5 Impediments to International Tourism

An Exploration of Issues in Five APEC Economies

Stephen L. J. Smith

Introduction

Tourism historically is one of the fastest growing economic sectors, but its growth cannot be taken for granted. Events such as terrorist attacks, the outbreak of SARS, and the Indian Ocean tsunami can quickly cause a tourism recession in affected destinations. The impacts of these recessions rapidly ripple throughout an economy, affecting businesses and their employees in tourism and non-tourism industries. However, tourism is affected not just by dramatic events but by day-to-day, systemic impediments to its growth. Many such impediments may be taken for granted because they have either emerged slowly in response to non-tourism issues or were implemented years ago without due consideration for their impact on tourism. Nonetheless, their effects on the ability of tourism enterprises to compete and grow as well as on their effects on the ability of private individuals to travel internationally should not be ignored.

Tourism often is a favoured economic development strategy because of its ability to quickly stimulate income and employment growth, foreign exchange earnings, and government revenues through fees and taxes (UNCTAD, 1998). Tourism not only generates jobs at a higher rate than most other sectors, it is an important source of jobs for new workers and those with minimal skills. The multiplier effect (indirect and induced economic effects) tends to be greater than that of many other sectors. Tourism diversifies economies and stabilizes against fluctuations in other exports, especially manufacturing. On the other hand, the benefits of tourism can be reduced through leakage created by the need to import services or goods, international marketing costs, interest payments on foreign loans, and the payment of franchise or management fees to foreign companies. Leakage is a particular problem for small and developing economies, although it exists in every economy that is open to international trade. Fortunately, leakage tends to decrease over time as an economy develops and domestic sources of goods and services increase. National governments sometimes impose restrictions on the outflow of capital or profit to multinational corporations as a way of reducing leakages as well.

Tourism is highly dependent on infrastructure, not just utilities on which every industry depends, but also virtually all modes of transportation and communication. The sector is strongly influenced by a wide range of government services, from border-crossing formalities to the provision of information. Although tourism is dominated by small and medium-sized enterprises and is supposed to be based on the personal contact implicit in hospitality, the Internet and e-commerce are profoundly reshaping the delivery of tourism information and services.

Tourism is particularly susceptible to external threats. For example, the war in Iraq depressed demand for some international travel, and the rising cost of fuel pushed a number of international air carriers, especially in North America, to the brink of bankruptcy. SARS dramatically affected tourism in a number of nations, particularly Singapore, China, Taiwan, and Canada. The Canadian Tourism Commission (CTC) estimated that SARS resulted in a loss of 662,000 room-nights in April 2003 alone, representing a loss of CA$92 million (CBC News, 2003). The CTC further estimated that SARS and the war in Iraq cost the global airline industry US$5 billion and 6.5 million jobs. More recently, a study by Oxford Economic Forecasting suggested that the impact of the December 2004 tsunami is expected to approach US$3 billion in 2005 and cost around 250,000 jobs (WTTC 2005).

A factor contributing to this vulnerability is that tourism depends on both consumers (private households) and businesses. Thus, anything that affects spending patterns of either source may have a significant impact on tourism demand. Consumers are sensitive to reports of crime, social unrest, and war as well as health or environmental hazards, such as earthquakes and volcanic eruptions. Even weather conditions can significantly affect demand, from typhoons to snow droughts. When conditions in one destination divert visitors, visitors tend to shift to another destination rather than cease travelling.

Business tourism demand is closely linked to the health of the economy in the originating country. Research in Canada, for example, has found that overall tourism demand follows economic cycles but magnifies them by about 40 per cent. In other words, when the economy grows by 1.0 per cent, tourism demand grows by about 1.4 per cent; similarly, when the economy shrinks by 1.0 per cent, tourism demand falls by 1.4 per cent (Wilton, 1998).

In brief, the growth of international tourism depends on healthy economies in origin and destination markets, political stability, freedom from disasters, and the existence of globally efficient logistics supporting transportation, telecommunications, financial flows, accommodation, food services, and other tourism-related services. Government policies, including those governing border crossings, foreign direct investment, access to foreign workers, and the movement of capital, are also key elements in the growth of tourism.

However, impediments and barriers exist in every country that restricts the potential of individuals to travel and the ability of tourism-related businesses to succeed. Working to reduce impediments, where possible, is a goal of the Asia-Pacific Economic Co-operation (APEC). This paper identifies and examines examples of such impediments in five economies.

APEC and Tourism

APEC is a multilateral forum, established in 1989, and composed of 21 member economies (the term ‘member economy’ is used instead of ‘nation’ because of the inclusion of Chinese Taipei, Hong Kong, and the People’s Republic of China in the APEC membership) with borders on the Pacific Ocean. Its member economies are Australia; Brunei Darussalam; Canada; Chile; Chinese Taipei; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; People’s Republic of China; Peru; Republic of the Philippines; Russian Federation; Singapore; Thailand; United States of America; and Viet Nam. APEC works to facilitate economic growth, co-operation, trade, and investment in the Asia-Pacific region through non-binding commitments, dialogue, and mutual respect for the views of all participants. It differs from the World Trade Organization and other multilateral trade organizations in that no treaty obligations are required of its participants. Decisions made within APEC are reached by consensus and commitments are undertaken on a voluntary basis.

