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Sri Lanka’s tourism sector, which is one of the economic pillars that the country is relying on in its effort to meet the revenue targets that are contained in the International Monetary Fund (IMF) bailout package, narrowly escaped a grave threat last year from a controversial decision by the then Government to outsource the visa-issuance process to a third-party consortium.

In a move that raised eyebrows across the tourism and economic sectors, the previous government decided to outsource the issuance of visas at the Bandaranaike International Airport (BIA) to a foreign consortium, including VFS Global, without following a transparent tender process and for no valid reason.  

In fact, the previous Minister of Public Security discounted the need for calling for tenders before appointing the VFS led consortium, despite the IMF, in its Governance Diagnostic Assessment, frowning upon the practice of entertaining unsolicited bids.

The decision risked undermining the progress made in attracting international tourists and bringing in the much-needed foreign exchange which the country was lacking resulting in it being pushed into bankruptcy.

Tourism veterans and organizations such as the Sri Lanka Association of Inbound Tour Operators (SLAITO) strongly criticised the move, emphasising that the decision lacked foresight and jeopardized the industry.

Stakeholders of the Tourism industry urged the then Government to resolve the matter, but the Government remained adamant and continued to maintain its stance. Tourism Industry leaders cautioned that the country was in danger of losing the usual influx of tourists in the winter season but were unable to make the Government see reason. The leaders pointed out that heightened confusion over the new visa system, along with the abrupt increase in visa fees, could derail the 2.3 million tourist arrival target set for the year.

Eventually the Supreme Court was petitioned which resulted in the Court issuing an interim order directing the Controller of Immigration and Emigration to suspend the VFS deal and revert to the earlier process overseen by Mobitel until the final determination of the case.

But the Department of Immigration and Emigration dragged its feet on the matter citing one reason or the other resulting in further confusion on the issues of Visas to the country.

However, the quick and decisive intervention by the National Peoples Power (NPP) Government, which took office in September 2024, to revert to the previous system of issuing on arrival visas ensured that the crisis was averted, eventually enabling the country to reach a figure of 2 million tourists in 2024, thus laying the groundwork to further develop the tourism sector in the coming years.

In fact one of the striking features of this controversy was that the Government of the day never offered any reasons to justify the need to shift from a cost-effective, locally managed tested system using the SLT-Mobitel platform to an expensive and less efficient foreign-managed system. The Government’s new visa issuance system resulted in several negative repercussions:

1. Increased Visa Fees: Visa fees for non-SAARC countries skyrocketed to over 100 dollars per person, including additional service and convenience fees. SAARC country tourists also faced significant fee hikes.

2. Loss of Revenue: Approximately 50 million dollars in fees was projected to be lost annually to the foreign service providers.

3. Disruption and Confusion: The abrupt implementation of the new system on April 17, 2024, without consulting industry stakeholders, led to widespread confusion. Delays in processing visas further dissuaded tourists from choosing Sri Lanka as a destination.

The National Peoples Power (NPP) Government, recognising the urgency of the situation, took immediate steps to rectify the damage. Despite the Supreme Court’s interim order to suspend the VFS deal and revert to the previous system, the Department of Immigration and Emigration’s delay in implementing the order, exacerbated the crisis. The NPP administration broke the impasse by reinstating the efficient and economical SLT-Mobitel platform for visa processing.

This intervention had immediate positive effects: Restored Efficiency: The SLT-Mobitel system, which had proven its reliability over the years, resumed operations, reducing delays and confusion. Lowered Costs: The elimination of exorbitant service fees made Sri Lanka more competitive compared to regional tourist destinations. Revived Confidence: Stakeholders and international tourists regained trust in Sri Lanka as a viable travel destination.

Despite the challenges posed by the visa debacle, Sri Lanka managed to achieve 2 million tourist arrivals in 2024, generating an estimated 3 billion dollars in earnings. While this performance was lower than the record 2.3 million arrivals in 2018, it marked a significant recovery, especially in the context of visa-related difficulties.

The NPP Government’s timely action not only salvaged the tourism industry in 2024 but also set the stage for ambitious targets in the future.

The country aims for 3 million tourist arrivals in 2025 and 5 billion dollars in revenue. The whole experience faced by the Tourist sector underscores the importance of sound governance and the rejection of corrupt practices in sustaining economic growth.

It is evident that the decision to replace the tried and tested system of issuing on-arrival visas with a more expensive process was lacking in transparency and had all the hallmarks of a corrupt deal. The whole process needs to be investigated and those responsible held accountable.

Lessons for the Future

The visa outsourcing controversy serves as a cautionary tale about the perils of mismanagement and corruption. Wrong decisions made by Governments, such as the abrupt switch to organic fertilisers or the ill-conceived visa outsourcing deal, can have far-reaching consequences for the economy. The tourism sector’s resilience in 2024 highlights the importance of swift corrective measures and stakeholder engagement in addressing crises.

Sri Lanka’s tourism industry remains a beacon of hope for the country’s economic revival. By prioritizing transparency, efficiency, and collaboration, the nation can ensure its place as a premier global tourist destination. The NPP Government’s decisive action against the visa outsourcing deal exemplifies the leadership needed to steer the country toward a prosperous future. (javidyusuf@gmail.com)