Sri Lanka Higher Education Minister slams tourism for imports, foreign investments
Oct 11, 2018 09:55 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT- Sri Lanka's Higher Education Minister said that the benefits of tourism does not trickle down to small businesses and communities, with large money outflows from the country.
Wijeyadasa Rajapakshe said that popular perception is that tourism brings large benefits to the country including employment and small business development.
"This doesn't trickle down. This financial strategy rarely gives the benefits down to small businesses," he said at the Tourism Leaders' Summit 2018 organized by the University of Colombo.
Rajapakshe is no stranger to bold statements, as he said in 2017 that the Board of Investment should be closed as it was destroying the economy, which drew criticism from his peer ministers.
The consumption of luxury goods by tourists is not helping the country, Rajapakshe said.
"Many assume that no one is paying for developing luxury goods and services in spite of the fact that this increases a country's dependence on imported products, foreign investments and expatriate skills," he said.
However, he said that tourism gives non-economic benefits to local communities, building their confidence to deal with outsiders, improving soft skills and empowering them.
Many foreigners are now seeking authentic local experiences in home stays and small accommodation units with little luxury, which made up nearly 50 percent of hospitality market share in Sri Lanka in 2016.
In 2017, 156,369 residents were employed directly in tourism businesses, while another 202,846 people were employed indirectly.
There is underemployment in the industry, with hotels alone requiring over 100,000 new workers to join over the next five years.
Foreign direct investments and expatriate workers increase the competition among local businesses and workers as well, analysts say.
Blaming imports is a mercantilist argument, as free markets give the freedom to consumers to choose from the most competitive sources of production.
Many blame imports for the devaluation of the rupee, when in fact improper monetary policy targeting a dual anchor of local interest rates and a soft peg on the dollar has caused two runs on the central bank in 2018, analysts say. (Colombo/Oct10/2018)