A key initiative of APEC is the ‘Bogor Declaration’, which calls for free and open trade and investment in the Asia-Pacific region by 2010 for industrialized economies and 2020 for developing economies. Specifically, the Declaration calls for efforts ‘to continue to reduce barriers to trade and investment to enable goods, services, and capital to flow freely among our economies’ (APEC, 1994, p. 5). Much of the work on the Bogor Declaration has been assigned to a series of working groups within APEC. One of these, the Tourism Working Group (TWG), has been charged with working to formulate strategies that will improve tourism movements and investment in the Asia-Pacific region. To do so requires an understanding of the nature of current impediments to tourism movements and investments in individual member economies (APEC, n.d.).

In 2000, the APEC Tourism Ministers’ meeting in Seoul, Korea, adopted the APEC Tourism Charter that includes four goals of key deliverables for the tourism sector. Table 5.1 summarizes the four goals as well as the key strategies to be pursued in fulfilling each goal.

The first two of these goals directly address the challenge of removing or reducing impediments, and thus the focus of this research was guided by these two goals.

Each member economy of APEC is expected to develop an individual action plan to identify steps for reducing and for removing specific impediments to tourism. The majority of economies have developed such plans, although the level of detail is sometimes quite limited. Moreover, progress in implementing the action plan generally tends to be slow and sporadic because most initiatives require co-ordination among two or more government agencies, adequate financial resources, and possible partnerships with a highly fragmented tourism sector. This project, aimed at identifying impediments in five economies, was seen as an effort to invigorate progress on reducing impediments.

Methods

A 1996 study on tourism impediments (Dain Simpson Associates, 2003) examined impediments in six member economies and resulted in the compilation of a summary matrix of impediments to tourism in co-operation with the Tourism Authority of Thailand on behalf of the TWG. In 2003, the TWG subsequently decided to extend the analysis by examining five more economies and by updating the tourism impediments matrix. A call for volunteer economies was issued to members, with the desire to have a diverse set of economies participating. Five members offered their co-operation: Canada, Chile, Indonesia, Peru, and Philippines.

These participating economies represent a mix of economies although all are market-driven to varying degrees. The relative importance of international tourism in each varies, with the spectrum ranging from Chile as an economy in which international tourism is a relatively new and minor part of the economy, to Canada in which international tourism is well-established and constitutes a significant contributor to Canada’s GDP. Moreover, they represent different geographic regions within APEC: North America, South America, and Southeast Asia. It should be noted that although these members are diverse in terms of the importance of tourism, the size of their economy, and the nature of their tourism attractions, they are not intended to be a representative sample of all APEC member economies. Rather, they were selected as case studies because of the willingness of representatives of the tourism ministries in each government to participate in the project.

Table 5.1 APEC tourism goals and associated strategies

Goal	Strategy
1. Removal of impediments to tourism business and investment	• Promote and facilitate productive investment in tourism and associated sectors • Remove regulatory impediments to tourism business and investment • Encourage liberalization of trade in services related to tourism under GATS
2. Increase the mobility of visitors and the demand for tourism products in the APEC region	• Facilitate seamless travel for visitors • Enhance visitor experiences • Promote inter- and intra-regional marketing opportunities and co-operation • Enhance the safety and security of visitors • Encourage non-discriminatory approaches to the provision of visitor facilities and services
3. Sustainably manage tourism outcomes and impacts	• Demonstrate an appreciation and understanding of our natural environment and seek to protect that environment • Foster ecologically sustainable development opportunities across the tourism sector, particularly for small and medium-sized enterprises, employment, and provide for open and sustainable tourism markets • Protect the social integrity of host communities with particular attention to the implications of gender in the management and development of tourism • Recognize, respect, and preserve local and indigenous cultures, and the local and natural cultural heritage • Enhance capability-building in the management and development of tourism
4. Enhance recognition and understanding of tourism as a vehicle for economic and social development	• Harmonize methodologies for key tourism statistical collections, consistent with activities of other international tourism organizations • Facilitate the exchange of information between economies on tourism • Promote the comprehensive analysis of the role of tourism in member economies in promoting sustainable growth • Expand the collective knowledge base of tourism issues to identify emerging issues and assist in the implementation of the APEC Tourism Charter

Adapted from Asia-Pacific Economic Cooperation (n.d.)

The project proceeded through a series of steps:

Reviewing an inventory of impediments previously compiled by the Tourism Authority of Thailand.

Contacting officials in the tourism ministries in the five member economies to request detailed information on their perceptions of tourism impediments.

Interviewing, in person, key government and industry representatives.

Conducting workshops with industry representatives to identify and discuss impediments from their personal perspectives and experiences.

Summarizing findings from the above steps and having them reviewed by representatives from the respective tourism ministries to correct any factual errors.

