Tapping tourism potential

Only today we learnt that oil prices fell on the news of a surge in OPEC production, anticipation of a US rate hike and appreciation of the US dollar.

It is clear to most commentators that we need to diversify the economy. This means paying attention to certain critical sectors with backward and forward linkage potential. Tourism is one such sector. Anyone who has visited Tobago recently would appreciate the tremendous efforts expended to produce a quality tourism product. In the coming budget emphasis should be placed on further fiscal incentives to stimulate growth in that sector.

We hasten to state that this cannot be similar to the situation when a TT$1 billion guarantee was provided by government to enterprises to increase the tourism plant by expanding the number of rooms for establishments of 20 rooms or larger. Was any enterprise able to take up this guarantee? Were there claims that this would tip the debt/GDP above the 50 percent threshold? It is interesting that no such warning was issued when the recent US$550 bond was issued.

The State needs to become an active player both in facilitating development through fiscal and non-fiscal incentives as well as partnering with the private sector.

Over the last five years a number of foreign entities have earmarked large tourism projects. These generally have either failed to get off the ground simply because of the need for a government guarantee or a lack of adequate financing for completion. The latter is a major reason for tourism projects failing internationally.

If the government has to provide incentives and approve projects they must look at the economic, environment and social, cultural and competitive impact. This could act as a filter or screening process for tourism projects.

Certainly we can advocate the need for a comprehensive framework with well spelt out plans. This after all is very important. Support elements such as VAT exemption, Custom Duty exemption, Tax exemption, social security support, land allocation, interest rate support and income tax withholding allowance can be considered.

Of course while the above are important, simple changes can have such a significant impact on tourism. Take for example installing proper signage to guide tourists as they seek to explore the country on their own. A corollary would be the availability of proper road maps that are complimented by proper road signs.

Tobago in particular has to be complimented for the efforts in keeping their road network in an acceptable condition. Certainly more effort has to be expended in the upgrade of public facilities at the beaches and the provision of services. It has to be admitted that conditions at Store Bay are generally cramped at best. Useful investment to upgrade the tourism infrastructure and product at other beaches has to be considered as the next points for expansion of related infrastructure and product.

As we seek to increase the nonenergy GDP and government revenue, tourism is a sector with significant potential. In addition, it has the potential of bringing in foreign currency we need to seize on the potential now.