• Arugam Bay reveals more illegal tourist businesses 

The news of an imminent attack on Israelis in Arugam Bay in retaliation for the ongoing war in the Middle East took the country by surprise when the US and UK diplomatic missions in Sri Lanka issued travel advisories on 23 October.

The US Embassy in Colombo said that it had received credible information warning of an attack targeting popular tourist locations in the Arugam Bay area. Given the serious risk posed by this threat, the embassy imposed a travel restriction on embassy personnel for Arugam Bay effective immediately and until further notice.

“US citizens are strongly urged to avoid the Arugam Bay area until further notice,” the statement read.

Following this advisory, other foreign missions such as those of the UK, Australia, and Russia also updated their travel advisories on Sri Lanka.

However, the Sri Lankan Government said that Indian intelligence had already informed their Sri Lankan counterparts regarding the attack threat and the individuals suspected of plotting the attack, noting that the authorities had taken necessary precautions.

According to the Finance Ministry Mid-Year Fiscal Position Report, earnings from tourism increased notably by 66.1% to $ 2,167 million in the first eight months of 2024 compared to $ 1,304.5 million in the same period in 2023, with increased tourist arrivals from India, the UK, Russia, Germany, China, and France during the period due to the revival of the tourism sector. 

Accordingly, it revealed that tourist arrivals had grown by 50.7% to 1,362,668 persons in the first eight months of 2024, compared to 904,318 persons in the same period in 2023. 

CT CLSA Securities in its tourism sector outlook said that it remained optimistic about the sector’s growth, forecasting arrivals to exceed 2018 levels by 2025E. 

It said that growth in neighbouring economies like India presented further opportunities to attract affluent tourists to Sri Lanka. “Additionally, Sri Lanka can capitalise on emerging markets like Thailand and Vietnam, which are popular among wealthy Indian tourists seeking similar experiences,” the report said.

The news of the potential attack came at a time when Sri Lanka had launched a new promotional campaign in August, titled ‘You Will Come Back for More,’ which aims to attract an additional 700,000 tourists by 2025E, reinforcing the country’s appeal as a travel destination. 

To support this growth, the Government is encouraging investment in tourism infrastructure by offering incentives for developing new resorts and eco-friendly accommodations. 

However, the terror threat brought to light the presence of another set of foreign nationals, following Russians and Ukrainians, who have arrived in Sri Lanka and are engaged in illegal businesses, which has caused tensions over the past few months down south and along the east coast. 

This development indicates that war tourism might be on the rise in Sri Lanka.

Tension caused by Israelis doing business  

In a statement released on 26 October, Sri Lanka Tourism Alliance Chairman Malik J. Fernando recapped: “In early October, Sri Lankan authorities raised an alert on a potential threat in Arugam Bay, a remote village on the east coast popular with Israeli surfers, far from the usual tourist circuits.

“Such security alerts are commonplace globally. Following the alert, security measures were increased, two arrests were made, and no incidents were reported. Authorities are confident in their response.

“The local population in Arugam Bay is predominantly Muslim, unlike the largely Buddhist and Hindu rest of the country. Typically, over 50% of tourists in Arugam Bay are from Israel, many visiting after military service. 

“Tensions arose between residents and tourists due to illegal businesses run by tourists using foreign currencies and issues related to visa overstays, which unfortunately have not been effectively addressed by the State.

“Additionally, the construction of a new synagogue next to a mosque contributed to friction, and the synagogue was provided security as a precaution.”

Despite these tensions, Fernando noted that there had been no history of even minor attacks, with Sri Lanka remaining hospitable to all.

Moreover, he said that local activists had called on social media for a boycott of Israeli-operated businesses in Arugam Bay, which were anyway illegal. “It is currently the off-season in Arugam Bay and hardly any tourists remain,” he had said.

Earlier this week, Minister of Public Security Vijitha Herath said that three persons had been arrested by the Police based on intelligence reports on security threats to Israeli nationals in Sri Lanka. 

“Given the conflict situation in the Middle East, it is our responsibility to ensure the safety of tourists visiting Sri Lanka. Some information has been revealed that there may be potential threats to the safety of tourists who visited Sri Lanka,” he said.

Herath said intelligence agencies had received the relevant information, following which the Government had taken immediate action. 

While many had concerns on the impact this would have on Sri Lanka’s tourism industry, which is still recovering from years of Covid-19 and the economic crisis, the situation has also revealed that apart from Russians and Ukrainians, Israelis are also conducting illegal businesses in the country.

Russians still doing business down south 

Speaking to The Sunday Morning, All Ceylon Small and Medium-Scale Tourism Entrepreneurs Association President Sameera de Silva said a significant number of Russians were engaged in doing business down south, but noted that the number of Ukrainians doing business had decreased, with most of them having been arrested by Immigration officers for working while being on a visit visa.

However, he said most foreigners escaped with little or no punishment since they had the money to spend on lawyers.

He noted that local tourist businesses faced a significant impact due to such illegal businesses and that the former Government had promised to intervene and stop such businesses from operating, which had not taken place.

De Silva said that with the change in government, law enforcement authorities were arresting those operating without permits and visas.

He added that illegal businesses, most of which were operated by Russians and Ukrainians, were exchanging foreign currency and renting vehicles and properties while earning tenfold more than local businesses.