Developing specific recommendations for individual action plans, in consultation with representatives from each member economy, on steps to reducing or removing the impediments. (It should be noted, though, this aspect of the project is not described in this paper due to space limitations.)

Developing general recommendations for collective action by APEC members to reduce impediments.

The Nature of Impediments

The 1996 report on tourism impediments defined tourism impediments as:

Any factor, real or perceived, such as a regulation, capacity constraint, policy, or operating practice that limits the growth of tourism to or within the APEC Region.

(Dain Simpson Associates, 2003)

These include constraints that limit the freedom of the individual to travel to or from economies within the region, or that affect their decision to travel to economies in the region.

They also include those factors that limit the operation, promotion, establishment, or development of tourism-related businesses within the APEC region. These include constraints such as infrastructure capacity, regulatory environments, the financial system, the labour market, the marketing and promotion network, and the introduction of technology (Dain Simpson Associates, 2003).

While this definition and the associated examples provided a useful starting point, the definition needed to be refined for this project. Specifically, the definition potentially includes conditions that industry might perceive as impediments but that reflect legitimate government policy priorities, such as environmental restriction on development in sensitive environments. Thus, the definition was operationally modified to focus on factors that governments might be able to and wish to address through policy or regulatory initiatives, including actions aimed at improving potential visitors’ perceptions of safety and security.

Findings

Despite the differences in the details of the social, political, and economic environments of the five member economies, the impediments identified reflect a relatively small number of themes. The following section summarizes these themes. More detailed information on the impediments in each of the five economies can be found in Table 5.2.

Tourism-Related Policies and Regulations

Many impediments and issues cited in Table 5.2 reflect national policy decisions that usually are taken in a context broader than just tourism itself. Nonetheless, these decisions can have a substantial impact on a nation’s tourism sector, either in terms of the ability of visitors to enter or leave the country, or of tourism-related businesses to succeed. These include:

Visa policies are often implemented on a ‘reciprocal’ basis, in which one government adjusts its visa policies to match those of another government. While some visa requirements have eased in recent years (Indonesia, for example, now makes it possible to apply for and obtain a visa upon arrival at Jakarta’s Soekarno-Hatta Airport), tighter regulations imposed by the US have resulted in many member economies increasing their requirements for US citizens. Further, Canada has modified its list of nations whose citizens must have visas to enter Canada to conform to the list of the US.

