E-Kantipur

KATHMANDU, NOV 05 -

With an impressive performance in the last few years, the country’s tourism industry is once again in the government’s priority list.

The government is planning additional incentives for the tourism sector to make them equal to those offered to other industries identified as national priority. If things go as planned, the next fiscal year’s budget will declare the planned facilities for the industry.

The government has recently formed a committee led by the secretary at the Prime Ministers’ Office (PMO) to study the potential areas for providing the facilities. The committee is scheduled to hold its first meeting soon that will discuss and identify the areas.

Tourism entrepreneurs have long been demanding that the tourism industry be provided same incentives that are given to other industries prioritised as national industry. They have been asking for a 100 percent tax rebate for purchasing vehicles for their businesses. With the investment in the tourism sector again growing, Hotel Association of Nepal (HAN) is also asking for tax holiday.

Tourism Ministry officials say the committee will prepare a detailed report on the sector and their classification, types of industry, their contribution and their operating areas (rural and urban) eligible for the intensive packages. “Currently, we are working on the classification of the industry,” said Hari Prasad Bashyal, spokesman for the ministry. According to the ministry, the government needs to amend the Financial Bill for this.

Madhav Om Shrestha, executive director at HAN, said although the tourism sector has been declared as national priority industry in the industrial policy, it is not clear what types of incentives and benefits is it entitled to. “The government has been charging electricity tariff equal to that for a commercial industry,”

he said.

Hoteliers said the government provides diesel in agency rate to hotels that purchase 12,000 litres and above at a time, but it is not consistent. Hoteliers also get five percent discount on customs duty for the import of materials required for renovation work. “The government policy does not have consistency in terms of facilitating tourism entrepreneurs,” said Shrestha. 

Despite being one of the major foreign currency earners, the tourism sector never got the status it deserved. The late 80s and 90s saw carpet and readymade garment industries getting special government treatment. “Although tourism was prioritised in the 80s, the government itself was in dilemma whether a service sector could be given industry status,” said Aditya Baral spokesperson for the Nepal Tourism Board (NTB).

The tourism sector, despite a setback in early 2000s, has transformed itself into a major foreign exchange earner. Earnings from tourism now account to 8.1 percent of the country’s total foreign exchange earnings.

The decade-long insurgency and labour unrest had compelled a number of star hotels to shut down. However, end of the conflict and Nepal Tourism Year 2011 have encouraged the travel trade and hospitality sector. According to HAN, the private sector has invested Rs 150 billion in the hospitality sector. The last two years saw the opening of more hotels—both star and non-star—in Kathmandu and outside.

An increase in tourist inflow and a letup in the industrial unrest have prompted the hotel industry to go on an expansion spree. Three five-star properties—Hotel Annapurna, Hotel Yak & Yeti and Hotel Everest—are planning to add more rooms, while Soaltee Crowne Plaza is consolidating its infrastructure. Luxury hotels have also been established elsewhere in the country, mainly in Pokhara, Bhairahawa, Lumbini and Kanchanpur

With investments—domestic and foreign—starting to flow in the sector, tourism entrepreneurs say additional government incentives will play a catalytic role in boosting investment in the sector.

Posted on: 2011-11-05 08:57

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