New stimulus package for tourism sector

New stimulus package for tourism sector

Incentives could amount to an additional $3 billion

Observer Business Writer

Sunday, September 20, 2020

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A raft of new stimulus incentives for the tourism sector, which is trying to make up for lost ground from the COVID-19 pandemic, is being rolled out by the Government.

This new stimulus package is in addition to the $1.2 billion which the Government announced for the sector at the start of the pandemic in Jamaica, back in March this year.

Tourism Minister Edmund Bartlett, who unveiled the new stimulus package, did not give an overall cost for the entire stimulus package measures but conservative estimates put it at over three billion dollars.

Most of the stimuli are being channelled through the Tourism Enhancement Fund (TEF), which has collaborated with key partners to create several initiatives geared toward helping the small and medium tourism enterprises (SMTEs) retool and rebound from COVID-19.

Addressing Friday's 59th annual general meeting (AGM) of the Jamaica Hotel and Tourist Association (JHTA), Bartlett disclosed that loan packages have been developed for SMTEs like the TEF/EXIM Bank Jamaica revolving facility, and Jamaica National Small Business Loans (JNSBL).

He told the virtual AGM, which was streamed via Zoom, that the TEF continues to provide access to capital for SMTEs to build their capacity to earn more, particularly via these two loan programmes.

“With a Government injection of $1 billion, SMTEs [through TEF/EXIM Bank Jamaica revolving loan facility] can access between $5 million and $25 million with a 4.5 per cent interest rate and five years to repay,” Bartlett said, explaining that “through JNSBL, SMTEs can borrow up to $5 million with a 5% interest rate and 5 years to repay.”

The minister pointed to the SMTE loan facilitation, where SMTEs can access a voucher through the Development Bank of Jamaica (DBJ) to partner with an approved professional business development agency when applying for loans. The DBJ covers 70 per cent of specific service costs with vouchers ranging from $50,000-$500,000.

He said, “additionally there is also the DBJ's credit enhancement facility, which will allow SMTEs to access up to a maximum of $30 million as part of a partial loan guarantee if they don't have enough collateral to access loans”.

He also outlined the provision of resilience packages through which the TEF will be providing 500 tourism protective kits to small tourism enterprises.

According to the minister, “This is to effectively protect front line workers and visitors while meeting the guidelines of the ministries of tourism and health and wellness COVID-19 safety protocols. The value of the 500 kits amounts to over $15 million. This initiative will be rolled out at the end of September.”

He further disclosed that an additional incentive is being provided through the initiation of the Rural Economic Development Initiative (REDI II) Project. This programme, funded by the World Bank and administered through the Jamaica Social Investment Fund, targets COVID-19 recovery efforts for the tourism and agricultural sectors.

As part of the project's COVID-19 response, $100 million will be made available to the tourism sector and can be accessed for, among other things, the acquisition of personal protective equipment and technical capacity building.

Minister Bartlett mentioned about the $1.2-billion incentive programme for the sector announced back in March, wherein the Government developed a suite of CARE programmes specially designed for tourism enterprises to assist them in this very difficult time.

One key programme under this initiative is the provision of a grant of $1.2 billion dollars to businesses operating in tourism and related sectors, which will now be administered through EXIM Bank Jamaica.

Previously these grants were accessible by application to a special, multi-stakeholder COVID Tourism Grant Committee and by submitting detailed information.

The information submitted must include audited financials and management accounts, projected cash flow statement along with assumptions, recovery plan with other steps being taken, statement of personal assets and liabilities, and evidence of tax compliance among other criteria agreed in consultation with stakeholders.

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