The role of the public and private sectors in investment and financing

Ahmed Majed Badawi Hamza
Supervisor: Prof. Dr. Abd Ali Kazim Al-Fatlawi

The role of the public and private sectors in how to invest and finance is determined in light of the following principles:
Government financing for tourism projects is limited to areas where the private sector does not find a desire or commercial ambition that motivates and encourages it to invest on a large scale.
The state or public sector does not invest in infrastructure projects without a critical tourism need. The private sector investor is not tempted to invest in areas far from cities that will not give a quick and significant return or require vast sums. Here, the public sector must intervene as a pioneer to pave the way for the private sector to facilitate and finance the infrastructure (hotels, cities, and tourist villages paid to start development operations or build specific facilities projects).
The government should bear a share of the burden of investments in public benefits from infrastructure (transportation, transportation, paving roads, power stations, etc.), and the private sector should invest in investments in the remaining sectors, such as accommodation projects, for example, provided that the government’s role is to coordinate with the private sector in the development plan. Governments should encourage the private sector to invest in tourism because tourism and hotel projects generally do not give more than what is not attractive to them, and the government must assist them administratively, financially, or technically. Tourism investment is not a goal in itself. Still, somewhat, it is justified by its direct and general economic benefit due to the large size of this investment in tourism with a vast fixed capital that makes it the most expensive industry. Tourism investment may not necessarily provide the highest and fastest profit in the early stages, but it gives a high return later and after a short period. We must view tourism investment as a necessary means to develop other related sectors of the national economy, and the state is required to assist regardless of the nature and size of the investments. When calculating the return on investment in tourism on the national plan, we must not limit ourselves to limited considerations in direct material and economic profit. Still, we must go beyond them to those positive effects on the general national development plan, where considerations of a non-economic nature are equal to or exceed the purely economic returns. (Abbas, 2017: 13)