TIC: Tourism likely to tumble next year

Tanzania will receive resilient growth of foreign direct investments (FDIs) inflows to primary productive sectors next year, but secondary sectors may fall on unpredictable fiscal policies, Tanzania Investment Centre (TIC) has projected.

Citing an example of the Value Added Tax (VAT) exemption abolition on tourist services introduced from July 1, TIC director of Research and Information Systems, Mr John Kyaruzi, said that the secondary sectors like tourism and hotel investments may drop next year as a result of the fiscal policy changes.

“For primary sectors like mining, FDIs inflow will be almost the same as this year. Unpredictable fiscal policies may affect the investments next year,” said Mr Kyaruzi who was responding to queries during the launch of the World Investment Report.

The minister for Finance announced VAT exemption on tourist services - tourist guiding, game driving, water safaris, animal or bird watching, park fees, tourist charter services and ground transport - as the government wanted to reduce the magnitude of exemptions.

Tanzania recorded 37.77 per cent increase of FDIs from $1.2 billion in 2011 to $1.7 billion in 2012 driven by oil and gas exploration, the 2013 UNCTAD world investment report shows. Uganda was the first in the East African region at $1.72 billion.

“This means that Tanzania is becoming an investment centre in the eastern Africa. However, the challenge is still on value addition of products such that most of them are exported in raw form,” said TIC managing director Juliet Kairuki.

She also added that currently the government was in the process to review investment policy to realize the investment potential in the region.

FDIs contributed 38.2 per cent to Tanzania’s GDP in 2012, according to her.

“What is important for countries like Tanzania is how much they get out of exports…This is the value added at the domestic level,” commented Manuela Tortora, UNCTAD Chief of Technical Cooperation.
Source: The Citizen, reported by Alawi Masare from Dar es Salaam, Tanzania
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