Transcript Current State of Tourism Service

Current State of Tourism Services
Sector in Nepal and Ways Forward
Presentation by
Dr. Ramesh C. Chitrakar
[email protected]
Expert 1
At
Second National Stakeholder Workshop on Services
(27th – 28th October 2009)
Co-organized by UNCTAD-Ministry of Commerce and Supplies
Kathmandu, Nepal
October 27, 2009
1
Role of Tourism and Travel-Related Services
Sector of comparative advantage – instrumental in
spreading benefits & providing alternative economic
opportunities
Located between the two fastest growing countries
namely India and China
Endowed with rich and diverse natural resources and
cultural attractions - Incomparable cultural heritage
as well as a rich environmental spectrum from the
highest mountains to the Terai plains.
2
Effect of the Tourism Service Sector on the National Economy
Contributes to the economy (GDP), employment (including women & youth),
foreign exchange earnings.
Helps in meeting MDGs & poverty reduction: Sector with high multiplier and
positive spill-over effects etc.
Three Year Interim Plan (2007-2009): Formulated new plans and policies for
tourism infrastructure development (creating awareness about tourism, developing
skills, expanding tourism activities); improving standards of tourism services; and
undertaking international promotion and marketing.
Tourism Vision 2020 (May, 2009): Valued tourism as the major contributor to a
sustainable Nepalese economy, having been developed as an attractive, safe, exciting
and unique destination through conservation and promotion, leading to equitable
distribution of tourism benefits and greater harmony in society.
The Tourism Vision 2020 also envisaged two goals:
 Increase annual international tourist arrivals to Nepal to two million by 2020,
and
 Augment economic opportunities and increase employment in tourism sector to
one million.
Declared Nepal Tourism Year 2011 as a national campaign looking at the
encouraging trend in 2008 and 2009
3
Market Trends
The opening of Nepal for foreigners: 1949 when Arnold Heim made an
aerial flight over Dhaulagiri, S. Dillon Ripley searched for mountain
quail in Rekcha (Surkhet) and Chainpur (Sankhuawasabha), H. W.
Tilman’s party explored and climbed Lamtang and Ganesh Himal, and
Sutter-Lohner’s expedition made a 99-day alpine trek around
Kanchanjungha
No. of tourists increased since then, but decreased during a decade long
Maoist movement.
Year 2007: re-started to attract more tourists. In the year 2006/07,
tourists visiting Nepal reached 516,000, with foreign exchange earning
of $205 million, average stay 13 days and average spending about $60 a
day.
About 100,000 people directly employed in providing tourism services
while 125,000 indirectly involved.
Economic survey records only the contribution of hotels and restaurants
(2.6% in 2008/09).
4
Table: Number of Tourists by Purpose of Visit
Year
(December)
2000
Pleasure
Trekking & Business
Mountaineering
255889
118780
29454
55.2
25.6
6.4
2001
187022
100828
18528
51.8
27.9
5.1
2002
110143
59279
16690
40
21.5
6.2
2003
97904
65721
19387
29
19.4
5.7
2004
167262
69442
13948
43.4
18
3.6
2005
160259
61488
21992
42.7
16.4
5.90
2006
145802
66931
21066
38.0
17.4
5.5
2007
217815
101320
24487
41.4
19.2
4.6
2008*
152950
100055
23039
30.6
20.0
4.6
Source: Ministry of Culture, Tourism and Civil Aviation
Note: Figures in bold represent percentage share in total
* Estimated
Official
Pilgrimage
20832
4.5
18727
5.2
17783.00
6.50
21967
6.50
17088
4.40
16859
4.50
18063
4.7
21670
4.1
45091
9.0
15801
3.4
13816
3.8
12366
4.5
21395
6.3
45664
11.9
47621
12.7
59298
15.4
52594
10.0
43044
8.6
Meeting &
Seminar
5599
1.2
0
0
0
0
8019
1.5
6938
1.4
Others
Total
17291
3.7
22316
6.2
58907
21.3
111758
33.1
71893
18.7
67179
17.8
72766
19.0
100800
19.2
129160
25.8
463646
100
161237
100
275468
100
338132
100
385297
100
375398
100
383926
100
526705
100
500277
100
5
Growth Rate of Tourist Arrivals by Major Regions
Year
North
America
Central &
South
America
Asia
Western
Europe
Eastern
Europe
Africa
India
other
Total+
Australia
& Pacific
Other
Total
2001
-20.2
-23.7
-17.4
-11.3
-21.8
-32.9
-21.7
-26.5
-16.5
0.0
-22.1
2002
-45.6
-39.8
-33.2
-14.9
-29.1
3.8
-18.7
-9.9
-35.4
0.0
-23.7
2003
8.1
-19.0
8.2
22.3
42.4
29.3
38.8
34.6
14.1
0.0
22.7
2004
10.9
93.3
22.4
18.8
-28.0
4.5
12.7
9.2
13.9
0.0
13.9
2005
-10.4
-18.6
-15.8
7.9
12.1
6.9
4.4
5.4
-24.0
266.2
-2.6
2006
4.9
4.9
4.9
4.9
4.9
4.9
4.9
4.9
4.9
4.9
4.9
2007
29.4
252.1
31.4
197.2
54.0
-4.9
32.9
17.1
86.8
568.1
33.5
2008
20012008
2.8
16.3
-2.2
-23.0
0.1
-5.0
-9.6
-8.2
11.6
25.8
-5.0
0.6
9.8
0.7
10.6
-2.2
0.8
7.5
4.6
3.7
47.3
2.8
Source: Calculated based on Data from Ministry of Culture, Tourism and Civil Aviation
 Growth rate improved for the year 2007, i.e. (33.5%), but could not sustain in 2008 may partly due to
financial recession in the western world and partly because of political conflict within the country.

