Ministry of Economic Development launches Matching Grant Scheme

As Sri Lanka embarks on a journey to become the ‘Wonder of Asia’, Ministry of Economic Development has introduced a ‘Matching Grant Scheme’ under the ‘Mahinda Chinthana Vision for the Future’ to support the tourism related SMEs and strengthen the local economy through sustainable tourism development. Accordingly, the Ministry of Economic Development has made available, a sum of Rs. 2 billion with a credit facility from the World Bank as an out-right grant for the development of tourism, and tourism related Small and Medium Enterprises (SMEs).

Thereby, the Ministry of Economic Development will bear the cost for either 50% of the project value, or a maximum of Rs. 10 million of any SME project under the tourism industry. It is the Government’s belief that the SME sector would bridge the gap between large scale corporates and micro level enterprises, there by further contributing towards the objective of strengthening the economy of the country.   

This Matching Grant Scheme will be administered by People’s Bank under the direction of the Ministry of Economic Development. People’s Bank as the matching administrator ban, brings forward over 50 years of experience in dealing with financial services relating to many ministries in the country and with an extensive branch network of over 725 and owning up to 24 SME sectors testified as the most qualified financial institution, to manage the funding of this grant. The bank holds the largest SME network in comparison to other commercial and state banks in Sri Lanka. Customers of other banks can apply for the Matching Grants scheme.

Through this project it is estimated that almost 1,500 SMEs belonging to the industry will receive benefits, while 2,000 new job opportunities will also be created. The project will also improve the technical and managerial skills of almost 5,000 persons and it is expected to bring an additional investment of Rs. 5 billion towards tourism, and tourism related SMEs.  

As per the recent analytics tourist arrivals for the year 2010 stood at 650,000 while this number increased to 1,005,605 in 2012. The Government of Sri Lanka has arrived at steps to increase tourist arrivals to 2.5 million in 2016, and to four million by the year 2020. Through such figures it is estimated that the country will receive an income of US$ 3 billion in 2016 and US$ 8 billion in 2020, in terms of foreign exchange earnings.

However, in order to achieve these targets, certain drawbacks prevailing in the SME sector need to be identified and necessary steps need to be taken. It is important to create an environment that satisfy tourist which will result in re-visits and promote Sri Lanka as one of the best holiday destinations in the world.  Furthermore, SMEs belonging to the tourism sector do not have adequate facilities to meet the demands of the modern day tourist. Buildings that do not adhere to the basic standards of construction, kitchen areas that lack modern amenities and the usage of wooden utensils have had a negative impact on the quality of service on offer. Additionally, the lack of trained staff, coupled with those employed not having been offered the required training to meet standards have affected the overall quality of service in the sector.

Tourists long for specially prepared meals

Currently tourists who visit Sri Lanka for a holiday expect to spend their time happily and engage in activities that create exciting experiences. Whilst most tourists, express a deep sense of satisfaction for nature savvy products and services, they also long for specially prepared meals, sports, fun activities, adventure sports, gift items and souvenirs.

 The objective of the Government is to focus its attention a great deal on safeguarding the cultural values, ethics and its natural resources and enhancing the services of the hospitality industry in order to establish tourism as an important contributor towards the development of the country’s economy.

Under the Government’s ‘Sustainable Tourism Development’ project, the Matching Grant will facilitate improving the quality of services and create a more organised level of service which will result in satisfied tourists. This project will also contribute to improve the rural economy by way of creating job opportunities, enhancing knowledge and skills. Increasing the demand for locally manufactured rural produce such as handicrafts and folk arts among tourists will result in more job opportunities being created which in turn would enhance the quality of life of the rural communities. The year 2010 witnessed 125,000 job opportunities being created and it is estimated that this number will increase to 500,000 in 2016. In order to achieve these goals, large scale improvements need to be made in the tourism industry.

In order to apply for this grant, the entrepreneur/beneficiary should be the owner of a sole proprietorship, partnership, private limited company or privately owned business enterprise in a different capacity. (Any entrepreneur who has obtained a Matching Grant under this scheme and holds 20% or more shares in a company is not eligible to obtain a similar Matching Grant for another company).

Tourism businesses or any business relating to tourism such as tourist guesthouses, independent tourist restaurants, holiday resorts, holiday bungalow for foreign tourists, homes and apartments, tourists home stay units, human resource development, gift and souvenir industry/craft and folk arts related establishments, wildlife related tourism businesses, green, energy and water efficient and environmentally friendly establishments, agro tourism industries and community tourism industries that has been in operation for more than one year, will be eligible to obtain the Grant.

New businesses such as tourist vessel operations (whale and dolphin watching), water and air based adventure activities, roadside stations and tea shops/houses also will be eligible for the grant.

Under this scheme, a Matching Grant or another Grant from a Government or non-governmental organisation should not have been obtained for a proposed sub-project. Also, new constructions for existing enterprises will not be eligible under this grant.

Duly filled applications need to be submitted to the relevant People’s Bank Branch before 31 July 2013.