Sri Lanka needs laws to facilitate new tourism trends: Forum

By Chandeepa Wettasinghe
Sri Lankan laws are not suitable for following the current trends in tourism, and the country may be seeing the last cluster of investments into the sector, under the current economic conditions, experts said at the Fitch Ratings’ Sovereign and Corporate Forum.

“For potential FDI opportunities, new trends in tourism involve real estate, which you see in some countries like Thailand and Malaysia. Vacation Clubs, timeshare and all. We want to improve our tourism product. These kinds of things will be helpful, but we don’t have the law,” Hemas Leisure Travel Aviation Group Managing Director Malinga Arsakularatne said.

Timeshare involves properties such as holiday homes and resorts which are collectively owned or leased by individuals for one week or such a short period every year on a rotating basis. Vacation clubs include a collection of timeshare properties where the customers are allowed to trade and choose different properties and given greater flexibility on time.

Marriott, the world’s largest hotel group, has over 55 properties in its vacation club, which has 420,000 clients.

Such properties are usually owned or leased by high spenders, as there are expensive annual fees for purchase, rental and maintenance.
Creating such laws would complement the government’s aspiration to attract high spenders. The laws related to timeshare have been usually adopted by countries which have fairly liberalized land laws with regard to foreigners.
However, Arsakularatne added that the Land Alienation Act could be a hindrance to tourism investments. “It could be an impediment to investments. Certain foreign companies like holding property,” he noted.
Meanwhile, Fitch Ratings Sovereign Ratings Senior Director/APAC Head Andrew Colquhoun said that even though tourism may currently be the best investment industry in Sri Lanka from a point of comparative advantage, the space for opportunities may now be closed.

 “As economists, we tend to assume. There’s a joke. If there’s a £5 note on the ground, and an economist walks past it, someone asks ‘Why didn’t you pick it up?’ The economist says ‘There can’t be a £5 note, because someone else would have picked it up.’,” he said.
He noted that the free market would have ensured that all the opportunities that were possible would have been snatched up.