No time series data for inflows of Chinese tourists. NTB : Chinese visitors (by air) in 2007 increased
by almost 63 percent over 2006 and 7 percent in the first half of 2008 compared to the same period in
2007, indicating the importance of Chinese tourists in the days to come.
6
UNWTO: developed tourism satellite account in 2001
According to the World Travel & Tourism Council (WTTC),
the TSA is based on a demand-side concept of economic
activity
Tourism industry does not produce or supply a homogeneous
product or service like many traditional industries
Diverse collection of products (durables and non-durables)
and services (transportation, accommodation, food and
beverage, entertainment, government services, etc) that are
delivered to visitors
Policy makers to understand that this diversity has many
complex links to different parts of the economy, which makes
the economic impact of tourism so significant
7
WTTC (2008) gives a comprehensive picture about
the economic impact of tourism to Nepal
According to 2008 update, T&T expected to contribute directly
3.0% to GDP in 2008 (NPR20.5 bn or US$318.9 mn), rising in
nominal terms to NPR50.8 bn or US$538.1 mn (3.6% of total) by
2018
Of total exports, T & T is expected to generate 14.8% (NPR16.6
bn or US$257.3 mn) in 2008, increasing to NPR52.1 bn or
US$552.1 mn (14.8% of total), in 2018.
Employment estimated at 548,000 jobs in 2008, 5.3% of total
employment, or 1 in every 18.8 jobs. By 2018, this is estimated to
total 824,000 jobs, 6.2% of total employment or 1 in every 16.0
jobs.
WTTC projection seems to match with 20/20 plan of creating a
total of 1 million jobs.
8
Contribution to National Development Objectives
and Economic Diversification
Contributes to development and poverty reduction in a number of ways.
Not only economic benefits, but also social, environmental and cultural
benefits
In terms of poverty reduction:
 provides employment and diversified livelihood opportunities.
 Reduces vulnerability by increasing the range of economic
opportunities available to individuals and households living in
conditions of poverty.
 Generates taxable economic growth since taxes can be used to alleviate
poverty through education, health and infrastructure development.
Its contribution at micro level is explained in terms of its contribution to
MDG.
One direct contribution is in terms of foreign exchange earnings, which
however, is fluctuating over the years
9
Table: Foreign Exchange Earnings from Tourism
Total Foreign
Exchange
Earnings from
Tourism
As % of Total
Value of
Merchandise
Exports
As % of Total
Value of
Exports of
Goods & Nonfactor Services
As % of Total
Foreign
Exchange
Earnings
As % of
GDP
Growth
Rate
2000/01+
11717
21
12
7.4
2.7
-
2001/02
8654.3
14.9
10.6
6.1
1.9
-26.1
2002/03
11747.7
23.1
15.2
8.20
2.4
35.7
2003/04
18147.4
32.9
20.3
11.40
3.4
54.5
2004/05
10464
17.5
12.2
6.10
1.8
-42.3
2005/06
9556
15.5
10.90
4.60
1.5
-8.7
2006/07
10125
16.1
10.70
4.50
1.4
6.0
2007/08*
10891
26.7
16.6
6.6
1.3
7.6
Year
Average Growth Rate
Source: Economic Survey 2007/08
+ Data based on new format since FY 2000/01
First Eight Mont
3.8
10
Table: Mountaineering Expedition Teams
Number of
Teams
Number of
Mountaineers
Number of
Employment
Royalty
(Rs'000)
Expenditure of the
team (Rs’000)
Year
2000
132
773
11587
119893
498513
2001
112
836
6203
127394
552033
2002
134
913
9928
128185
600000
2003
152
1080
14838
181360
630000
2004
140
1042
9362
127072
494494
2005
128
940
636
156240
400137
2006
133
986
4344
145612
423985
2007
2008
162
1128
4843
169829
966637
8080
239426
-
202
Source: Source: Ministry of Culture, Tourism and Civil Aviation.
11
Contribution to National MDGs
MDGs- agreed set of goals to be achieved by 2015 based on all
actors working together at global, regional and national levels
World's main development challenges: poverty reduction,