Israelis operate as surfing experts, travel agents

De Silva shared that Israelis in Arugam Bay conducted surfing lessons for foreigners and earned money together with locals.

“They bring in guests and teach them, so it’s difficult for others to see that they are doing a business,” he said.

Further, he said that most Europeans funded the construction of villas down south and in Arugam Bay, thereafter offering them online at a certain price to Europeans, who booked them directly before coming to Sri Lanka, claiming to be friends and families of those who had funded the villa.

“Therefore, Sri Lanka will not receive any foreign exchange since the payments are made before they arrive in the country,” he said.

Addressing the Israelis operating in Arugam Bay, he said that they joined locals who conducted surfing camps, with the Israelis being introduced as their surfing specialists. He added that the Israelis also played the role of travel agents, bringing in tourists under a package while their local counterparts provided accommodation and facilitated sightseeing.

De Silva alleged that although these locals received a certain amount through this transaction, the Israeli who acted as the travel agent received a massive cut. He further alleged that guests who arrived through these packages were also involved in a mafia where they brought drugs into the country.

‘Close illegal biz, deport overstaying tourists’ 

In his statement, Sri Lanka Tourism Alliance Chairman Fernando said that authorities must also shut down illegal businesses and ensure that anyone overstaying a visa was deported, as was the norm in most countries.

He said that the advisory from the US Embassy had been amplified by Israeli media, suggesting that all of Sri Lanka was unsafe for Israelis, which he termed as absurd.  

He noted that the UK had quickly followed suit, issuing a new advisory implying that all of Sri Lanka was dangerous, stating that “terrorists are very likely to attempt attacks in Sri Lanka,” without a shred of additional evidence, merely citing the earlier US alert about Arugam Bay.

“Travel advisories are blunt tools, where diplomats often jump at the slightest ‘intelligence’ to play it safe. For example, the Australian advisory on Germany states: ‘Exercise a high degree of caution in Germany due to the threat of terrorism,’” he had added.

He further noted that the uncalibrated response from foreign embassies displayed callousness towards Sri Lanka and its tourism sector, which plays a critical role in uplifting millions in rural communities still recovering from serious economic setbacks in the recent past.

“What looked to be a promising winter tourism season can now be impacted, as the US advisory is amplified by the UK and subsequent international media coverage. Each booking is vital to Sri Lanka’s recovery,” Fernando had said.

“We are hopeful that prospective guests will see beyond the smoke and mirrors and continue to book Sri Lanka.

“Despite the reckless actions of those with megaphones, Sri Lankans remain hospitable and welcoming to travellers from around the world. If we have been over-hospitable in the past, this should be addressed, and laws enforced to ensure the country and its people are not taken advantage of,” he had further said. 

Law to be enforced fully against illegal biz

Speaking to The Sunday Morning, Sri Lanka Tourism Development Authority (SLTDA) Chairman Buddhika Hewawasam said that many tourists were engaged in business in Sri Lanka, and not just Russians, Ukrainians, and Israelis.

He said that there was an immigration law which prevented tourists from doing business in Sri Lanka. “Tourists are only supposed to engage in tourist activities and not do any kind of work,” he said, adding that the SLTDA had suggested that the law be enforced in the relevant areas where illegal businesses operated.

Hewawasam added that action could be taken against such illegal business, with the immigration law preventing foreigners from working in Sri Lanka without proper permits and visas. However, he added that although the Tourism Act had provisions in this regard, they were not being enacted at the required level for the law to be enforced fully.

He noted that in most of the cases, it was difficult to identify tourists who were engaged in business, as they were doing it together with a local party. 

“There are certain complexities, but we are looking at the process and setting up a plan along with law enforcement agencies,” he said. 

Further, Hewawasam said that the SLTDA was educating certain foreign missions and tour operators on identifying and preventing tourists doing business in Sri Lanka. He added that the law would be enforced in a fully-fledged manner by the end of the year or in the next few months against tourists doing business in the country.

Twofold impact on Lankans

Hewawasam said that there was a twofold negative impact from tourists doing business in Sri Lanka, with one being that it compromised the opportunities available to people.

He said that legal businesses, whether of foreign investors or local tourism stakeholders, were at stake because of such illegal businesses.

“Secondly, it impacts the safety and security of our country,” he said, adding that regulatory aspects of the country’s law could not be enforced against this particular illegal manner of doing business.  

Therefore, he pointed out that this practice was harmful to tourism as well as legal businesses and entities operating in the country. 

Illegal biz could deprive country of revenue 

Speaking to The Sunday Morning, Advocata Institute Chief Executive Officer (CEO) Dhananath Fernando said that with payments taking place outside the country in relation to these illegal businesses operating through foreigners, the revenue estimates obtained from arrival numbers could be higher than the actual numbers.

In Sri Lanka, tourism revenue is estimated based on the average stay of the tourist and the average price of a room.

Moreover, Fernando said if someone arrived on a tourist visa and operated a business in Sri Lanka, it was unfair to local businesses because illegal businesses avoided tax obligations, reducing Government finances while earning high profits.

He said that the regulatory mechanism had to be implemented even if someone wished to start a business as a foreigner, and that they should be allowed to operate according to the legal framework.

He further pointed out that addressing the issue of illegal businesses was a highly sensitive matter in a country like Sri Lanka, given that the country’s economy depended on tourism.