which the Sri Lanka Tourism, Export Development Board, Department of Commerce, Sri Lanka Tea Board, SriLankan Airlines and the BOI must work together considering the cost involved and the fact that coherent promotional strategy is necessary for an effective promotional campaign.

The Minister of Economic Development has also emphasised that the promotional activities should be directed towards emerging economies and there are greater potentials to attract tourism, trade and investment from South Asia, Middle East, East Asia, Russia and Far East in addition to its traditional markets in Western Europe and USA. It is in this context that the BOI has been requested to spearhead this task.

Further, the BOI had been requested to effectively provide support services to the investors who are already here in its export processing zones and elsewhere. On the direction of Minister, BOI has appointed Country Directors to coordinate and facilitate investors from respective countries. The Minister has also requested additional investments should be sought from them in addition to facilitating new investors coming from abroad.

As many investors who have shown keen interest in exploring Sri Lanka’s investment potentials, the Minister has further requested the officials to work out a wide range of investment proposals that can be  presented to investors to make such promotions more focused.

In that context, the Ministry also requested the BOI to give a detailed breakdown of the proposed US$ 2 billion foreign investment that the BOI is expected to realise this year to ensure close monitoring.

Further, the Minister has directed that no investor, once having approached the BOI or Tourism Authority, should be sent from pillar to post and has instructed relevant officials in the organisations to work with Government agencies on all multifaceted needs of investors.

Commonly identified constraints such as land alienation, local authority clearance, environmental and regulatory arrangements, tax matters, etc., require a coordinated effort by the BOI to resolve investor approval process. The one-stop shop at the Sri Lanka Tourism Development Authority was also created on a directive given by the Ministry to ensure industry issues will be resolved effectively.

Many investors have brought to the notice of the Ministry that the performance of this one-stop-shop concept in both BOI and Sri Lanka Tourism Authority is still far below their expectation.

Overseas promotions

With regard to overseas promotions, the Minister has requested the identification of an effective promotional team rather than regularly sending the same officials of these organisations for all promotional activities overseas and seminars workshops, road shows, fairs and conventions.

In the regular review meetings at the Ministry, concerted efforts have been made to encourage second tier officials who could come up in the post conflict middle income country foreign investment drive and promotions and identify different teams with communication skills to different markets. Zone directors are to be empowered to promote their zones by effectively resolving investor concerns and maintain all time high zone utilisation levels.

The Ministry has not stopped any requests from any organisations unless those officials have repeatedly gone for overseas missions without follow up work or seeking service extensions contrary to Government policy decisions or the Minister thinks that the purposes of such overseas visits could be achieved through Sri Lankan missions abroad.

The Ministry promotes training opportunities to all young working officials rather than rubber stamping the nominations of a selected few who repeatedly make use of such opportunities at the cost of others. In fact, the Minister has praised several Ambassadors, particularly the Sri Lankan Ambassadors to Japan, Russia and China, who have taken special interest in promoting tourism and investment from those countries.

The Minister explained his approach to promotions to all Board members. The officials in the Ministry work on such guidance and see no reason as to why other organisations under the Ministry cannot fall in line with this approach.

Significant reforms needed

The Ministry of Economic Development believes that the BOI and Sri Lanka Tourism need significant reforms in terms of attitudes, decision making and follow up by its senior officials. Since the formation of the Ministry of Economic Development, the Ministry has encouraged chairmen and boards of directors to give leadership towards such changes.

Already the BOI Law has been amended to appoint a fulltime CEO to work under the overall supervision of the Chairman and Board of Directors, to make this change with the full cooperation of all officials in the BOI. The Minister proposes a reconstitution of the BOI and appointment of a new CEO by mid June 2012.

Tax incentives have been incorporated in the relevant statutes to accommodate the interest of SMEs, large investments and strategic investments. The Government itself has expeditiously cleared several large strategic investments in recent times, proving such quick and investor friendly decision making is feasible.

Tourism

With regard to tourism, the intention of the Government is to amalgamate all four tourism-related agencies to make a cost effective agency to promote and develop tourism industry. The relevant legislation is under preparation.  In this background, the Ministry of Economic Deve-lopment wishes to state that information aired in the media over the weekend is grossly distorted and does not reflect the real picture in the organisations and the Ministry.

As any changes and reforms involve resistance and reactions, the information that has gone to the media corresponds to such human behaviour rather than the hard reality in those places.