opportunities for education, better maternal health, gender
equality, and reducing child mortality, AIDS and other diseases.
International tourism contributes to MGDs by generating benefits
to poor people and poor communities in the context of sustainable
tourism development, usually without specifically targeting the
poor
Targeted interventions to address the issues raised in MDGs also
require that the linkages between tourism and poverty be
identified. Figure 3 illustrates many of these linkages.
12
Figure 1: Linkage between tourism and poverty
Source of Livelihood
Non-farm
livelihood
opportunities
Pro-poor growth
Jobs: employment and
empowerment
Growth and diversification
in marginal or remote areas
Revitalization of local
culture & preservation of
traditional skills
Education and Training
Tourism and
Poverty
Enterprise, development and
micro, small and mediumsized enterprises
Health care, infrastructure
and services
Reduction in isolation
`
Access to markets for
the poor
Source:
Global partnership
for development
Corporate social
responsibility
Sustainable environment
management
Modification of Sheet No 3: Tourism and Poverty Reduction Making the Links, Pro-poor
Tourism Partnership 2004, adapted from UN (2007), Study on the Role of Tourism in SocioEconomic Development.
13
Contribution of tourism to achieving MDGs
Goal
Contribution of tourism
1. Eradicate extreme
poverty and hunger
(a) Tourism stimulates economic growth both at the national and local
levels and promotes the growth of the agricultural, industrial and service sectors;
(b) Tourism provides a wide range of employment opportunities easily
accessible by the poor. Tourism businesses and tourists purchase goods and
services directly from the poor or enterprises employing the poor. This
creates opportunities for micro, small and medium-sized enterprises in which
the poor can participate;
(c) International
and
domestic
tourism
spreads development to poor
regions and remote rural areas of a country that may not have benefited from
other types of economic development;
(d) The development of tourism infrastructure can benefit the livelihood of the
poor through improvement in tourism-linked service sectors, including transport
and communications, water supply, energy and health services.
2. Achieve universal
primary education
(a) The construction of roads and tracks to remote areas for tourists also
improves access for school-age children and for teachers;
(b) Tourism can help local resource mobilization, part of which can be spent on
improvement of educational facilities.
3. Promote gender equality
and empower women
a) The tourism industry employs a high proportion of women and creates
micro enterprise opportunities for them. It promotes women’s mobility and
provides opportunities for social networking.
14
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria
and other diseases
(a) The construction of roads and tracks to remote areas for tourists also improves access to health
services;
(b) Revenues accruing to national and local governments through taxes on the tourism industry can be
used to improve health services and nutrition for young children and their mothers;
(c) Tourism raises awareness about HIV/AIDS issues and
supports HIV/AIDS-prevention
campaigns;
(d) Tourism aggravates the spread of HIV/AIDS (negative effect).
7. Ensure environmental
Sustainability
(a) Tourism can generate financial resources for conservation of the natural environment;
(b) Tourism raises awareness about environmental conservation and promotes waste
management, recycling and biodiversity conservation;
(c) Uncontrolled
tourism
may
generate
negative externalities as a result of pollution,
congestion and depletion of natural resources (negative effect).
8. Develop a global partnership
for development
(a) Tourism