Table 5.2 Summary of impediments to tourism in five APEC member economies

CANADA
Impediments to individual travel
Impediment	Comments
1. Visa requirements	• All visitors to Canada require a visa, except those from 58 countries and administrative jurisdiction that have been granted exemptions.
2. Limitations on travel abroad	• No restrictions.
3. Foreign exchange (inbound)	• No restrictions, except cash or equivalent over C$10,000 must be declared.
4. Foreign exchange (outbound)	• No restrictions, except cash or equivalent over C$10,000 must be declared.
5. Customs or barrier controls	• Visitors entering from the US may expect lengthy delays due to security concerns. • Some restrictions on import of foodstuffs and plants. • Local officers have significant discretion in enforcing regulations.
6. Departure taxes	• Many airports impose airport improvement fees; these vary by airport.
7. Other fees and charges	• Federal government imposes a C$12 air security charge to all airline tickets sold in Canada. • C$40 fee for air traffic control.
Impediments to the operation of tourism-related businesses
Impediment	Comments
8. Business licences and approvals	• Environmental planning and development laws and regulations at three levels of government (local, provincial, and national); these are not specific to tourism. • Tour operators (including wholesalers, retailers and consolidators), hotels and travel agents are licensed under provincial legislation. • Provinces and territories set residency and citizenship requirements for owners of corporations. • Food service establishments are subject to local inspection and approval regarding sanitation. • Most businesses (not just tourism) are also subject to local fire regulations and inspections.
9. Import policies	• Non-discriminatory.
10. Foreign investment (business)	• Investment Review is generally required for acquisitions of interests by WTO investors in Canadian businesses with total assets exceeding a threshold set every year; exceptions exist for certain sectors. • Special requirements exist for acquisitions of a cultural business. Investment in Canadian airlines is limited to no more than 25 per cent of assets of the airline. • Direct acquisition of a business involved in providing transportation services with assets of C$5 million or more must be approved by Transport Canada. • Indirect acquisition of transport businesses with assets of $50 million or more or with assets between C$5 million and C$50 million that represent 50 per cent of the total international transaction must be approved. • The acquisition of transport businesses working in a federally regulated area with annual gross sales in excess of C$10 million must obtain approval from National Transportation Agency. • Investments must demonstrate ‘net benefit’ to Canadian economy.
11. Foreign investment (property)	• Some provincial regulations restrict purchase of farmland or shore frontage by non-residents, or give priority to provincial residents in the acquisition or leasing of public lands. • Some provinces impose additional land transfer taxes on foreign purchasers.
12. Taxes and charges	• In general, taxed at rates similar to other Canadian industries. Tourism refund scheme allows refunds on GST. Foreign owners face differential land transfer taxes.
13. Foreign exchange controls	• No restrictions.
14. Repatriation of profits or capital	• No restrictions, but subject to withholding tax on interest and dividends.
15. Employment	• Temporary residence for the purpose of employment is subject to approval by the Department of Human Resources and Skills Development Canada. Decision on approval of work permit is based, in part, on whether qualified Canadians are available to perform job. Temporary residence visa is also required. Intra-company transferees working as managers or executives or with specialized knowledge and citizens of Chile, Mexico or US do not need work permits. • Restrictions on posting foreign tour leaders in Canada.
16. Import of promotional materials	• No restrictions.
17. Other	• Proposed regulatory changes to on-duty and driving hours for motorcoach drivers coming into Canada will deter tour operators from developing Canadian itineraries for the US market. • Rising insurance rates are limiting to ability of tourism businesses to create new competitive experiences for the international market. Some businesses are operating with reduced insurance coverage, which exposes them to potential bankruptcy in the case of a major claim. • Airline restructuring has led to reduced air capacity between Canada and some offshore markets as well as difficulties for international passengers to easily book affordable air transportation between gateway cities and other destinations.
CHILE
Impediments to individual travel
Impediment	Comments
1. Visa requirements	• Visas are required for citizens of Guyana, Haiti, Dominica, Cuba, Kuwait, Egypt, Saudi Arabia, United Arab Emirates, most African nations and most Eastern European nations. • Citizens of Australia, Canada, Mexico, and the US are charged an ‘administration fee’ equal to the cost of visa applications by Chilean citizens in those nations.
2. Limitations on travel abroad	• No restrictions.
3. Foreign exchange (inbound)	• No restrictions.
4. Foreign exchange (outbound)	• No restrictions.
5. Customs or barrier controls	• Import of some goods prohibited for bio-security reasons.
6. Departure taxes Impediments to the operation of tourist-related businesses	• US$26 at airports, added to price of ticket.
Impediments to the operation of tourist-related businesses
Impediment	Comments
7. Business licences and approvals	• Municipal patent required for all businesses. • Some environmental regulations affecting developments in agricultural and rural areas and near national parks. • Lengthy delays and high rejection rates for proposed concessionaire activities in national parks. • Rigid legislation governing hours of work, including tourism businesses.
8. Import policies	• Non-discriminatory. Tariffs generally low or non-existent.
9. Foreign investment (business)	• No restrictions.
10. Foreign investment (property)	• No foreign ownership of land within specified limits of the frontier and coast. • Land on Easter Island (Isla de Pasqua) may be owned only by indigenous population.
11. Taxes and charges	• Foreign visitors are charged higher fees than Chilean citizens in national parks.
12. Foreign exchange controls	• No restrictions.
13. Repatriation of profits or capital	• No restrictions on repatriation of profits. • Capital repatriation allowed after one year.
14. Employment	• 85 per cent of employees of professional service firms must be Chilean. • 85 per cent of all other firms with 25 or more employees must be Chilean. • Foreign employees must have work visa and valid contract.
15. Import of promotional materials	• No restrictions.
16. Other	• Multiple public sector agencies are involved in tourism planning, development and marketing, with no central co-ordination. SERNATUR lacks authority to ensure co-ordination and to reduce overlap and inefficiencies among multiple national government tourism initiatives. • Budget and staffing levels for SERNATUR are insufficient to exploit significant marketing opportunities or to meet rising policy and planning demands, including co-ordination of strategic product development. Inadequate research on economic contributions of tourism, effectiveness of marketing campaigns and basic market research. • The level of awareness of Chile in potential key international markets is low to nil; the country lacks a strong brand image. • Many national parks are effectively closed to tourism due to concern over environmental impacts. Eco-tourism development is weak and unco- ordinated, and not a priority for the National Forestry Corporation (CONAF). • There is a general lack of awareness of the importance of tourism in government, industry and the general public. Chile does not view itself as a destination country, nor place emphasis on providing good quality tourism services at a competitive price. • The quality of human resources in tourism, especially but not exclusively tour guides, is poor.
