Tuesday, October 4, 2016

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Taxing a nation’s talk time – Sri Lankans to pay over 49% tax via telcos with new VAT increase

Original Date of the Article - Monday, October 03, 2016
By Jithendra Antonio

Sri Lanka is said to be a tech savvy nation and the telecommunications industry, particularly with regard to mobile phones, has been one of the fastest growing industries which has touched the entire country in less than three decades.

At one point in 1992, Sri Lanka had just 2,644 mobile connections but now 24 years later Sri Lanka has become home to over 24.6 million mobile connections (as of June 2016 according to TRCSL Statistics), turning into a country that has two million more mobile connections than people.

Mobile penetration almost touched 116.7 per 100 inhabitants and fixed lines, which amounted to just 121,388 in 1990, increased to over 2.59 million by June 2016 after hitting a peak of nearly 3.5 million fixed lines in 2010. Statistics highlight that over the last decade mobile phone penetration has increased from 16.8 (per 100 persons) in 2005 to 116 by 2015.

On the other hand, Sri Lanka’s Internet penetration expanded to 19.5% in 2015, compared to just 1.1% (per 100 persons) in 2005, according to analysis conducted by a premier conglomerate involved in ICT sector highlights.
The country’s internet connections grew by 22.2% during 2015 while fixed internet connections grew by 12.6%. As at June 2016 Sri Lanka had over 768,000 Fixed Broadband subscribers and over 3.46 million Mobile Internet subscribers. Mobile Internet subscribers alone had grown from 91,359 in 2009 to 3.46 million in 2016.

As a result, the country’s IT, Telecommunications and Digital Infrastructure sector has been earmarked to play a vital role in driving economic development, fueling innovation, driving productivity and enabling the exploration of new knowledge frontiers. We have also witnessed that governments which came to power over the years have capitalized on ICT strategy, even marketing a ‘A Nation with Free Wi-Fi’ vision covering the whole geopolitical landscape of Sri Lanka despite some drawbacks in the implementation process. The present Government is also trying to improve Sri Lanka’s digital infrastructure, enhancing ICT policies, legislation and standards, and facilitating trade and business through ICT.

Sri Lanka was the first South Asian nation to adopt 4G broadband technology in 2013 and high competition between service providers allows users to enjoy some of the lowest data tariffs in the world.

Broadband, leased-line and satellite connectivity is also widely available and the country’s BPO/BPM industry is positioned for strong growth as the country’s high literacy rate, talent pool for IT skills, investor-friendly policies and conducive business environment and infrastructure makes it an attractive location for offshore services.

Sri Lanka now ranks 14th on the 2016 A.T. Kearney Global Services Location Index (GSLI), moving up two notches from its position in 2015. In 2013, Sri Lanka’s IT/BPM generated revenue of $ 720 million in exports and the industry has set its sights on achieving $ 5 billion in revenue by 2022, generating 200,000 jobs and creating 1,000 start-ups in the process. The telecom industry in Sri Lanka at present provides employment to over 12,700 professionals in the country. So obviously governments throughout the years learned that Sri Lankans using mobile phones and telephones were the ‘Best Base’ to tax and increase Government revenue. This is evident with the latest VAT hike applicable to telephone and mobile telephone talk time and internet services

Talk time

Sri Lankans have enjoyed the benefit of free incoming calls for the last six years with both fixed lines and mobiles while total domestic outgoing calls amounted to over 44.75 billion minutes in 2015 which gradually increased from 37.2 billion in 2011 while so far in 2016’s first half as at June subscribers took over 22.1 billion minutes in outgoing calls.

Meanwhile, foreign outgoing calls gradually decreased from 694.06 million minutes in 2011 to 575.84 million in 2015. So far in 2016 outgoing international calls amount to over 232.7 million minutes of talk time.

