The Egyptian cabinet announced its approval on Wednesday of a six-month rescheduling and deferral plan on utility payments for tourist establishments and private airlines. The payments shall start from October.
The decision comes as part of the state’s efforts to contain the repercussions of the ongoing coronavirus (COVID-19) outbreak on the country’s tourism sector.
It carries on from a broader set of state measures to support the country’s much suffering tourism sector. Also part of the deferral plans is the postponement of real estate tax on tourism facilities for three months, which can be paid in instalments as well.
This comes in addition to the lifting of administrative reservations on all financiers who have payable tax, of which they can pay only 10% of their due tax.
Moreover, the Central Bank of Egypt (CBE) has launched EGP 50bn financing initiative to support local tourism. The loans, with a declining 8% interest, aim at replacement and renewal of hotels and tourist transport fleets.
As part of the initiative, banks can grant credit facilities with a maximum two-year repayment period, in addition to six-month grace starting from the grant date, during which banks can capitalise unpaid interests.
Decision to support tourism sector
To understand the recent decision and its impact on the tourism sector in the coming period, Daily News Egypt spoke to tourism stakeholders. All praised the decision, although some highlighted that the decision neglected tourism companies.
Hesham El Damery, former chairperson of the Egyptian Tourism Promotion, praised all state decisions supporting the tourism sector in the last period. He said the decisions revealed the political leadership’s awareness on the importance of the sector for the economy, as one of most important industries for attracting foreign currencies.
Tamer Nabil, Secretary General of the Investors Association in the Red Sea and member of the Egyptian Hotel Association (EHA), also praised state efforts to contain the negative impacts of the coronavirus on the tourism sector.
Both noted that Egypt is dealing exceptionally well with the ongoing coronavirus outbreak. They project that the above measures will translate into helping the tourism sector, whether investor or worker, come out of the crisis with minimal losses. They added that the decisions will also ensure workers do not lose their jobs and hotels can remain open.
Not all will win
Elhamy El-Zayat, former head of Egypt’s Federation of Tourism Chambers, told Daily News Egypt that the new decision will only postpone the collapse of airlines companies and hotels.
“My question now is, where are the tourism companies’ and the floating hotels’ support in this decision?” he said.
He noted that whilst the decisions do have their merits, not all the tourism sector will receive those benefits.
Yasser Sultan, partner director of Egyptian Valley, also praised the decisions, highlighting the benefits they would have for hotel owners. The decisions, he added, however neglect small- and micro-size enterprises that currently represent 60%-70% of the total 2,500 tourism businesses.
Tourism companies do not need rescheduling
Nabil said that tourism companies are not in need of any further decisions for financial support given that they already pay a very small amount of money in utility consumption. This is especially in comparison with hotel and airline companies, who face much larger problems.
However, Sultan said, “We were awaiting more support from the government for these companies, as they will face a liquidity problem, so I am suggesting that the government directs not only the emergency fund but all funds affiliated to the Tourism Ministry and its affiliated chambers to allocate money to support the tourism sector.”
He added that, this year, 1,840 companies have worked towards organising the Hajj (Islamic pilgrimage) before its cancellation, paying a lot of dues. As a result, they need to recoup these losses, with this financial liquidity enabling them to withstand this crisis.