What are the economic importance of tourism industry in souith asia?

Question

What are the economic importance of tourism industry in souith asia?

Answer 1

The Asia and Pacific region will be the focus of the worldwide tourism industry in the new millennium.  Over the last decade, tourist arrivals and receipts rose faster than any other region in the world, almost twice the rates of industrialized countries.  Between 1980 and 1995, tourist arrivals and receipts in the Asia Pacific region rose at an average annual rate of 10% and 15% respectively, higher than any region  in  the  world  (World  Tourism Organization 1996a). Statistics from the World Tourism Organization (WTO) for 1996 show that tourist arrivals and receipts accounted for a 15.2% and 19.4% share of the world's total respectively, a significant increase from 1985 as shown in Tables I and 2 (WTO 1997a). The Asia Pacific region has been gaining market share at the expense of the Americas and European regions, which saw a decline in their respective shares during the same period.  The WTO 1996b) projects that by the year 2010, the region will surpass the Americas to become the world's number two tourism region, with 229 million arrivals. It is an indication that the growth of tourism in the Asia Pacific region in the next decade will be nothing short of spectacular.

Mass travel, which first began in the 1950s  when  millions  of  Americans  and Europeans traveled the world, has blossomed in Asia. The region is now regarded as a major generator and receiver of tourism. A wealthy new middle class of Asians are taking to the skies and joining their European and American counterparts on their pleasure, business, and adventure trips around the globe. The rapid growth of the tourism industry has been attributed to a number of factors including among others, strong economic growth, increase in disposable income and leisure time, easing of travel restrictions, successful tourist promotion, and a recognition by the host governments that tourism is a powerful engine of growth and a generator of foreign exchange earnings.

It is the purpose of this paper to provide a basic discussion of the economic importance of tourism and review the major trends that shaped the growth and development of the tourism industry in the Asia Pacific region.   A comparison of the tourism industry performance will also be made between selected Asia Pacific countries, and with other regions of the world, to highlight the trends and changes.  The definition of the Asia Pacific region in this paper corresponds to the definition used by the WTO which includes North-East Asia, South-East Asia, and Oceania.

Economic Importance of Tourism in Asia Pacific

Tourism is one of the most important sectors in the economies of Asia  Pacific countries. Currently, tourism is the most important sector and major source of foreign exchange earnings in Thailand, Australia, and New Zealand. It is ranked second in Hong Kong, Malaysia and the Philippines, and ranked third in Singapore and Indonesia. For example, in New Zealand, the tourism industry employs more than 200,000 people, with projections of a 14% annual growth till the year 2000 (Chan 1995). In Hong Kong, tourism employs 12% of the workforce and contributes about 7% to the economy (Boxall 1996). The tourism sector in Thailand supports over 1.5 million jobs and contributes 5% to the economy (Asian Business 1996). Tourism is also gaining importance in China. By the year 2000, China expects to receive 55 million visitors with foreign exchange earnings of US$14 billion, which will contribute 5% to China's economy, making tourism one of the most significant components of the national economy (Beria 1996). In Singapore, the healthy overall balance of payments is attributed to the huge surplus achieved  by  the  tourism  sector  which contributes  about  10%  to  the  economy (International Monetary Fund 1996a). Despite Singapore's open economy, and its vulnerability to external shocks and import leakages, tourism has made a significant contribution to output, employment, and income.

Based on 1988 input-output tables, Khan et al. (1995) estimated that tourism contributed 11.9% to Singapore's GDP (Gross Domestic Product) in 1992, while employment accounted for 13.4% of the labor force. The employment effect of a million dollars in tourist expenditures would create 25 new jobs. The results ts showed that every dollar of tourist expenditure would generate S$1.97 of output and S$1.05 in income. The income multiplier for tourism was larger when compared to Hong Kong, Indonesia and Malaysia, while the tourism output multiplier was greater relative to other sectors of the Singapore economy.

