Hoteliers warn proposed Tourism Act will trigger severe red tape and two-year industry stagnation

• Replacing 2005 Act threatens to paralyse industry for two years
• Current laws provide sufficient autonomy but authorities fail to execute
• formal sector seeks targeted amendments and awaits planned stakeholder workshop

By Nishel Fernando 

The formal hospitality sector has strongly pushed back against the government’s proposed new Tourism Act, warning that repealing the existing legislation will strangle the industry with fresh layers of bureaucracy and trigger a crippling two-year period of legislative stagnation. 

Industry stakeholders argue that the regulatory overhaul, rather than streamlining operations, threatens to reintroduce the very red tape that past reforms successfully eliminated, effectively sidelining the private sector at a critical juncture for economic recovery.

Taking the lead in the industry’s pushback, Tourist Hotels Association of Sri Lanka Chief Executive Officer Priyantha Fernando emphasised that the move to completely replace the Tourism Act No. 38 of 2005 is both untimely and highly destructive to long-term capital formation. 

He noted that the proposed legal framework, which suggests creating additional oversight bodies such as a National Tourism Commission and a Tourism Policy Formulation Council, would only compound administrative bottlenecks.

Furthermore, the sheer timeline required to enact entirely new legislation poses a severe threat to operational momentum. “Going in with a new Act is a waste of time. It can take up to two years because a new Act has to be drafted by the legal draftsman, it has to be taken up at cabinet level, then at parliament level, and then gazetted,” Fernando stated. “And the industry will be in the doldrums awaiting a new Act to come in and no action will be taken.”

Providing historical context, Fernando pointed out that the current 2005 legislation was enacted after 15 years of rigorous deliberation specifically to free the industry from severe financial constraints and paralysing government red tape. 

Prior to this, the entire national budget for tourism was heavily dependent on restrictive government grants, with total allocations in 1986 sitting at a mere Rs. 35 million. The 2005 Act successfully introduced independent funding mechanisms through the Tourism Development Levy and embarkation taxes, ensuring the sector had adequate, self-sustaining resources. Fernando argued that the perceived failures of the current framework are not due to the legislation itself, but rather the authorities’ consistent reluctance to exercise their legally mandated independence.

“Basically, it’s the precedence which has been there for the last 15 years where Sri Lanka tourism has been falling back on government regulations, following ARs and FRs of the government, whereas the Act has provided sufficient power for them to make their own decisions,” Fernando explained. 

He specifically criticised the continuous politicisation of key administrative roles, stressing that the positions of Chairman and Director General remain political appointments when they should be strictly professional, merit-based selections. A comprehensive review of the government’s National Tourism Policy by the industry revealed that the vast majority of its strategic objectives can be seamlessly implemented under the existing legislation without the need to tear down the current legal structure. 

“What we find is most of the things listed in the National Tourism Policy could be done under the current Act. There’s no necessity to bring in a new Act,” he affirmed.

Rather than enduring a lengthy and disruptive legislative process, the formal sector is advocating for targeted amendments to specific clauses of the 2005 Act. Addressing the dialogue with policymakers, Fernando clarified that while both the Tourist Hotels Association and the Sri Lanka Association of Inbound Tour Operators submitted comprehensive proposals earlier this year, engagement has been limited to just one initial round of consultations so far. 

However, with a dedicated stakeholder workshop currently planned to further deliberate the proposed legal framework, industry leaders are strongly urging the government to use this upcoming platform to seriously consider their targeted amendments and avoid stalling the country’s most vital foreign exchange earning sector.