contributes
to
the
socio-economic development of least developed countries,
landlocked countries and island developing countries through foreign exchange earnings and
the creation of job opportunities;
(b) Tourism stimulates the development of the transport infrastructure, which facilitates access to
and from the least developed countries, landlocked countries and island developing countries;
(c) Tourism stimulates internal and external trade and strengthens supply chains;
(d) Tourism promotes the integration of isolated economies with regional and global flows
of trade and investment;
(e) Tourism reduces the burden on government budgets through implementation of public-private
initiatives;
(f) Tourism creates decent and productive work for youth;
(g) Tourism
provides
opportunities
for
bilateral, multilateral
and
sub-regional
cooperation among countries;
(h) Information technologies play an important role in integrating tourism enterprises into
global tourism markets.
Source: United Nations ESCAP, Transport and Tourism Division, Transport Policy and Tourism Section, adapted from UN
15
(2007), Study on the Role of Tourism in Socio-Economic Development
Tourism Regulation
Tourism services regulated by various acts: Industrial Ent. Act, Tourism Act,
2035 (1978) amended in 2053 (1997), the Hotel, Lodges, Restaurants, Bar
and Tourist Guide Rules, 2038 (1981), the Travel and Trekking Agency
Rules, 2037 (1980), the Trekking and Rafting Rules, 2044 (1985), and the
Mountaineering Rules, 2036 (1979).
FITTA 1992: no foreign investment in Travel Agencies, Trekking Agencies,
Water Rafting, Pony Trekking, Horse Riding, and Tourist Lodging.
Opened up foreign investment in travel agency and tour operator service
after WTO membership, but limited to 51%
FDI permitted in hotel industry with government's permission. As per WTO
commitments, up to 80% foreign equity allowed in hotel, lodging services
and graded restaurants.
MOTCA/ Tourism Industry Division: tourism regulator dealing with
registration, licensing, categorization of star hotels, providing facilities and
incentives and monitoring and evaluation.
16
Civil Aviation Authority of Nepal (CAAN): Regulator in aviation since its existence
in December 1998. Three activities: regulation, growth and monitoring. Provides Air
Operator Certificate (AOC) and enters into air service agreements with other
airlines. Out of 35 air service agreements, only 17 have schedule flights at present.
Prior to liberalization in 1993, civil aviation department used to perform such
activities.
Lack of domestic regulation to abide by the WTO commitments is a regulatory
problem. WTO commitments: opened up the travel agency and tour operator service
for foreign investment up to 51 percent of foreign equity capital. Not happened so far
for lack of domestic regulation.
China provided Nepal with the approved tourist destination status since 2001.
However, only three agencies in China known to provide approval for Chinese to
travel to Nepal hindering the free flow of Chinese tourists.
People with international linkages required for tourism promotion abroad. Requires
huge capital investment. Not possible at present as Nepal has not allowed capital
account convertibility so far.
Service Enquiry Point established under the WTO division of the Ministry of
Commerce (See annex ….for detail). At present, there is a coordinating body, which
is represented by 17 Ministries/agencies. However, it is not functioning effectively
for lack of necessary manpower, equipments and activities
17
Potential for Medical Tourism
Broadly defined as provision of ‘cost effective’ private medical care in collaboration
with the tourism industry for patients needing surgical and other forms of specialized
treatment
Potential in Nepal. Will have to consider how to position itself as a medical tourism