INDONESIA
Impediments to individual travel
Impediment	Comments
1. Visa requirements	• Reduction in number of countries offered visa exemptions reflecting both heightened concerns for security as well as the imposition of visa requirements on Indonesian visitors to other countries (reciprocal treatment). • Allowable stays for most visitors cut from 60 days to 30 days. • Staffing shortages limit locations where foreign residents can apply for visas; a particular concern in China, where applicants must go through Beijing Embassy only.
2. Limitations on travel abroad	• No formal restrictions, but pre-payment of income tax required: Rp 100,000 for departure from seaport, Rp 250,000 for land crossings, and Rp 1,000,000 by air.
3. Foreign exchange (inbound)	• No restrictions, but amounts over Rp 5,000,000 per person must be declared.
4. Foreign exchange (outbound)	• Persons carrying over Rp. 10,000,000 must have Letter of Permission from Central Bank.
5. Customs or barrier controls	• Imports of more than 200 cigarettes, 50 cigars or 100 grams of tobacco, and more than one litre of alcoholic beverages require payment of duties. • Some import quarantine restrictions on plant and animal products.
6. Departure taxes	• A passenger airport services fee of Rp 100,000 is levied by the airport authority for international travellers and from Rp 9,000 to 20,000 for travellers on domestic routes.
Impediments to the operation of tourist-related businesses
Impediment	Comments
7. Business licences and approvals	• All corporations offering tourism services must be licensed by local government. Approval process is lengthy. • Activities seen as against morals, religion, security and public order, such as casinos, are prohibited.
8. Import policies	• Some limitations on importation of capital goods and other goods locally available; subject to 10 per cent VAT, 10 per cent duties and possibly luxury tax up to 75 per cent.
9. Foreign investment (business)	• Foreign direct investment may be made up to 100 per cent foreign ownership in hotels and resorts in selected regions (Eastern part of Indonesia, Kalimantan, Bengkulu, Jambi and Sulawesi). The number of tour operators and travel agencies in Jakarta and Bali is limited to 30. FDI must be divested to Indonesian interests within 15 years of commencement of commercial operation.
10. Foreign investment (property)	• Indonesia does not recognize the concept of freehold land right, although certain rights to use land are recognized.
11. Taxes and charges	• 10 per cent VAT on imports, manufactured goods and most services. • 10 per cent to 75 per cent sales tax on luxury goods.
12. Foreign exchange controls	• Amounts over Rp 5,000,000 being brought in must be declared. Amounts over Rp 10,000,000 being removed must have Letter of Permission from Central Bank.
13. Repatriation of profit or capital	• Payments of dividends, interests, royalties and technical & management fees for services performed in Indonesia to Indonesian and non- Indonesian residents are subject to with-holding tax: – Payment to Indonesian residents (except for technical and management services @ 6 per cent) is 15 per cent. – Payment to non-Indonesian residents is 20 per cent.
14. Employment	• Employment of foreign operational directors, managers, experts and specialized workers is permitted only if Indonesians are not available or qualified to fill these positions or jobs. • An expatriate wishing to take up or continue employment in Indonesia must possess a work permit. Expatriates who hold the post of director must also possess work permits. • FDI joint venture companies must either provide approved training or pay US$100/month/foreign employee to Department of Manpower to support training programmes. • Every foreign expert or expatriate who has worked in Indonesia for 5 years must leave Indonesia and re-apply from outside the country to extend his or her stay beyond 5 years.
15. Import of promotional materials	• Duty is charged on brochures, leaflets, catalogues and promotional materials worth more than US$1,000. • Importation of samples and models is limited to three pieces for display only and must be re-exported; no motor vehicles are permitted.
16. Other	• Media stories and some nations’ travel advisories exaggerate the degree of risk associated with travel in Indonesia. • Foreign investors appear still to be uncertain about long-term political stability. • Limited internal domestic air connections. • Poor quality service in some sectors (such as taxis) and a lack of skilled labour in many industries.
PERU
Impediments to individual travellers
Impediment	Comments
1. Visa requirements	• No visa required for citizens of Western Europe, Asia, South or North America, Australia, New Zealand and South Africa. • Citizens from China, North Korea, Iraq, India, Cuba, Sri Lanka are required to apply for visas. • The visa costs US$14 for personal visitors and US$31 for business visitors – good for 90 days and renewable for up to 90 days. • Tour groups can receive their visas from the Consulates of Peru abroad (processing time: 10–15 days), while individual travellers have to apply for their visas from the Ministry of Interior. • Diplomatic passport holders can obtain their visas from the Ministry of Foreign Affairs.
2. Limitations on travel abroad	• No limitations, except for the passport processing fee of US$15 plus US$40 tax intended to protect children in Peru.
3. Foreign exchange (inbound)	• No limitations, except cash or equivalent over US$10,000 must be declared.
4. Foreign exchange (outbound)	• No limitations.
5. Customs or barrier controls	• Border controls and checks imposed to restrict exports of flora and fauna; Restrictions on exports of cultural artifacts more than 50 years old. • The National Institute of Natural Resources under the Ministry of Agriculture also imposes some restrictions on imports of agricultural products (such as seeds, vegetables and fruits) that may be brought to Peru by individual travellers.
6. Departure taxes	• US$28.24 for international travellers for airport use and infrastructure. • Additional US$15 charged for international travellers and US$3.50 for domestic travellers.
Impediments to the operation of tourism-related businesses
Impediment	Comments
7. Business licences and approvals	• Foreign investment approval can be obtained at the national level, but business licences are issued at the local level. It usually takes about 1–2 months to complete the approval and licensing process. It may take longer if archaeological sites are involved, in order to protect the sites.
8. Import policies	• 10–15 per cent tariffs plus 19 per cent sales tax on imported products; 30–40 per cent excise tax on liquor and cigarettes. • Customs officials have limited English and lack of knowledge about duty-free goods from Ecuador and other Andean member countries.
9. Foreign investment (business)	• No particular restrictions on foreign investment, except for 40 per cent ownership for foreigners in TV, newspapers and other cultural products. • For LAN Peru, foreigners can invest up to 49 per cent at the beginning; after six months, the foreign share can increase up to 70 per cent. • Foreigners are allowed to live in Peru if they bring a minimum of US$25,000 and create at least five jobs for Peruvians. • No casinos in hotels under 4-stars or restaurants under 5-forks.
