Long-overdue WB tourism project takes off amidst concerns
A long overdue US$16 million (Rs. 2 billion) World Bank-funded project to assist SMEs in the tourism sector finally got off the ground this week but industry officials say it falls short of targeting enterprises that should ideally be streamlined as part of the original plan.
In this respect, enterprises already in the tourism business would be assisted through this funding.
The World Bank funded project mooted around 2007/8 finally received total approval in 2010 identifying certain sectors to benefit under a matching-grant scheme. This week the government advertised in local newspapers calling for applications from the tourism sector SMEs targeting 1500 with at least one year experience in the business, trade associations and new enterprises. Applications are available at People’s Bank branches, which is the implementing agency and close on July 31.
SMEs would be given assistance for 50 per cent of their projects and upto a maximum grant of Rs.10 million for enterprises with an annual turnover of Rs.100 million under the Sustainable Tourism Development Project monitored by the World Bank, Project Director at the Economic Development Ministry A.B.M. Ashraff told the Business Times last Tuesday.
Payment of the total amounts allocated for such assistance to these SME projects would be released in four monthly installments only after at least 25 per cent of the work has been carried out by the entrepreneurs, he said.
Categories identified are restaurants, tea shops, home-stays, gift and souvenir craftsmen, folk arts, greening hotels, refurbishments not constructions; improvement of human resources through trade associations to train staff and promotional activities like producing brochures. In addition, under the new enterprises the project targets air and land based adventure activities; vessel purchases for operations like whale and dolphin watching and other similar activities, Mr. Ashraff explained.
The matching grant scheme project would conclude by September 2014, the project director said.
He noted that another part of the World Bank funding of US$2 million would be released for institutional development that was yet to be worked out between the funding agency, the ministry and the tourism industry.
However, industry experts speaking with the Business Times said that ideally those SME entrepreneurs who were operating without a licence should have been brought into the mainstream sector like those operating on the beaches of Hikkaduwa.
It was pointed out that these small businessmen would have ideally gained by ensuring they were provided licences to operate and brought into the mainstream.
One expert said the authorities should have gazetted the SME allocations made under the project and then looked at these businesses that required assistance; relaxing regulations to bring them to the mainstream operations and then allocate the necessary funds for the upliftment of these projects.
He said the project had deviated from this original plan with bureaucrats within the ministry at the highest level being responsible for its delay and continuous “dilly dallying” in the project work, repeated removal of project directors, and repeated changes to the structure and concept of the project.
Originally the plan was to fund institutional development with policies, infrastructure development of the East and a matching grant scheme. The East was targeted since the project was proposed at a time when potential for tourism development in the East was identified.
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