provider in the global market.
The New Tourism Policy (NTP) 2008-identified health tourism as one of the
potential tourism products of Nepal
Famous for natural method of treatment: NTP emphasizes to develop Nepal as a
place of traditional Aurveda and naturopathy method for treating diseases with
greater participation of the private sector
As Nepal is equipped with valuable natural, historical and cultural heritage, NTP
also highlights to publicize the importance of post-treatment rest around natural
heritage sites in Nepal - requires infrastructure development with the participation of
private sector.
High altitude sports like cricket may also be included in Nepal’s health tourism.
Qualified doctors, having their master and doctorate degrees from developed
countries with several years working experiences are also available in Nepal.
Medical check up, diagnosis, lab facilities, indoor service, surgery and follow ups
are possible at a very low cost compared to developed countries.
18
Effect of Trade Liberalisation on Tourism
GATS and WTO
 Reforms to achieve higher demands for services began in
1992: Efforts to remove licensing and quota requirements in
imports, reduce tariffs, liberalize investment laws,
restructure the tax system and privatize a number of state
owned enterprises (SOEs)
 Moved towards integration with the global economy:
country’s active participation in numerous international
organizations and trade agreements.
 Nepal’s membership in WTO in 2004. Upon accession,
Nepal assumed a large number of general and specific
commitments.
19
Nepal's Commitments
Broadly, the commitments made by Nepal in the services sector are divided into:
(A) General Commitments:
Extended market access to both imports and exports in a specified manner except a
restriction of providing only US dollar 2000 for Nepalese citizens while going abroad.
Supply of services by an existing foreign supplier will not be made more restrictive than
they exist at the time of Nepal’s accession to WTO.
However, movement of natural person has been made unbound or restrictive except in
the categories of services sales persons, persons responsible for setting up a commercial
presence, and intra-corporate transferees.
In commercial presence, no limitation on national treatment placed on foreign
investments and reinvestments except two conditions, i.e. approval of DOI and
incentives and subsidies provided available to wholly owned Nepalese enterprises only.
The schedule restricts foreigners to buy and sell real estate in Nepal. The present civil
code prohibits selling, mortgaging, gifting or endowing or disposing real estate to
foreigners.
Provide decisions within 30 days of the date of application for investments except
where of environmental impact assessment (EIA) is needed.
20
4 supply of services modes: (1) Cross border supply (2) Consumption
Abroad (3) Commercial Presence (4) Presence of Natural Person, the
commitments made in tourism under each mode are as follows:
Table : Tourism Specific Commitments by Nepal in WTO
Sector or sub-sector
Limitation on Market Access
Limitation on National
Treatment
TOURISM AND TRAVEL
RELATED SERVICES
A.
Tourism and restaurants
Hotel, lodging services (CPC
6411) (star hotels only);
Graded restaurants (CPC
6421-6423)**
B.
Travel agency and tour
operator (CPC 7471)
(1) None
(2) None
(3) None, except only through
incorporation in Nepal and with
maximum foreign equity capital
of 51 per cent for travel agency
and tour operator (CPC 7471)
and 80 per cent for hotel, lodging
services (CPC 6411) (star hotels
only), and graded restaurants
(CPC 6421-6423) **.
(4) Unbound, except as indicated in
the horizontal section.
(1) None
(2) None
(3) None
(4) Unbound, except as indicated in
horizontal section.
Source: WTO, WT/ACC/NPL/16/Add.2, 28 August 2003


