Tourism can double its contribution to the Philippine economy and job creation, currently at around a tenth of the entire pie, on the back of an accelerated infrastructure spending committed by President Duterte, according to regional investment house CLSA Ltd.
A Jan. 16 research note by Hong Kong-based CLSA senior economist Anthony Nafte titled “Up, up and away: Asean (Association of Southeast Asian Nations) tourism” discussed a “feast” of investment opportunities awaiting the region in the travel and tourism space.
Aside from hotel and resort development, Nafte said diverse sources of investment would include transportation and other infrastructure, security industry and environmental protection as well as niche areas such as medical tourism and retirement destinations.
In the case of the Philippines, Nafte said tourism’s economic contribution of 10.6 percent of gross domestic product (GDP) and employment share of 10.3 percent “could potentially double with stepped up investment.” He noted that the travel and tourism share of total investment in this country was only 2.7 percent in 2015.
“The $23-billion commitment for tourism infrastructure during Duterte’s six-year term, 1.3 percent of GDP in 2017 and in 2018, would complement rising private investment,” Nafte said. Quoting Japanese gaming tycoon Kazuo Okada—whose $2.4-billion Manila casino resort complex opened in December—the economist said this was aimed at turning the Philippines into “the next Hawaii.”
The CLSA economist said Mr. Duterte’s diplomacy with China could be rewarded with rising Chinese tourists lifting their share of total arrivals from only 12 percent at present. At the same time, he said the country was not ignoring other avenues, notably efforts to sustain tourism flows from Korea, which had the biggest share of arrivals at 25 percent.
“President Duterte’s political realignment of the Philippines, distancing from the US and moving closer to China, is high risk but has economic benefits. Along with rising Chinese tourist arrivals, there is the prospect of Chinese funding of tourism projects,” Nafte said.
“The drawback of this strategy though, is that future political conflicts with China could disrupt tourism revenues. This reinforces the argument for tourism policy to have a multiple focus, rather than the exclusive objective of attracting more Chinese tourists,” he added.
The research also took note of the Philippines as a “nice place to retire.”
Nafte said promoting the Philippines as a retirement haven by offering a special visa for indefinite stay and multiple entry was an interesting angle. He especially noted the minimum age requirement for the retiree visa at only 35 years.
Across the region, the CLSA research said the outlook for tourism was boosted by the report of increasing global passenger traffic in late 2016. The International Air Transport Association (IATA), while recognizing risks (not least terrorist threats), was hopeful of a sustained uptrend through 2017. CLSA said Asia-Pacific, with its high share of air travel demand, would be well placed to benefit.
“Emerging Asean’s prospects will ultimately rely on tourist-friendly policies, efficient implementation of tourism infrastructure and facilitated access for foreign investment in tourism projects,” Nafte said.
Within the region, Thailand was cited as a “global success” in tourism expansion, ranking sixth highest in international tourism receipts with $45 billion in 2015. Last year, tourism contributed more than 20 percent of Thai domestic output, driven by the estimated 33 million foreign tourist arrivals in 2016. In 2012, the Chinese hit movie “Lost in Thailand” introduced Chinese tourists to the attractions of Thailand, lifting Chinese arrivals from 1.7 million to an estimated 8.9 million in 2016, the CLSA research pointed out.
“Other countries will strive to emulate Thailand’s success in attracting Chinese tourists. This is rational given China’s top global ranking for international tourism expenditure, $292 billion in 2015 from 127.9 million tourist departures. Even so, strategy should be broadened beyond China,” the economist said.
For now, the research pointed to Indonesia and the Philippines having fallen short of their tourism potential. “Efficient implementation of tourism infrastructure with easy access for foreign investment in tourism projects would turn this around, generating a tremendous number of jobs and shoring up the balance of payments.”