10. Foreign investment (property)	• Foreigners are not allowed to buy property less than 50 kilometers from the border for security reasons. • Some restrictions also apply to agricultural land for conservation purposes. • Land occupied by indigenous people is protected – foreigners are allowed to lease or rent the land only.
11. Taxes and charges	• 19 per cent taxes on air tickets and train tickets. • VAT free for foreigners for hotels/lodging. • High airport landing fee.
12. Foreign exchange controls	• No restrictions
13. Repatriation of profits or capital	• No restrictions, but subject to financial transaction tax which stands at 0.1 per cent in 2004. The rate may drop to 0.08 per cent in 2005, then to 0.06 per cent in 2006.
14. Employment	• Up to 20 per cent foreign workers can be brought in and employed in any business establishments, including tourism-related businesses.
15. Import of promotional materials	• No restrictions on tourism promotional materials, but they are subject to import duties unless exempted.
16. Other impediments	• Safety and security concerns of travellers in Peru. • Lack of stability of financial capacities of airlines in Peru. • Environmental protection of tourism resources is weak. • Lack of English-language skills among immigration and customs officials, National Agriculture Sanitary Services Employees and other tourism front-line workers
PHILIPPINES
Impediments to individual travel
Impediment	Comments
1. Visa requirements	• Visas are generally not required to enter the Philippines for up to 21 days. Multiple entry visas permitting longer stays are available but are among the most expensive in the ASEAN region.
2. Limitations on travel abroad	• No restrictions. Filipinos going abroad must present documents, including passport, visa and work contracts/permits for examination to determine authenticity.
3. Foreign exchange (inbound)	• No restrictions. Foreign travellers may bring in any amount of foreign currency. However, amount exceeding US$10,000 must be declared.
4. Foreign exchange (outbound)	• For residents, written declaration of the funds’ source and purpose of use is required to bring out foreign currency more than $10,000 or its equivalent. • Non-residents may purchase foreign exchange from commercial banks only with proof they have previously sold the same amount to a bank for pesos. • At airports or other ports of exit, departing non-residents may reconvert unspent pesos of up to a maximum of US$200 without proof of previous sale of foreign exchange to banks. • No person may bring in or out of the country Philippine banknotes, coins or checks exceeding PhP 10,000 without authorization by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines). • Foreign exchange may be freely purchased outside the banking system.
5. Customs or barrier controls	• No more than two cartons of cigarettes or two tins of pipe tobacco and up to one litre of alcohol may be brought in. • Some import quarantine restrictions on plant and animal products. • Removal of antiques or national treasures must be approved by National Museum.
6. Departure taxes	• Terminal fee of PhP 550. • Travel tax of PhP 1,620 for Filipinos travelling abroad.
Impediments to the operation of tourist-related businesses
Impediment	Comments
7. Business licences and approvals	• No discriminatory licensing for tourism businesses, but there is a lack of standards in procedures. • Licensing typically involves multiple approvals and can take up to six months.
8. Import policies	• Many tourism business operators still need information on liberalization. • Some high tariffs and customs approvals still exist on products used in tourism such as beef, wine, motorcoaches.
9. Foreign investment (business)	• Foreigners may not invest in small retail businesses (capitalization under US$2.5 million). • Foreigners can invest up to 100 per cent in most tourism activities except for transportation, which is limited to 40 per cent. • Investment Priority Plan sets annual guidelines for investments. • With the passage of the Foreign Investment Act (RA 7042 as amended by RA 8179), foreign nationals are now allowed to invest up to 100 per cent equity participation in new or existing economic activities including restaurant operations that are incidental to the hotel business. Foreign equity participation of up to 40 per cent is allowed in the operation and management of utilities (including land, air and water transport). • Foreign equity participation is allowed up to 40 per cent of total equity in domestic market enterprises with paid-in equity capital of less than US$200,000. No limit is set for investment in domestic market enterprises with paid-in equity capital over US$200,000. • Foreign equity participation is also allowed up to 40 per cent of total equity in domestic market enterprises involved in advanced technology or employing at least 50 direct employees, with paid-in equity capital of less than the equivalent of US$100,000. • Foreign equity participation is allowed up to 40 per cent of total equity for ownership of private land and condominiums, as well as the exploration, development and use of natural resources, subject to the provisions of the Philippine Constitution.
10. Foreign investment (property)	• Foreigners investing in the Philippines can now lease private lands up to 75 years based on RA 7652 (Investors Lease Act). Lease agreements may be entered into with Filipino landowners. Lease period is 50 years renewable once for another 25 years. For tourism projects, the lease is limited to projects with an investment over US$5 million, 70 per cent of which must be infused in the project within 3 years of signing the lease contract.
11. Taxes and charges	• Hotels and restaurants are charged higher electricity rates than other industries. • Local sales taxes are highly variable and sometimes seen as arbitrary by tourism businesses. • Airlines pay customs immigration quarantine charges. • Airlines also add fuel surcharges and ‘war risk insurance’; rates vary by airline.
12. Foreign exchange controls	• No restrictions, but amounts over US$10,000 must be declared.
13. Repatriation of profit or capital	• Removal of amounts over US$10,000 acquired as a bank loan must have Letter of Permission from Central Bank. Not required if money is part of personal assets. No more than PhP 5,000 may be removed from the country. • Foreign investments duly registered are entitled to privileges of full and immediate capital repatriation and remittance of dividends and interest. • No restriction to purchase foreign exchange to fund the repatriation provided such foreign exchange is purchased outside the banking system or is obtained from own personal funds. However, registration with the Bangko Sentral ng Pilipinas is required if foreign exchange to repay the repatriation is purchased from a bank.
14. Employment	• Employment of foreign nationals in hotels, resorts, and restaurants must be approved by Department of Labour and Employment.
15. Import of promotional materials	• None, if material is brought in as personal luggage; duty charged if sent as air cargo. • Promotional videos and CDs are charged duty and are subject to screening by Optical Media Board for offensive content.
16. Other impediments	• Terrorist attacks in recent years have led to a lingering perception of risk in visits to the Philippines in some key international markets. • Land reform has resulted in parcels of land of sizes that are not attractive to potential investors. • Bank service charges and holding periods on deposits are seen as excessive by tourism businesses. • Continuity of policies due to political changes.