Among many commitments under GATS, liberalization of tourism trade is an important one. After WTO
membership, Nepal opened up the travel agency and tour operation services for foreign investment up to 51%
of foreign equity capital.
21
Up to 80% of foreign equity capital allowed for hotels, lodging and graded restaurants.
SAFTA
15th SAARC summit: Head of State underscored the vital
contribution that tourism could afford to the economic
development of the SAARC region.
Agreements made to facilitate the movement of people through
improved travel infrastructure, collaboration in human resource
development, and the promotion of SAARC as a common
destination through public/private partnership and joint
campaigns.
Key elements for tourism growth & environment : Harmonization
of customs procedures, improvement in transit facilities and
improvement in communication systems.
Recognizing this, Nepal also proposed a SAARC tourism board, a
SAARC Visa that allows easy movement of nationals of the
SAARC countries within the Contracting States, and discount on
travel fares for SAARC nations. (Frontline Magazine)
22
Table: Trade in Travel Services
Countries / Region
Export
Export
1995
2005
(US$ million)
25.06
69.70
2581.54
7853.00
210.73
286.49
177.40
131.31
109.64
181.00
225.85
429.06
3330.22
8950.56
53308.50
101111.00
392530.00 679860.00
Bangladesh
India
Maldives
Nepal
Pakistan
Sri Lanka
South Asia
Asia
World
South Asia’s Share in
Asia
6.25
8.85
Import
1995
Import
2005
233.50
996.18
31.40
136.34
446.26
186.38
2030.06
47699.00
379434.00
131.65
6464.00
69.94
163.20
1275.00
314.46
8418.25
93520.00
633784.00
4.26
9.00
South Asia’s Share in
World
0.85
1.32
0.54
*Average annual growth rate (%)
Source: RIS based on IMF BOP CD-ROM 2008
AAGR*
Export
Import
1995-2005
(%)
17.81
-4.36
20.42
54.89
3.60
12.27
-2.60
1.97
6.51
18.57
9.00
6.87
16.88
31.47
8.97
9.61
7.32
6.70
1.33
23
Table: Tourists Arrivals from SAARC Countries, 2008
More than 91,000
i.e. 58% has been
from India,
followed by Sri
Lanka and
Bangladesh, with
tourists visiting
from other SAARC
countries limited to
2 %, implying the
possibility of
increasing tourists
from other
countries as well
S.N.
1.
2.
3.
4.
5.
6.
7.
Countries
Afghanistan
Bangladesh
Bhutan
India
Maldives
Pakistan
Sri Lanka
Total
Number
1,371
20,067
2,662
91,177
491
3,248
37,817
156,833
%
0.9
12.8
1.7
58.1
0.3
2.1
24.1
100.0
24
Constraints to Inter-SAARC tourism
Internal factors: inadequate infrastructure, insufficient
funding of tourism promotion, shortcomings in quality
and efficiency in other sectors like educations, and
health. (CEDA: 2007+ World Bank: 2004)
External factors include among others; immigration
laws, documentation requirements, restriction on
currency movements, lack of transparency, and policies
that work as a disincentive for specific destinations
(CEDA: 2007)
25
SWOT Diagram 1: Prepared by MOTCA, Nepal
Strengths