What has been golden for governments over time has been these billions of minutes, for which the 22-million-strong population in Sri Lanka is paying a tax of 27.5% for Voice Calls, SMS (Short Message Service) and Value Added Services (VAS) amidst the International Monetary Fund (IMF) pushing the Sri Lankan Government to recover 20% of GDP as tax revenue added with a currency devaluation from the $ 84 billion economic value of the country.  

Taxing the telecoms

The Government at present is waiting to proceed with a $ 1.5 billion IMF loan with the second tranche of the loan being delayed according to reports published last week, with the IMF pushing the Government to soon implement the new VAT hike.

Careful analysis of the proposed VAT hike shows that an average Sri Lankan’s tax cost per mobile bill or even prepaid phone will be hiked by over 10%-22% while people will end up paying almost 49.68% as tax for main services such as Voice Calls, SMS and VAS upon new budget proposals.

Currently, Sri Lankans pay several taxes for mobile services and citizens are also taxed for mobile services and data usage. The taxes include the Telecommunication Levy, CESS, VAT (Value Added Tax) and NBT (Nation Building Levy) and the percentage of the levy is dependent on each revenue stream of telecom and mobile services. The new tax regime comes into force again and will once more add NBT and VAT at an increased rate. A detailed snapshot of how your phone bills will rise is explained in the two charts.

If we go back to 2011, telco watchdog the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) recommended consolidation of all taxes paid for telecommunication services to avoid “tax on tax” as much as possible, to make it simple on the systems of telecommunications companies and also for people to easily understand the tax components in their bills and obviously for the Government to make money. 

Accordingly, in January 2011 the then Government imposed a Telecommunications Levy of 20% of operator revenue and a CESS tax of 2% to replace 27% collective taxation broken down as 12% VAT, 10% Mobile and Fixed Subscribers Levy (MSL), 3% Nation Building Tax (NBT) and 2% Environment Conservation Levy (ECL). The effective rate of the mentioned tax charges are more than 30%.

However, as later Government policy was directed at promoting Broadband data (BB) services, they decided on a lower rate of 10% for Broadband-related services but again in the 2014 Budget the Government decided to increase the general Telecommunications Levy from 20% to 25% and charge 10% on broadband services while the CESS of 2% remained as it was.

This shows that as of now telecommunication services have a unique taxation structure in Sri Lanka. If you look at the bills you get from service providers today, you see the following tax components (some service providers don’t show the breakdown of the taxes and levies): CESS (of 2%), 10% Telecommunication Levy on broadband services and 25% Telecommunication Levy on all other services.

Since late last year the new Government has shown some inconsistency with regard to taxes and levies. The Budget for 2016 said the following on VAT. It was proposing to remove certain exemptions with the view of generating an increase in revenue. The present single rate was revised to three bands 0%, standard rate of 8% and a 12.5% higher rate for the service sector and the minimum threshold for the liability for VAT was Rs. 12 million per annum. But a few months later the Prime Minister declared a different set of tax policies in Parliament and decided to implement them from 1 April 2016.

That was postponed for unknown reasons and now VAT is set to increase to 15% and NBT to 4% from 2 May 2016 onwards. On the other hand, the President publicly mentioned that no tax burden would be imposed on the public but as of now Telecommunications is not exempted from 15% VAT and 4% NBT. As shown above, the 25% tax charged in telephone bills already includes 12% VAT and if another 15% VAT and 4% NBT are imposed, we will witness a 46% tax on general telecommunications services and 31% on BB services.

Separately, the 2016 Budget Proposals also stated increasing the International Telecommunication Operator Levy (ITOL) from US 9 cents to US 12 cents and a total increase to be credited to the Consolidated Fund. ITOL has been going down everywhere in the world (maybe except in a few underdeveloped African countries) in the past decade to discourage illegal international call termination practices and also to enable telecommunication operators to somewhat compete with over-the-top (OTT) players such as Skype, Viber, WhatsApp, etc.

But Sri Lanka has kept it high all the time and this increment in the last budget is a shocking surprise to the telecommunications industry locally and internationally as it encourages illegal terminations of international calls received as well as making local operators less competitive to OTT players.

