Tourism Ministry seeks to consolidate foreign investment

All the changes proposed by the ministry are in response to the 18,000 hotel rooms needed for an expected 5 million tourists by 2015.

Eilat 248.88 (photo credit: Ariel Jerozolimski)
Eilat 248.88
(photo credit: Ariel Jerozolimski)
Foreign tourism investment might become less complicated if a proposal to transfer application and financing processes to the Tourism Ministry passes Tuesday in the Knesset Finance Committee. Tourism Ministry Director-General Noaz Bar-Nir unveiled his plan to consolidate all steps in the tourism foreign-investment procedure into one central body. Currently, the Industry, Trade and Labor Ministry approves grants for hotels and attractions, while the Tourism Ministry sets budgets and keeps track of plans and progress. The money for grants belongs to the Tourism Ministry. "If you have such a ministry you need to give them the tools to implement the policy, so in that sense it seems logical to me," said Prof. Noam Shoval, who teaches in the geography department at the Hebrew University of Jerusalem. His research includes tourism and culture as a tool for urban development and urban-tourism management. The proposal is part of a restructuring, said Merav Peleg, who is establishing a new unit for the promotion of private-sector projects for the development administration within the ministry. She said the restructuring, which was recommended in a 2006 report by Ernst & Young, will help streamline the investment process to make foreign investment easier to accomplish. All the changes proposed and occurring by the ministry are in response to the 18,000 hotel rooms needed for an expected 5 million tourists by 2015. "I think it was a catalyst because now we saw that we have to add 18,000 hotel rooms in about six years, and it's not an easy target to achieve," Peleg said. "We had to take action. Until now all steps were going like ping pong." United Arab List-Ta'al MK Ahmad Tibi said he would vote against the measure in Tuesday's Knesset Finance Committee meeting. He said the move was a political ploy, adding that the Industry, Trade and Labor Ministry's investment center is sufficient for all departments. Still, as the ministry attempts to smooth its interior, it also plans to make the financial hit less rocky for investors by offering new routes to earn grants. The ministry plans to offer grants worth 24 percent of the acknowledged total investment for foreign investment projects. The major focus is on hotels, as the ministry intends to promote the construction of new establishments, renovation of old ones and conversion of other buildings into hotels. But whether all 18,000 hotel rooms will be ready by 2015 is still unsure. "I'm not a prophet, I can't tell," Peleg said. "I only can tell that we will do our best." The necessity of the Tourism Ministry has been debated in the past, as its role changes depending on how much money the state has, Shoval said. But since it exists, he said, it deserves a chance to control funds and oversee development of the tourism industry. "We're not the first to note that it is really hard in a bureaucracy if someone wants to come in with investment," Shoval said. "It makes sense to make it a simpler process." Bar-Nir said the transfer of nearly NIS 500 million in 2009-2010 would produce investments totaling NIS 2 billion, thousands of new jobs and directly and indirectly bring hundreds of millions of shekels of output. Shoval said he agreed with Bar-Nir's proposal in principle, but said there was potential for misuse or abuse any time an agency is given more power. Aside from investment needed for accommodations, Peleg said she hoped foreign investment can bring attractions such as Aquaria, a proposed water amusement park in Eilat. She said attractions such as this, and even those on a smaller scale, would encourage tourists to stay longer and deposit more money into Israel's coffers.