The nature of the national tourism organization (e.g. whether it is a ministry, a sub-ministry, or an arm’s-length organization) and the degree to which it has power to influence tourism policy, planning, and development initiatives among various ministries and departments often have substantial impact of the competitiveness of a member economy’s tourism sector. Both government and industry representatives in all of the economies examined felt that the political weight of their national tourism organization did not adequately reflect the importance of tourism in the economy. For example, SERNATUR (Chile’s national tourism organization) is mandated to provide strategic direction for tourism policy, product development, international promotions, and tourism research, whereas it has no power to co-ordinate the activities of the various government organizations that actually influence or implement these initiatives. Further, its budget and staffing are inadequate for the expectations placed upon the organization by government and industry.

Regulations governing the temporary employment of foreign nationals in tourism jobs restrict access to the hiring of temporary foreign workers in most economies. For example, Indonesia permits the employment of foreign operational directors, managers, and other specialized workers only if the company can demonstrate there are no qualified Indonesians to fill the post. Further, any firm in Indonesia employing foreign nationals must pay US$100 per month per foreign employee into a fund to support training of Indonesian workers. Peru, in contrast, has a relatively more liberal labour environment, permitting up to 20 per cent of an enterprise’s employees to be foreign workers.

Limits on foreign investment in or ownership of tourism businesses and land constrain access to capital for growth in the tourism sector. Indonesia, for example, does not recognize the concept of freehold land by private individuals. The Philippines does not permit foreigners to own land. Canada has restrictions on foreign investment in transportation companies as well as on ownership of what are deemed to be ‘cultural businesses’.

Policies and regulations governing airline service to and within an economy constrain the potential for growth in travel between various pairs of economies, and sometimes air capacity within an economy. None of the economies examined permit cabotage; access to gates at gateway airports are generally more restrictive for foreign air carriers than for domestic. Concerns were heard about excessive gate or landing fees in some situations such as Canada’s Pearson Airport (Toronto) and at Peru’s Jorge Chavez Airport (Lima). Industry representatives in every economy expressed frustrations with perceived inadequacies in internal transportation linkages between gateway airports and secondary destinations around the country. Peru also cited serious financial concerns for its national air carrier, LAN Peru. Airline deregulation and restructuring in Canada has significantly affected the quality of air service in that country.

Safety and Security Issues

International travel, especially by air, has changed profoundly in most nations since September 2001. Beyond the impact on visa policies, concerns over terrorism have led to new emphases:

Passenger identification and information systems, including machine-readable passports. Citizens of member economies that do not yet have this technology, such as Filipinos, often experience delays when entering another country. Tighter screening procedures, especially at land borders, can result in significant delays crossing borders. This issue is a particular source of complaint at the Canada—US border.

Most member economies are careful about screening for bio-security hazards by restricting the importation of many food and animal products and soil. Further, there are attempts at tighter controls to protect the removal of products derived from endangered species. Each of the five economies abides by the Convention on International Trade in Endangered Species. The protection of endangered species was cited as a special concern in Indonesia and Philippines because of their tropical rain forests and high incidence of endangered species. Various restrictions on both visitors and businesses, and inspections of arriving and departing passengers, were seen as justifiable ‘impediments’ on tourism movement and development by governments in each economy and by most industry representatives (although some questioned whether certain restrictions on development were leading to an ‘over-kill’ in specific situations).