These tax increments surely affect call volumes and the duration of calls and this will affect the profitability of telecommunications operators, which in turn will affect corporate taxes paid by them. This will also affect many other industries as telecommunications is a basic need of all other industries as well.

It is interesting to know the recent history of these values to understand the impact of the additional VAT and NBT which was already imposed from 2 May 2016 onwards but only slightly reduced in August 2016 as per reflected in telecom bills as the new VAT imposition was challenged in the Supreme Court.
The Supreme Court in July issued an interim order to suspend the Value Added Tax (VAT) increase from 11% to 15% imposed from 2 May 2016 until the relevant legislation was passed by Parliament. But on 13 September 2016 the Finance Ministry again confirmed the VAT hike imposition on several services upon approval from the Cabinet of Ministers to raise Value Added Tax (VAT) to 15%. Accordingly, the Cabinet has approved the VAT bill with amendments as required by the Supreme Court judgment.

Apart from the said taxes above that largely affect the consumer, Sri Lanka’s largest mobile services provider Dialog Axiata Plc, which has a 10.4 million local subscriber base, has highlighted in their latest annual report that the new taxes on telecom and corporates had affected the financial performance of the company.

Accordingly, as per 2016 Budget Proposals, Finance Act No. 10 of 2015 certified on 30 October 2015 contains a Super Gain tax, a one-off tax at the rate of 25% on the taxable income of the year of assessment 2013/2014.

Accordingly, Dialog Axiata alone had paid over Rs. 1.79 billion as Super Gain Tax while partly state-owned national telecom services provider SLT and Mobitel collectively paid over Rs. 769 million as the same tax. On the other hand, Mobile Telephone Operator Levy, a one off levy of Rs. 250 million on every person who is engaged in the business of a licensed mobile telephone operator as at 31 March 2015, is accounted as expenditure incurred during the year by Dialog Axiata Plc, Mobitel, Airtel and Hutch which amounted to a total of Rs. 1 billion as tax income to the Government.

The VAT is borne by the ultimate consumer and not by the trader. It is an indirect tax and the Government will receive at the end, through all the intermediary suppliers and wholesalers and retailers, an amount equal to the amount paid by the final consumer. Surely showing the VAT in the invoice to the customers will give operators some benefits on the cost side.

Above all, it is very clear that the decision to extend the VAT increment to telecommunication services is done without giving much thought to its impact on the public and the telecommunications industry.

It seems like telecommunication services are to be subjected to more taxation in the time to come, squeezing the average Sri Lankan’s income and deleting the nation’s savings habit.

(The writer is an Investment Banker and Economic Analyst at Frontier Capital Partners Ltd. and CA PLUS Ltd. He has previous experience as both an Investigative Journalist and Financial Journalist at four national newspapers in Sri Lanka. The writer can be reached at jithendra@jithendraantonio.com)

Monday, September 12, 2016

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‘Tourism and Water: Protecting our Common Future of Sri Lanka

Original Date of the Article - Tuesday, September 24, 2013
For: World Tourism Day 2013 for Chamber of Tourism and Industry - Sri Lanka 
By Jithendra Antonio

The United Nations World Tourism Organization (UNWTO) celebrates World Tourism Day on September 27 every year.

In line with the 2013 United Nations International Year of Water Cooperation, the 2013 theme for World Tourism Day is ‘Tourism and Water: Protecting our Common Future’. And this year’s World Tourism Day celebrations will be climaxed in the Maldives as the host country and Sri Lanka was the official host country of World Tourism Day in 2007. UNWTO’s membership includes 155 countries, 7 territories and over 400 Affiliate Members representing the private sector, The United Nations World Tourism Organization (UNWTO) is the United Nations agency responsible for the promotion of responsible, sustainable and universally accessible tourism.

