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Al-Ahram Weekly 25 - 31 March 1999 Issue No. 422 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 25 - 31 March 1999 Issue No. 422
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Profile Features Travel Living Sports People Time Out Chronicles Cartoons Letters Tourism with a future
by Gamal Essam El-DinThe Shura Council has adopted the recommendations of a new report urging the government to give greater support to the tourism sector because of its prime role in developing the national economy. "Tourism is Egypt's largest source of foreign currency, its income exceeding that of the Suez Canal. Despite the negative impact of Luxor's 1997 terrorist attack, revenues generated by the tourism sector reached LE3.8 billion that year, compared with LE1.7 billion generated by the Suez Canal in the same year," said the 130-page report entitled "The Future of Tourism in Egypt". The rise in tourism revenues caused a 16.8 per cent (LE250 million) rise in national revenues, although tourist traffic increased by a mere one per cent.
The report emphasised that the tourism sector still lacks government support and stressed the necessity of enhancing its role in Egypt's national economy due to its high potentials. "Not only is the sector burdened with taxes, but it also lacks many of the necessary investment incentives," said the report. A case in point is the five per cent sales tax imposed on hotel and tourism restaurants, as well as transportation, fax and telex services. Worse, according to the report, is a 25 per cent "resource development fee" imposed on air travel and tourist agencies. "The fee, which generated LE34 million last year, has discouraged tourists from buying air tickets from domestic tourist companies, causing the latter to incur financial losses," the report said.
The Investment Law of 1997 denied many tourist activities some of the most vital incentives. "Basic tourist activities such as diving and golf, as well as fast food restaurants, marinas and conference halls, were denied a number of necessary incentives such as tax exemptions," the report said.
The report emphasised that the 1997 Luxor terrorist attack dealt a severe blow, not only to the tourism sector, but to the national economy as well. "Compared to this incident, the negative effects of the Gulf War and previous terrorist attacks on tourists in Egypt were minor. The Luxor act was a serious scar that led to a long-term and sharp drop in tourist traffic, as well as in the prices of tourist hotels and services. The savage act drove away many potential European and Japanese tourists who had been planning to visit Egypt. Tourist hotels recorded almost zero-occupancy rates for the first time in their history," the report said. It noted that Israeli tourists were the least affected by the incident, their numbers dropping by only one per cent.
According to the report, the Cabinet's strategy for the next century is to increase the number of incoming tourists from the current four million to 27 million by the year 2017, and tourist nights from 26 million to 237 million during the same period.
"There are plans to increase the lodging capacity in hotels, tourist villages and Nile cruises from 100,000 rooms at the moment to 618,000 in 2017," the report said. To attain this objective, the state has given sweeping incentives to the private sector enabling it to become a major player in the field. "The first industry to undergo privatisation in Egypt was tourism. Privatisation in tourism took the form of either contracting private management, or through the direct sale of all state-owned hotels. As a result, the privatised hotels have recovered their efficiency and achieved profits," the report said.
Over the past two years, the report added, the state took another giant step by introducing the BOT (Build, Operate, Transfer) system allowing the private sector to establish new airports, which resulted in the building of five private airports on the Red Sea, in South Sinai, the Suez Gulf and on the Northern Coast.
The report, however, blamed the state for hesitating to privatise EgyptAir, Egypt's national air carrier. "We highly recommend the opening up of the air transport business to foreign competition, because only then can this sector recover its efficiency," said the report.
In their debates, a large number of Shura members criticised the deterioration in EgyptAir's services. The leftist-oriented Rifaat El-Said and businessman Mohamed Farid Khamis agreed that the monopoly EgyptAir exercises on air travel is "no longer acceptable".
"The performance of this company is rife with negligence and serious shortcomings. I hope the government will tell us to what extent this company has managed to adhere to its flight schedules over the last six months," said El-Said.
Khamis emphasised that "privatisation of the air transport sector is vital if Egypt is to attract more tourists."
