Tourism Development Fund 12 March, 2010 - The government’s decision to use Nu 26 million from the tourism development fund (TDF) as funding to market Bhutan as a tourism destination under the McKinsey plan has led to differences between the association of Bhutanese tour operators (ABTO) and the tourism council of Bhutan (TCB) over the fund’s control and ownership.

According to ABTO, the government has no right to use such a large amount of the TDF fund, which belongs to tour operators. The fund is made up by the USD 10 per tourist levy and the USD 40 dollar surcharge for single travellers and USD 60 dollar extra charge for two travellers. The total TDF fund, according to sources, around late 2009 was around Nu 27 mn.

TCB, on the other hand, is arguing that the TDF levy is a government tax for the benefit for development of tourism in the country and does not belong to tour operators alone.

The issue has been made more complex with the guides association of Bhutan, the home ministry and the handicrafts association also demanding a share of the TDF fund. TCB is also planning to support the hotels association of Bhutan demand for resources to set up their association from the same fund.

The TDF fund was established in around 1999-2000 with USD 25,000 as an initiative to help develop tourism and tourism infrastructure in the country. It is manned by a nine-member committee, five, including the chairman, from TCB and four from ABTO.

“We haven’t been consulted and, as far as we know, the government can’t use the TDF, since it requires the joint signatures of both the DG of TCB and the president of ABTO,” said ABTO executive member, Sonam Dorji.

Both ABTO and TCB have not been able to agree on even the interpretation of the executive order on the use of the Nu 26 mn.

“For us, the executive order means that a part of the TDF fund is to be used to fund a part of the Nu 26 mn for destination marketing and not the whole amount,” said Sonam Dorjee, the general secretary of ABTO.

ABTO has also put forward a formal proposal to the ministry of economic affairs on the fund. “In our submission we’ve asked for clarification on the ownership, because as of now the understanding was that, until the government matches the fund, the ownership is with ABTO,” said Sonam Dorjee.

He said the government had not been able to match the fund provided by tour operators. “The levy isn’t a government tax, otherwise it would be deposited in the exchequer and not in the fund collected from the tour operators’ margin,” he clarified.

ABTO has suggested that 50 percent of the fund be with ABTO and the remaining be contributed to the government’s cultural trust fund and environment trust fund.

A TCB official, on condition of anonymity, said, “The TDF fund belonging to ABTO is a baseless contention. No one except the government has the right to exact a levy and it’s also not a voluntary donation from tour operators.” The officials also said that governments contribution was the 40 dollar surcharge for single travellers and 60 dollar extra charge for two travelers, which would be used to develop tourism and support other associations.

Nu 1.5 mn has already been committed to guides association of Bhutan from 2009-2011; a similar amount has been committed to the hotel association of Bhutan, which wants more.

GAB president Garab Dorji said, “It’s not the tour operators money but a tax levied for tourism development.” He said the money was needed to train and improve quality of guides.

The home minister, Lyonpo Minjur Dorji, said that a major reason tourists came to Bhutan was because of cultur,e therefore the TDF fund should be used to supplement the yet to mature cultural trust fund.

The HAB president, declining to comment on the fund ownership, said that the Nu 1.5 mn was too less to set up the association, it required Nu 3.5 mn.