The celebration aims at creating further awareness among the international community on the social, cultural, political and economic importance of tourism. It also seeks to address the Millennium Development Goals (MDGs) and to highlight the contribution the tourism sector can make in meeting these goals.
Tourism today is a trillion dollar sector involving the movement of over one billion tourists a year around the world and another five to six billion domestically. As the most widely celebrated global day for tourism, it represents a unique opportunity to raise awareness of tourism’s role in water access and shine a spotlight on the sector’s contribution to a more sustainable water future.
Tourism has proven to provide environmentally sound solutions, as well as political and financial support, for the conservation and sustainable use of water sources. But more must be done. With a record one billion international tourists travelling in a single year in 2012, now is the time to commit to a more sustainable tourism sector in order to protect our common future.

This year’s theme highlights tourism’s role in water access and shines a spotlight on the actions currently being taken by the sector in order to contribute to a more sustainable water future, as well as the challenges ahead.

The Maldives is in fact a very matching to theme as the host country to celebrate as a country covered 99% by water. Official WTD celebrations in the Maldives will include a High-Level Think Tank bringing together public and private tourism stakeholders and water experts to devise policies and strategies aimed at ensuring the tourism sector contributes to protecting water resources.

UNWTO Secretary-General Taleb Rifai in his official WTD 2013 message had said that as one of the largest economic sectors in the world, it is the responsibility of the tourism sector to take a leadership role and ensure companies and destinations invest in adequate water management throughout the value chain.

He had further said that if managed sustainably, tourism can bring benefits to the national and local communities and support water preservation.
Clean, accessible water is vital to tourism, running most of the sector´s businesses, from hotels and restaurants to leisure facilities and transportation. More importantly, wetland tourism is growing, with many of the world’s coastlines, lakes and other wetlands among the most popular tourism destinations.

World Tourism Day will be a unique opportunity to examine the challenges facing water management in tourism and the measures being undertaken by the sector to protect and promote water resources while creating benefits for local populations around water tourism destinations.

Tourism is a major industry that contributes to the economic and social development of Sri Lanka by way of foreign exchange earnings, employment generation, income creation and generation of government revenue. Tourist traffic to the country soared from 1968 onwards until the eruption of ethnic conflict in 1983. Arrival plunged sharply due to the ethnic conflict from that year but arrival increased sharply with the improvement of the security situation in the early 1990s.Since 2009 with the end of War against Terrorism Sri Lanka is now emerging to reap the benefits of a thriving Tourism Industry.

Sri Lanka as a country that is filled with natural water resources as well as manmade water-resources Sri Lanka has more potential to brand itself as premier destination for wetland tourism products in line with this year’s ‘World Tourism Day’ theme. From breathtaking coastlines, rivers, waterfalls, manmade tanks and a lakes and other wetlands, Sri Lanka is could be positioned as a most popular tourism destinations for even water sports.

Sri Lanka's radial network of rivers begins in the central highlands. There are about 103 distinct river basins covering 90% of the island. The southwest quarter of the island has seven major basins with catchment areas ranging from 620 to 2,700 square kilometers. They are: Kelani ganga, Kalu ganga, Maha Oya, Attanagalla Oya, Gin Ganga, Nilwala Ganga, and Bentota ganga. An exception to the above radial pattern is the largest basin, that of the 335-km-long Mahaweli River which has a catchment area of 10,448 square kilometers. After leaving the central highlands, it runs almost north for 90 kilometers (km) from Minipe to Manampitiya and a then further 70 km through several distributaries as far as Verugal and Mutur on the east coast. Most Sri Lankan river basins are small. Only 17 of the 103 basins exceed 1,000 square kilometers. The total runoff in Sri Lanka is estimated at 49.2 cubic kilometers (km3/year).

In fact the surrounding areas in these basins have created an environment for the growth of tourism in the country as many of the rivers and the water falls that are born form their flow paths are major attractions in the country’s natural beauty.

