Government has scrapped off duty on building materials for hotel, lodge and inn proprietors with a room capacity of above 50, a development industry players have said would reposition the industry as a vehicle for a diversified economy.
A statement published on the Malawi Revenue Authority (MRA) website on Monday said the development follows the amendment of Customs and Excise (Tariffs) Order by introducing Customs Procedure Codes (CPC) 4000.442 and 4071.442.
Tourism is Malawi’s third foreign exchange earner after tobacco and tea and the tourism industry contributes significantly both to the level of Gross Domestic Product (GDP) and to the country’s economic growth.
Government has since thrived to create an enabling environment for the development, regulation and promotion of a sustainable tourism sector to enhance tourist experiences and satisfaction while improving the socioeconomic wellbeing and maintaining the cultural identity of local communities through the National Tourism Policy.
Minister of Finance Economic Planning and Development Goodall Gondwe in an interview on Tuesday said the motive behind the development is just one of numerous ways to encourage investment as well as reduce costs on hotel fees.
“We want more hotels built in the country hence this waiver to ensure that investors both local and international build standard hotels and lodges. We also believe that this will prevent increases in hotel tariffs.
“MRA will no longer ask for money on such materials provided the proprietors get proper documentation and clearance from the revenue body prior to importation of the goods,” he said.
Speaking separately MRA head of corporate affairs Steven Kapoloma in a written response to a questionnaire on Tuesday said the Customs Procedure Code will be effectively implemented using an authorisation process that is in place to review and verify applications made by an investor to qualify for this provision.
According to Kapoloma applications from hotel, lodge and inn proprietors should be made directly to the Commissioner General of the MRA.
Commenting on the new incentive Sunbird Hotels and Resorts chief executive officer Yusuf Olela noted that Malawi as a tourism destination is growing and the incentive will lead to more facilities creating employment opportunities and re-positioning the industry as vehicle for a diversified economy.
He said for Sunbird the benefits will go a long way to enable us improve our existing products and expand our existing properties where demand has been high especially our resorts.
“Government has indeed waived duty on building materials and this waiver is an incentive for existing and potential investors in the hospitality sector to invest in expansion and construction of hotels.
“We would like to thank the government and the relevant ministry for creating an enabling environment for tourism product expansion,” he said.
Other than this incentive, investors in the tourism sector will also not pay import duty, import excise and VAT if they import materials and equipment for the establishment of a conference centre with a 200 seating capacity.
Such materials and equipment include public address system, video conferencing equipment, television screens, amplifiers, LCD equipment and industrial catering and bar equipment.
A recent report by World Travel and Tourism Council ( WTTC) shows that the sector’s direct contribution locally currently stands at K138 billion, representing 3.4 percent of total GDP and it is anticipated to rise by 4.9 percent per year in the next 10 years.
In terms of total GDP contribution, the sector was responsible for K289 billion, about 7.2 percent and this is forecast to rise by 5 percent in the next 10 years.