Comparisons with previous studies (Schymyck 1983; Toh and Low 1990) showed an increase in the contribution of tourism over time, a strong indication of the significance of tourism in the Singapore economy.  The estimated economic impact of tourism is also significant in South Korea. According to Lee and Kwon (1995), the total impact of tourism receipts of US$4.7 billion in 1993, generated US$11.7 of output, US$2.4 billion in income, and created 350,000 full time jobs. The secondary impacts were also found to have a considerable effect on the economy. The findings suggested that tourism should be promoted as a strategic export industry.

It is no surprise that the key to the success of tourism in the Asia Pacific region is a clear recognition by the host governments of the important role of tourism in the economic development of the country. Tourism serves as an important means to increase economic growth, raise the quality of life, create employment, and improve the overall balance of payments by helping to offset deficits in other sectors. Many Asia Pacific countries show a net surplus in their tourism balance of payment account as shown in Table 3 (WTO 1997a; IMF 1997).  Japan, Taiwan, and South Korea are major tourist generating countries in the region and this is reflected by the deficits in their respective travel balance of payments accounts. Mak and White (1992) attributed the travel account deficits for these high income countries to a higher allocation of disposable income to leisure travel.   The relaxation of travel restrictions in Taiwan also had a significant impact on its travel account, due to the large increase in outbound travel. On the other hand, China, Thailand, and Singapore are major receivers of tourists, enjoying a huge surplus. As a percentage of exports, tourism contributes more than 13/n to the economies of Australia, New Zealand, and Thailand, again reflecting its ranking as the top export. Its contribution to the GDP is significantly greater in Singapore (10%) and Hong Kong (7%).

Almost  all  Asian  nations  are committing substantial manpower and resources to attract more arrivals whose expenditures represent significant contributions to national income and foreign exchange earnings.  For example, Singapore has unveiled a new tourism blueprint titled "Tourism 21" that is expected to turn the nation into a world class tourism business center and the tourism capital of the East.  Plans call for increasing arrivals and receipts by 6.4% and 6.6% annually to 10 million and US$11.4 billion, respectively, by the year 2000 (Boey 1996). Even Indonesia and Malaysia have  raised  their  commitments  towards developing the tourism sector. Indonesia plans to make tourism the nation's number one foreign exchange earner by the year 2004, when arrivals will hit 11 million and receipts reach US$15 billion from current levels of 4.3 million and US$5.4 billion, respectively (Travel Trade Gazelle 1997). In the current Seventh Malaysia Plan, which ends in the year 2000, a number of strategies were formulated to turn tourism into a top revenue earner for the country. Millions of dollars  will  be  allocated  for  tourism infrastructure in an effort to increase arrivals and receipts to 12.5 million and US$6.3 billion, respectively, by the end of this decade (Pacific Area Travel Association News 1996). With increasing competition for the tourist dollar, the national tourism organizations of New Zealand, Thailand, Australia and Hong Kong, among others, have also allocated an increase in tourism funding to tap the emerging tourism markets that promise new income and employment opportunities.



Tourism Growth Factors

A number of factors are responsible for the rapid growth and development of the tourism industry in the Asia Pacific region.  These include the strong economic  growth , increase in income, breakdown of political barriers, easing of travel restrictions, liberalization of air transport, and focused marketing campaigns. These factors are expected to accelerate the growth of tourism over the next decade.

Economic Growth

The rapid growth of the tourism industry is a reflection  of  the  region's  booming  and diversified economies.  Economic growth has ranged between an average of 6% to 9% in the last decade, in contrast to 3% to 4% growth achieved by the rest of the world.  Only the industrialized countries of Australia, Japan, and New Zealand show a lower rate of growth than the rest of the region.  China, which has achieved double-digit growth over the last 5 years, is poised to become one of the world's largest economies and surpass Japan in the next decade. The region is expected to maintain its growth at a rate between 6% to 8% over the next decade (IMF 1996b).

Strong economic growth in Asia is attributed to a focus on market reforms, export oriented industries, stable currencies, diversification of the economy, and massive injection of foreign capital. Billions of dollars are being poured into the tourism infrastructure to accommodate a burgeoning Asian tourism industry. This has intensified trade, investment, and travel within the region and with the rest of the world. Asian governments have also sought to  avoid  extremes  of  inflation  and unemployment, and are keeping budget deficits small or running surpluses. It is no wonde