Groundwater resources of Sri Lanka have been extensively used since ancient times for domestic purposes using shallow open wells in almost all parts of the country. Sri Lanka's largest aquifer extends over 200 km in the northwestern and northern coastal areas. There are about 25,000 tube-wells in the country. The quality of the groundwater is generally fairly good and relatively constant throughout the year. However, in some parts of the country (Northern and Northwestern coastal areas) excessive concentrations of Iron and Nitrates (due to agrochemicals and fertilizers) have been reported.

Dams in Sri Lanka are classed according to the materials they use. They are mainly earthen, rockfill, or concrete dams. Earthen dams are the most common type in Sri Lanka, the longest being the Parakrama Samudraya dam which is 13.5 km long and has a storage capacity of 0.12 square kilometers. The highest in this category is the Senanayake Samudraya dam at 44 m and with a storage capacity of 0.95 square kilometers. The Victoria dam, built under the Mahaweli multipurpose project, is the highest concrete (double curvature) dam with a height of 106 m and a storage capacity of 0.73 square kilometers. The gross theoretical hydropower potential in Sri Lanka is estimated at 8,000 Gigawatt hours per year (GWh/year). Still Hydropower accounts for over 90% of electricity generation in Sri Lanka.

Dams, Hydropower plants are also sites of major attraction for locals and the current trends in tourism industry have changed in which many of the generations born to baby boomers are tech-kids who love visiting man made Super and Mega Structures in the modern world. In that context Sri Lanka’s present development drive that includes Mega Structures such as Ports, Airports, Fly-Overs, Highways, Mega Star Class Hotels, Leisure Centres and Cultural Centres, Performing Arts Theatres and Medium and Up market City Centres including Shopping Malls had also boosted countries tourism with local travelers increasing their sightseeing around the Mega Structure sites and foreign travelers also being attracted to those sites.

Further local Government has placed a high priority on providing water supply to urban communities where groundwater is contaminated. Sri Lankan Government spends over US $ 45 million a year in providing piped water to the population. But major tourism oriented cities such as Colombo, Negombo, Mount Lavinia, Habarana, Galle already have many hotels that are managing cleaning plants to process their used water and wastewater and reuse the same water for watering gardens, flower beds, ponds and various other cleaning activities in the hotels and resorts.

On the other hands Sandy Golden Beaches such as Negombo, Mount Lavinia,  Kalutara, Beruwela, Bentota, Pasikudah & Kalkudah, Unawatuna, Mirissa, Weligama, Polhena, Dickwella, Hikkaduwa, Koggala, Tangalle, Trincomalee, Nilaveli, Batticaloa,  Arugam Bay, Casuarina Beach, Kilaaly Beach, Vankalai, and even Kalpitiya are major tourism attraction zones. Those areas have contributed vastly to the economic development of the country and to the boom of country’s tourism industry. And in fact the present government had considered the ‘Tourism’ as a major sector to drive Sri Lanka’s economic growth whilst the several new leisure projects are in the pipeline across Sri Lanka’s coastline. Many of them are 5-star properties and international chains and popular hospitality brands such as Shangri- La, Hilton, Hyatt, Marriott, Mövenpick, Starwood, Raffles, Sheraton, Avic are yet to open some major star class properties in the country.
Country’s tourism authorities are also mulling to promote Sri Lanka as a preferred holiday destination for emerging middle class in two of the world’s largest economies – India and China. During the last two years there is major annual growth in tourists arrivals from China and India whilst from January to August 2013 Chinese visitors to the country had increased by 74.3% to 24,306 and Indian arrivals had increased by 4.9% to 113,541.

The recently implemented online visa system had made it easy for tourists to obtain visa to Sri Lanka and further exemption of the exit pass requirement for Chinese tourists travelling to Sri Lanka, increase in the frequency of Sri Lankan Airlines flights between Sri Lanka and China, the vigorous Sri Lanka promotion campaign and the active presence of Sri Lanka / Chinese tour operators at road shows and tourism promotional events in China have contributed to the increased Chinese tourist arrivals in Sri Lanka.

