FHTA, 23 July 2020 – As Government announced their Fijian National Budget for 2020 / 2021 last week, a
collective sigh of relief was heard around the tourism sector.
After months of brainstorming, Talanoa sessions and lobbying, Tourism support has come through with a review of some of the fundamental areas that contribute to industry costs.
The announcement of multi-pronged support for the tourism sector comes at a time when many operators were unsure of the direction of the entire industry.
Among the many incentives declared by Government, the major wins for the tourism industry are the rescinding of Service Turnover Tax (STT) of 6 per cent on all prescribed services and the reduction of the Environment & Climate Adaptation Levy (ECAL) from 10 per cent to 5 per cent.
The increase in the threshold for the application of ECAL from F$1.25M to F$3M will also go down well with the many small and medium enterprises. Initially considered an antithesis to the growth of smaller businesses because once earnings surpassed F$1.25M, they paid the same amount of ECAL as the larger operators in the country, the incentive now gives SME’s a wider scope with room to grow.
Since its introduction in the 2017-2018 financial year, ECAL collections have totalled F$270.2M of which FJ $255.9 has been used to finance 102 projects that address climate change, environmental conservation, and infrastructure. Largely collected from tourism operators.
By comparison, white-goods vendors have only had to apply ECAL since last year, but they too have felt how quickly a 10% increase can distort your price structure and reduce your popularity with a price-conscious market.
Currently dealing with managing staff without international visitor revenue contributions, maintenance and operational costs even during semi or full closures; every tourism business owner has also been relieved to hear of the deferment of the implementation of the VAT Monitoring System (VMS) to 1 January 2022.
This is expected to cost a minimum of $3,000 for a small business to implement and up to $1.25m for a large hotel to integrate into its complex system of transaction processing, point of sale (PoS), Property Management Systems (PMS) and Management Information Systems (MIS) to name a few.
The deferment directly allows savings for critically needed capital expenditure, for which the direct benefits for tourism businesses are at best vague, but is designed to report VAT payments to FRCS in real-time even though VAT payment reports will continue to be submitted as it is now, at the end of every month. We will continue to work with FRCS on both the need to have this and how it can be implemented with less difficulty and cost.
Obviously, many of the budget’s announced measures support the industry’s collective efforts to pick itself up and be COVID-safe and prepared when the borders reopen.
As the earner of 46 per cent of our country’s total Gross Domestic Product in 2019, tourism has taken an enormous hit that has not just been felt economically. The bigger impact has been felt and continues to drastically impact the communities that tourism businesses operate from. With increased unemployment and lower demand for materials, resources, and fresh produce; there is also reduced economic activity in the communities where tourism is the key employer because of lower or lost incomes.
Preparations for borders opening continue to be the focus for many businesses with the constant review of operational costs and how many staff can be brought back during the weekend bookings in support of the “Love Our Locals” campaign that continues to gain popularity. The implementation of the COVID-safe guidelines and training of staff on the new requirements, the completion of refurbishment if undertaken or the reopening after months of being closed are currently some of the activity taking place across the country.
With the changes in tax policies recently announced, adjustments will need to be made on pricing structures, in-house systems and once passed down from suppliers, food & beverage costing. A collective effort is being made to develop attractive and innovative holiday packaging that will convince ready to travel COVID weary international visitors to select Fiji as their preferred destination.
At the same time, the unpacking of the complex scenarios of travel options within the Bula Bubble have begun. This includes how we deal with borders reopening with just one neighbour that is COVID contained, or two neighbours where only one is contained. How we manage pathways without compromising community safety where even the best and friendliest intentions would be considered breaking protocols, or provide safe accessibility to activities and attractions as opposed to making them safer by deeming them off-limits. Fiji is not alone in trying to navigate a safe path back to borders reopening and being sufficiently prepared.
As we look to compete with every idyllic locale in the region and further, we can only do our best and work together to get Fiji back on track and our workers back at work. Around the world, other tourism destinations are moving their own preparations up to open borders. The ever-mentioned Bali looks to open its borders on September 1 to Americans, while the Bahamas have decided to boldly close their borders to that market.
Tahiti is reopening with a self-test and in Jamaica, if you do not follow the health protocols, the Tourism Minister there will close your resort. Some countries are even offering visitors a year’s work visa to locate there. Such is the widespread reliance on tourism’s ability to quickly rehabilitate a flagging economy.
Our own tourism workers are aware of the industry’s preparation to be COVID-Safe and ready to go when those borders open. They are also looking forward to returning to jobs that pay well and include competitive weekend and holiday pay rates, with wet allowance, risk allowance, height allowance, meal allowances, uniforms, and even transport and accommodation provided depending on where they work and what they do.
While we compete with the world with our Bula Spirits and friendly smiles that set us way above other cheaper destinations, let us do so while maintaining who we are.
We are Fiji.
By: Fantasha Lockington – CEO, FHTA
Published in the Fiji Times on 23 July 2020