Colombo (LNW): Sri Lanka is set to receive a much-needed boost to its tourism industry with a hybrid grant scheme of Rs. 41 billion (USD 135 million) backed by world-renowned re-insurer, world-leading re-insurance Lloyds insurance of London and HSBC. The grant is aimed at reviving the country’s tourism industry, which has been hit hard by Easter bombings, COVID-19 pandemic and the recent economic crisis. The GOVSL or the citizens of Sri Lanka do not have to pay out of their pockets.
The initiative comes at a time when Sri Lanka is looking to exceed 4,000,000 visitors by the year 2030 and increase its foreign currency income. In 2022, Sri Lanka had just 720,000 visitors, a far cry from the over 2,300,000 tourists in 2018, before the terrorist attacks and COVID-19 pandemic. The majority of visitors to Sri Lanka come from neighbouring countries, and unfortunately, most of these visitors are uninsured. In case of medical need, these uninsured tourists receive medical services from the public medical system, which is financed by the country’s treasury. Essentially, Sri Lanka pays for these treatment costs.
This medical and travel insurance scheme for foreign visitors, allow Sri Lanka to join other countries which already implemented similar scheme such as: Thailand, Saudi Arabia, N. Cyprus, Russia, Botswana, Cameron, Dominican Republic, Egypt, Aruba, Jamika, Costa Rica, Panama. It’s also similar to the EU travel requirements. The insurance, will cover medical expenses, including all medical treatment, and repatriation if necessary. It will also cover other unforeseen events such as national catastrophe (tsunami, act of terror, pandemic and alike), flight cancellations and even lost passport.
The travel insurance scheme is expected to be a win-win situation for both tourists and the country. Tourists will have access to a comprehensive insurance scheme at a low cost, while the country will benefit from increased tourism revenue. The scheme will be funded through a premium of as low as $35, which will be included in the visitors’ flight ticket for a 30-day stay. This daily cost is less than a bottle of water in a restaurant, and visitors will have access to world-class hospitals and medical services via this scheme.
The Hybrid grant of Rs. 41 billion will be used to develop the tourism industry further and recover the costs of the travel insurance scheme. The grant will be recovered within 10 years, and the government hopes that the initiative will help attract more tourists to the country and boost the economy.
The tourism industry is a vital partner in increasing the number of visitors to Sri Lanka. The industry has suffered from Easter bombing, COVID-19 pandemic and the recent financial crisis. The SMEs in the tourism industry are currently under a financial moratorium, which ended on 31/12/22. Ending this moratorium has hindered the much-needed support to increase the number of annual visitors. The SME sector is currently at a huge risk, and financial institutions are in the process of liquidating assets to recover prevailing loan balances.
The SME sector requires immediate attention to sustain the business and support the increasing arrivals of tourists to the country. 80% of the tourism service providers are from the SME sector. This includes Small and medium scale Hotels, Villas, Home Stays, Tour Operators, Tour Guides and Restaurants (food and beverage service providers). Such SME’s can apply for concessional loans under this scheme from their local banks. GOVSL will profit from that as well.
Overall, the introduction of the travel insurance scheme backed by leading re-insurer and the connected hybrid grant scheme is a positive step towards reviving the tourism industry in Sri Lanka. The initiative is a shining example of how governments can work with the private sector to develop innovative solutions to complex problems. It is believed that this initiative will help Sri Lanka exceed its target of 4,000,000 visitors by 2030 and increase its foreign currency income.