Sri Lanka has also launched a series of tourism promotional activities in China for the year 2013 including the visits of Chinese journalists to Sri Lanka for Familiarization Tours, a Bus Advertisement Campaign and “Get Sri Lankaned” Campaign in the main cities of China targeting the arrival of 275,000 Chinese tourists to Sri Lanka by 2016.

Sri Lanka's Tourism Promotion Bureau (SLTPB) recently announced that plans are afoot to invite 300 Chinese tour operators on a familiarization tour in the island.
Sri Lanka is also positioning itself to be a major player in the gaming industry hoping to attract more Chinese and Indian gaming enthusiasts with several large Casino resorts yet to come in the commercial capital Colombo whilst world’s famous Casino empires such as Australia based Crown mulling to invest over US $ 350 million in the country.

Country is yet to reap its benefits from the Tourism industries growth potential and be a part of Asian growth story that is happening for the next 100 years of world’s timeline.

Sri Lanka recorded over One Million tourist arrivals for the first time in 2012 and this year so far over 711,400 tourists have arrived to the country as at August 2013. It is a 14.3% increase year on year compared to 622,661 tourist arrivals till August 2012.

However till a majority of tourists arrivals to the country are from the countries in Western Europe which has increased by 13.9% year on year to 281,233 in January –August this year. Over 30,000 travelers arrive to Sri Lanka monthly from Western European countries such as Austria, Belgium, Denmark, Finland, France, Netherlands, Italy, Norway, Spain, Sweden, Switzerland, U.K. and Germany.
Government has earmarked on projects that would develop tourism under sub sections including Fishing Tourism, Deep Sea Diving, Nature Based Tourism, Beach Tourism, Sport and Adventure Tourism, Agro Tourism, Culture Tourism, Village Tourism and Event Tourism. State also have projects in the pipeline such as the Kalpitiya Dutch Bay Resort Development Project that envisage foreign and local mega tourism related investments through leasing out 14 islands spanning over 4100 acres for resort developments on the long term. The project aims to have 17 resorts in 14 islands with 5,000 hotel rooms and 10,000 beds for travelers. The project also has Desalination and Water Provision Methodology that will be introduced to the Hotel Industries at Kalpitiya Islands accordingly further Purified fresh water will be provide to the Development Islands and The Kalpitiya Town from the Water supply Project at Kala Oya – River mouth at Gangewadiya Village. The project alone hopes to provide 15,000 direct employment opportunities and 22,500 indirect employment opportunities.

In September 2011, Ministry of Economic Development officially launched the Tourism Development Strategy for the next five years period of 2011-2016. According to the newly launched Tourism Development Strategy, the main target of the tourism sector until 2016 is to achieve a target number of 2.5 million tourists by 2016.Country is also mulling to increase the number of hotel rooms to 35,000 to accommodate 2.5 million tourists.

Aspiring to become the 'hub of Asia', Sri Lanka is actually an internationally famous country as a value for money destination for MICE activities. MICE is an acronym for Meetings, Incentives, Conferences and Exhibitions.  In this regard The 2013 Commonwealth Heads of Government Meeting (CHOGM) that is scheduled to be held from 15-17th November 2013 in Colombo is considered a larger event that would attract many travelers while giving the boost to country’s image as a top MICE Tourism Destination. This is the first time an Asian country is hosting the summit in 24 years. There are 54 independent states under the belt of commonwealth and many of those already have confirmed their participation.
And Also the Commonwealth Business Forum (CBF) will take place in Colombo, Sri Lanka in conjunction with the Commonwealth Heads of Government Meeting (CHOGM). This is the premier business event in the Commonwealth bringing together Heads of Government, Ministers, and top business leaders from around the world and will be attended by over a thousand delegates.

More than 70 representatives from 15 Commonwealth countries are currently in Sri Lanka on an advance visit to make preparations for their respective delegations for the Commonwealth Heads of Government Meeting (CHOGM) 2013.