Unmatched natural products: Mt. Everest, Himalayan range and
eight of the worlds fourteen 8,000m peaks, diverse landscape,
sublime natural scenery, protected areas with diverse flora and
fauna, fast flowing rivers, year-round pleasant weather.

Ultimate adventure destination: Number one destination for
mountaineers and trekkers, white rafting, largest assortment of
aerial, terrestrial and aquatic sports.

Rich Culture: Multi-cultural, multi-ethnic; multi lingual yet
harmonious society; unique Newari architecture of Kathmandu
valley, Limbini and other UNESCO world heritage sites;
Kumari-the Living Goddess; more festival than days in a year;
tourist friendly and hospitable people, diverse cultures in Terai
region etc.

Others: A model of successful peace process, able private
sector, awareness of community level, public-private-people
partnership approach, gateway to the Himalaya region.
Opportunities

Government has placed high priority on tourism

Growing tourism outbound of immediate neighbors

Competitive ground handling costs

Spill over effects from adjoining destinations of India and
China

Growing demand for adventure travel

Sustainability of nature and cultural heritage through tourism
economic development
Weaknesses

Insufficient infrastructures

Inadequate investment in
tourism sector

Limited air connectivity
and weak national carrier

Poor coordination among
different agencies

Weak public-private
partnerships

Scarcity of resources for
massive publicity and
consumer promotion

Tourism patterns limited to
only in a few geographic
areas
Threats

Transitional phase of
political environment

Global terrorism

Cross-border disease

Strong competing
advisories

unfavorable travel
advisories

Global economic downturn

Climate change
Source: GON/MOTCA (2009), Tourism Vision 2020: Tourism for Peace, People and prosperity.
26
SWOT Diagram 2: Prepared by UNCTAD-DITC
Nepal’s Tourism Sector
Strengths
Natural assets
Cultural diversity
Religious sites
4 World Heritage Sites
Acquired image as an adventure and cultural theme tourism
destination
Good service, hospitable nature of the Nepalese people
Expanded air access to major markets
Government promotion of sustainable tourism
Wide array of ecotourism offerings
Opportunities
Strengthen inter-sectoral linkages
Strengthen community-based tourism
Restored in-country stability, safety and security
Restored political stability
Improving tourism and transportation infrastructure and service
New tourism themes: healthcare and educational tourism,
business and conference tourism
Weaknesses
Lagging capacity expansion relative to targeted volume of
tourists
Infrastructure limitations in rural regions: utilities, telecom,
water treatment.
Road network limitations / traffic congestion
Limited capacity of Kathmandu airport to accommodate
growing traffic
Moderate levels of ‘leakage’
Foreign–based local businesses do not repatriate profits
towards Nepal
Lower quality service provided by small restaurants,
guesthouses, taxies
Limited access to new investments and financing
Inadequate safety regulations
Threats
Environmental degradation in high-traffic areas
Increasing incidence of theft and violence targeting tourists
Global economic crisis
Over-development may damage the image of the destination
Competition for land between tourists and local needs
Required spill-ins from other sectors: requires improved supply of services from the transport, financial, ICT, recreation, healthcare,
utilities and security services sectors
Anticipated spill-overs into other sectors: provides improved market for services from the transport, recreations and healthcare
sectors; conservation and improved land management related environmental benefits; expanded offering of infrastructure in tourism
zones; propagation of quality standards to other sectors.
Key stakeholders: relevant government ministries and parastatals; tourism sector firms – hotels, restaurants; transport firms –
airlines, taxies, car-rental; local communities; labour unions; recreation and sports firms and interest groups; advertising agents and
e-tourism suppliers.
27
Source: UNCTAD-DITC-TNCD, Strategies for advancing development of the services sector of Nepal, Draft Version, February 2009.
Points to be re-emphasized
Strengths:
 Rich in natural resources, cultural diversity and religious sites
 Number one destination for mountaineers and trekkers, and other
adventure tourism (rafting, aerial, terrestrial and aquatic sports)
 Tourism is Nepal’s dominant service export
Weaknesses:
 Poor services provided by small restaurants, guest houses and
taxis
 No direct air connection to Europe and very few international
flights having connections to Kathmandu
 Weak national flyer
 Unable to reap benefits from intra-regional tourism
 Failure to provide attractive and incentive packages to travelers
from India and China compared to competing destinations
28
Points to be re-emphasized (Contd…)
Opportunities:
 Adding new tourism products like health and wellness tourism, educational tourism,
community tourism, sporting vacations, ethnic tourism etc.
 Attracting middle income tourists during off season and from non-traditional markets
 Decrease costs through e-tourism
 High prospect of attracting surface travelers in future, both from India and China, with the
opening and development of new tourism destinations on both sides of border
 Prospect of opening new border points like Rasuwa for the Chinese tourists
 Reducing negative environmental impacts for ensuring long term stability of biodiversity
 WTO membership helped integrate Nepal’s tourism services into the global economy,
stimulating development through employment creation, and foreign exchange earnings.
The positive spill over effect of this aided rural development: reducing dependency on
agriculture, distributing the benefits to the population, and boosting GDP growth to reduce
poverty.
Threats:




