Kerala Tourism has been at the forefront in India in terms of qualitative tourism. Though not in numbers, compared to some other states, Kerala has become a sought after destination by its memorable visitor experience. The excellent connectivity of the state from many parts of the world, the natural beauty, the people, culture, heritage, backwaters, beach villages, hills, the popular Ayurveda and all have made the state attractive for the visitors. Above all, the beautiful resorts with typical Kerala ambience, and the feel offered by them are the most appealing ingredient of the Kerala experience. To go to the next level of equipping ourselves, we need more infrastructure, tourist facilities, hotels, resorts, hospitality centres, training institutes and many more.
Regarding infrastructure development, we should refer back to a proposal presented by the Working Group on Tourism Infrastructure, appointed by the Plan Committee on Tourism and Tertiary Sectors of the Planning Board of Kerala. In the proposal made in 2006, they had targeted 15 lakh Foreign Tourist Arrivals and 150 lakh Domestic Tourists in six years. Their main recommendation was to create sufficient room availability to achieve the targets. For this, they had estimated an investment requirement of Rs 10,000 crore in the hospitality sector alone. They estimated a need for 86,000 classified rooms in the state in 6 years period. That period is now over and we have achieved only 0.73 million Foreign Tourists Arrivals and 9.38 million Domestic Tourists to Kerala. In the present scenario without taking that projection into consideration, we have a considerable gap even in the case of rooms. We need to have Rs.1500 to 2000 crores investment every year to reach the projected investment level. Apart from the accommodation sector, investments are required in supporting infrastructure and product development too. Inter and Intra connectivity by air, rail, road and water, water supply, power communication, waste management at the tourist’s destination, wayside facilities, shopping facilities, signage, safety and security, etc fall under support infrastructure. It had been estimated by the infrastructure committee to have an investment of Rs.5000 crore for support infrastructure in the period ending in the year 2012.
The investments in all these areas are envisaged from the private, joint venture and public sectors. This itself gives an idea of the gamut and the scope of investment possible in tourism by the private sector. There is an Rs.15,000 crore investment required in tourism right now.
The NRI’s particularly the NRK’s are the most potential segment to meaningfully invest and take part in the development of Kerala including tourism. I fully appreciate the enthusiasm of all concerned to attract the NRK’s to Kerala and invest, but frankly, I do not feel confident of the investment climate we have created for them. There are cumbersome and time-consuming procedures and formalities in obtaining statutory clearances for investments in projects. There are no `single window clearance’ facilities offered to the investors yet.
Operationally the investors find it extremely difficult to run their business in Tourism profitably as the operational cost is very high due to high taxation, high bar license fees, sales tax on liquor, high electricity charges, building tax on hotel buildings and the labour cost. In this scenario, the confidence level of the investors has to be enhanced through supportive and favourable policies. Of course, the Kerala Tourism Policy 2012 spells out the state’s commitment to tourism to make it a vibrant and significant contributor to the sustainable development of the state. The policy also spells out its mission to deliver a world-class, yet local visitor experience and attract investments in the sector, which will be sensitive to the natural environment. But there should be an earnest fervour to implement the provisions of the policy to attract investments.
As we talk about investor-friendly policies we should really make the investors convinced of how far we are investor-friendly. There should be provisions in the legislation for their reasonable protection as they operate in our social environment. Already there are provisions in the legislation protecting the interest of the employees, but employers are generally left without support.
NRK’s are already used to world-class facilities and administration and hence they expect a good set of facilities to be provided by the Government, if not the best. There is no harm even in allowing some extra facilities and recognition to investors investing in high volumes in Kerala.
Though the labour sector is nowadays more constructive thinking, still one might face labour unrest here and there in Kerala. The unpredictable and unannounced hartals and public standstills hindering the tourism movement are surely a bane to the tourism development of the state. We should check our political will towards containing such menaces for the sake of promoting investments.
First of all, we have to spell out the finer details of the procedures relating to investors and investments, to set the stage ready for investments. We need to be clear to the investors about our policies and procedures. We should have a `single window’ arrangement for approvals and clearances. As recommended by the infrastructure committee in 2006, a master plan should be prepared, identifying the areas for development and the infrastructure requirements. Investment areas should be identified based on the circuits and zones developed for tourist movements, as part of the destination management.
The Infrastructure Committee had recommended a `Kerala State Tourism Finance Corporation’ for funding of tourism projects. Government should have an `expert cell’ to study the projects and recommend them to the said Tourism Finance Corporation.
An `Investment Coordination Cell’ is a must to facilitate the potential investors, provide information, statistics, data, model projects, project reports, etc and assist them in obtaining clearances and approvals for the projects and also to liaise with Governmental agencies. We even need to have an effective system to monitor the investments and their progress and effectiveness. This would help in finding out how beneficial and useful are the investments, and how supportive are our measures to such projects.
However, still, we see a lack of professional approach among the medium and small investors when they get into the tourism projects. Many times we find a lack of deeper knowledge about the tourism industry and an unscientific approach in business management. This causes a setback in these steps from selection of land, planning the project, designing, positioning, manpower planning, marketing, and also planning future. Some investors are found to be reluctant in entrusting the management with professional organizations and try to run it the way they find it right. The NRI’s as they are used to a different political, administrative, social and financial environment, landing up in a totally different business climate in India might cause a jolt to them, but they should pay good attention to create an ideal setup for themselves for successfully running the business in the given environment.
Whatever is said and done, ultimately for the Non-Resident Keralites, Kerala is their home. Participating in any development activities back home is a matter of satisfaction and self-attainment. They should try and make use of this investment opportunity to its best and pick up the most appropriate and suitable projects which are in sync with the development plan of tourism in Kerala. They should address all the impediments and difficulties bravely and sustain themselves in their successful track of business, being part of this land.
The investments and contributions of various successful NRK businessmen in various sectors in Kerala should be acknowledged with great admiration. Their contributions and participation in our airport projects, hospitality sector, healthcare segment, etc are well recognized. That brilliant participation should be an encouragement to all future investors in Kerala.
Having been an investor and business person and a tourism professional in Kerala for the last 36 years, I would surely recommend NRIs to come forward in a big way and invest in tourism to make it really world-class.
E.M. Najeeb
Chairman & Managing Director , ATE Group