Thus the CHOGM could be part of Sri Lanka’s growth story and Tourism as it could be considered an opportunity as many world leaders and top business leaders will be coming to the country.

Sri Lanka had been in the spotlight of many international travel publications around the globe since 2009. Sri Lanka is among the top 10 most affordable destinations in the world, according to the German-language Yahoo! Travel Magazine. In 2010, The National Geographic Channel in an exclusive report categorized Sri Lanka as the second best place to visit. The commentators, Times Travel Writer Jil Crawshow and Editor of Wandertrust Magazine describe Sri Lanka as 'definitely a best place to visit'. The National Geographic Adventure too has ranked Sri Lanka as the Second Best New Trips for 2010 out of 25 countries, accrediting the country as the "Wonder of the World."

Sri Lanka was ranked as the number one tourist destination by the 'New York Times' in its list of "31 Places to go in 2010". Just days after this ranking, a leading lifestyle web resource, Daily Candy, weighed in with a similarly enthusiastic travel recommendation, praising Sri Lanka as "the best place ever been".

The World Travel Market 2011 Industry Report has highlighted five countries including Sri Lanka as the five emerging counties behind the BRICS nations Brazil, Russia, India, China and South Africa.

On January 8, 2011 The CNN Travel Magazine has reported that Sri Lanka is a suitable country for tourists to spend their leisure time.

Sri Lanka was among the best destinations to visit in 2012 National Geographic Traveler, by US-based magazine, which has focused on the island’s hill country. Another monthly travel magazine in Britain ‘Condé Nast Traveller’ has nominated Sri Lanka as one of the top five destinations to watch in year 2012. The travel experts of the magazine have predicted that Sri Lanka will be among the hottest new holiday destinations for travellers in the coming year. Sri Lanka was placed third in the list of destinations ahead of Britain, Australia and Abu-Dhabi .
Meanwhile UK’s most discerning monthly fashion and lifestyle magazine “HELLO” named Sri Lanka as one of the top five destinations to visit in year 2012. In ‘Hello’ Magazin Sri Lanka secured the second place among the top five list selected by the magazine being second only to Thailand.

World’s most renowned and largest travel guide book and digital media publisher –“The Lonely Planet” has named Sri Lanka as number one destination in the world to visit in year 2013. The travel experts and the voters have predicted that Sri Lanka will be on the top of the hottest new holiday destinations for the travelers in year 2013. Under the title  ‘Serenity returns to Serendib “  the travel guide raves destination Sri Lanka describing the multi-faceted experiences the traveler can look for in this small Island , fused with novelty and indulgence .
This year Sri Lanka was also awarded the prestigious “Most Potential Outbound Tourist Destination Award” at the Jinhua Travel New Model Awards Ceremony organized by the Beijing Times on 27 February 2013 in Beijing.

Meanwhile Recently Sri Lanka won an award for Best Travel Destination of Cantonese, based on online voting by the readers of the Southern Metropolis Newspaper.  The award was presented to the Sri Lanka Consulate General on the opening day of the China (Guangdong) International Tourism Industry Expo 2013 (CITE 2013), a one-stop platform for the travel trade, which took place at the China Import and Export Fair Pazhou Complex, Guangzhou from August 29th –September 1st 2013.

Sri Lanka is on course to develop into a major tourist destination. With tourist arrivals crossing one million in 2012, the sector is firmly on track. Leading industry consultants continue to forecast a demand – supply gap in hotel room inventory, a situation that will be beneficial for existing hotels. Analyst also note that in the long term, with the entrance of more international brands and maturing of the tourism industry, Sri Lanka is set to change from a budget destination to a more exotic one offering a variety of experiences to a diverse segment of travelers.

The Tourism sector has been given priority by the Government to push growth and also to earn foreign exchange and the Tourism Development Strategy 2011-2016 continues to support the President's vision of attracting 2.5 Million Visitors by 2016 with additional objectives of attracting US $ 3 Billion of FDI and increasing tourism related employment five-fold to 500,000 by the year 2016.