Lack of political stability and the status quo bureaucratic structure
Political interference and mismanagement in Nepalese airlines
Threat of international terrorism and insurgency within the country in the past
Regular bandas, road blockades, highway obstruction and landslides
29
Policy Recommendations – Ways Forward
Socio-economic and political aspects
Tourism be made free from politics and conflict: Any renewed worsening in the
political situation could again send tourist arrivals into decline
The linkages between tourism and poverty be identified and established as
depicted in figure 1.
Focus tourism on the local or community level and aim at increasing tourism's
contribution to poverty reduction - pay attention to the village tourism like
TRPAP
Trekking and mountaineering tourism – provides royalty income
Emphasis on religious and cultural tourism
Make necessary provision of infrastructure facilities and services (roads,
communications, and health and sanitation services) - designed to benefit local
communities & contribute to the achievement of Millennium Goals 4, 5, 6 and 7
Specific programmes to increase inflows of tourists coming from North America
and India
Travel industry to produce trade surplus - surplus provided up to 2004 tuned into
deficit since 2005.
Introduce TSA developed by WTTC. Also make service sector classification
compatible with SNA 1993 and WTO classification
30
Regulatory and institutional aspects
 MoTCA to improve its Monitoring and Evaluation system
 Airport be opened round the clock. Also need of interagency coordination for working effectiveness of different
agencies operating at the airport
 Formulate domestic regulations to make the country able to
abide by the WTO commitments. Need of strengthening
WTO Reference Centre established under MOCS
 The Service Enquiry Point established under the WTO
division of MoCS be strengthened with necessary
manpower, equipments and activities for its proper
functioning
 Need of further work in implementing and introducing
medical tourism
31
Related to Liberalization: GATS etc.
Nepal’s commitments under GATS in twelve sectors, tourism being one. Need of
a comprehensive service plan in the tourism sector to:





Access Nepal’s capabilities and resources to compete in the global tourism industry.
Find the optimum balance between local and foreign participation in this industry
Access the ability and resource to fight barriers to market access created by other
counties through technical standards, subsidies, discriminatory access to information
and distribution channels etc.
Identify supply constraints created by the lack of human resource, technology, and
quality standards
Develop plans and policies to overcome supply constraints and barriers to market
access
Tourism: industry to have the largest monetary turnover in the world by the year
2020 (Frontline Magazine.), so, trade liberalization constraints in tourism must be
acknowledged and differences between the SAARC nations must be rectified in
order to reap the highest benefit of this growing industry.
Re-examination of the trade policies for enhancing FDI in tourism sector.
Consideration be given to increase the coverage of GATS commitments in
tourism services by scheduling new commitments for food and beverage services,
tourist management services, education and health accommodation services, and
other non-conventional services.
32
Action Plan Matrix
S.N.
Activities
Year I
I
1
2
3
4
Development of service sector database
compatible with WTO classification & SNA
1993
Introduce tourism satellite accounting
Reforming policies and regulations to attract
foreign and domestic investment for tourism
promotion
Make necessary improvements in TIA
including opening it round the clock
II
III
Year II
IV
I
II
III
Year III
IV
I
II
III
Responsible Agency
IV
MoTCA/NTB/CBS & Consultant
MoTCA/NTB/CBS & Donors
MoTCA
MoTCA & CAA
5
Development of mechanism for independent
evaluation of new tourism policy
MoTCA/ NTB & Consultants
6
Expansion of tourism activities in rural and
remote areas
Establishment of attractive incentive packages
for travelers coming from India and China
MoTCA, NTB
7
8
9
10
11
12
13
14
15
Preparation of acts and rules prohibiting
bands& strikes leading to road blockades
Initiation of proper garbage management in
Kathmandu valley
Actions to Increase airlines connectivity
Preparation and implementation of long term
fleet plan of NAC
Capacity building training for service
providers for quality service
Strengthening Service Enquiry point and
WTO Reference Centre
Actions for introduction of new tourism
products like health and wellness tourism
Introduction of e-tourism like CRS and GDS
NTB & Concerned Countries
Ministry of Home
Ministry of Physical Planning and
Works, Kathmandu Municipality
CAA/NAC and Private Airlines
MoTCA/NAC
NTB & Training Institutes/Trainers
MOCS/Donors/ Consultants
MoTCA/ NTB in collaboration with
MoCS & 33
MoH
MoTCA/ NTB