The risk of crime and terrorist attacks is rising in the consciousness of many international visitors. Awareness of the potential of crime is spread through word of mouth and media, as well as travel advisories. Such advisories address not only the risk of injury from terrorism but also the risk of theft, muggings, kidnappings, rape, and murder. Risks vary significantly by economy, although it is present in every economy examined. Some cities, such as Lima in Peru, have especially high crime rates. The risk of terrorist attacks against visitors is of special concern in certain parts of Indonesia and Philippines.

Administrative Practices

Individuals in every one of the member economies examined referred to problems associated with administrative procedures, including:

Business representatives in several member economies reported excessive delays in obtaining approvals for business or development applications. For example, Indonesian business leaders claimed that the average time for approval of proposals for a new business initiative was over 300 days. Further, many proposals, especially those involving land developments, require approvals from multiple agencies, which further increases the time before a business could be started or expanded. Bank holding periods on business deposits and service charges are described as excessive by tourism businesses in the Philippines.

Industry representatives in Canada and Chile reported problems associated with labour regulations. New regulations governing the hours professional drivers (both truck drivers and motorcoach drivers) can be on duty have significantly increased the costs of tour operations and even resulted in the cancellation of some tours from the US into Canada because tour operators were not willing to work under the new restrictive regulations. Limits on hours of work in Chile have caused problems for tourism operators, such as receptive guides or restaurants, when they need to stay open late at night to handle delayed inbound international flights.

Residents in some member economies experience extended delays in obtaining visas or the need to travel to a distant city to apply for a visa. For example, citizens of the Philippines and Indonesia were reported as experiencing unwarranted delays in applying for visas from the US. Efforts can be seen in some countries to address how they handle visas for their inbound visitors. Indonesia now issues visas upon arrival in the Jakarta Soekarno-Hatta Airport; Chile does not require visas for visitors from a number of nations but charges an entry fee to citizens from a given country equal to the cost of a Chilean citizen applying for a visa to that country. For example, the US charges Chileans US$100 to apply for a visa; Chile has reciprocated, not by requiring a visa from Americans coming to the country, but charging them US$100 as they exit their aircraft.

Many government officials, especially customs and immigration officers at borders, are free to interpret some policies, often adopting very narrow interpretations of the policy. This was cited as a special irritant at the US—Canada border, where the level of questioning (and the degree of politeness) varies across agents and allegedly by the origin of the visitor. Decisions about the admissibility of visitors or whether a potential visitor is subjected to a secondary (more in-depth) interview are reportedly made on grounds that sometimes appear capricious.

There are reports of corruption among officials who award contracts or approve business proposals. This was, in particular, the subject of several complaints and media reports in Indonesia during the time of the project.

Infrastructure

Representatives in each of the five economies expressed frustrations about existing levels or quality of infrastructure required to support tourism. While investments are being made in each economy, governmental financial constraints or competing demands for scarce resources mean that improvements are still needed to enhance tourism growth and ensure the sustainable development of tourism in areas such as:

Airports – including air navigation, runways, baggage handling, and passenger waiting and reception areas in terminals. Peru, in particular, cited the need to improve the internal arrivals hall for inbound passengers; improved ground transportation linkages between the gateway airports in Vancouver, Toronto, and Montreal and their downtowns were identified as a need in Canada.
Border-crossing facilities – particularly increasing security systems, but also increasing the capacity to handle high flows. Capacity constraints are a special problem in Canada with its long border with the US.
Highways and bridges – to cope with congestion as well as physical deterioration; every member economy cited needed improvements in this area. Roads outside the Philippine capital of Manila, for example, need substantial upgrading.
Ferries and ports – improving capacity, upgrading or replacing out-dated or deteriorating facilities; improving inter-island ferry service was cited in both the Philippines and Indonesia. Improving port security against possible terrorist attacks is seen as a need in Canada.
Water and sanitation systems – expanding capacity, and replacing aging pipes and sewers. This is an ongoing need in many parts of the economies examined.
Urban streets and sidewalks – repairing deteriorating surfaces; for example, the sidewalks of parts of downtown Jakarta are very uneven, with curbs as high as 50 cm. Traffic congestion arising from private automobiles is an issue in the major cities of every one of the economies examined.
Air pollution – investments to reduce emissions associated with power generation and the development of technology and regulations to reduce emissions from motor vehicles. This is, for example, a need in Santiago, Chile, and the larger cities of Indonesia as well as across much of Indonesia during times of fires set in the region to clear fields.

Environment and Culture

A healthy environment and respect for local cultures are essential for a sustainable tourism industry. A number of policy and regulatory restrictions related to environmental and cultural protection were identified. Some of these are defensible in terms of scientifically demonstrable environmental impacts; others reflect national political agenda and sensitivities. The application of some regulations, particularly related to approvals for business developments and start-ups or licensing, was sometimes challenged as ‘over-kill’. Some of the perceived impediments related to the environment and culture include the following:

Ownership of land, especially access to shorelines, agricultural lands, and borderlands, is a sensitive issue. Certain Canadian provinces have restrictions on ownership of agricultural land or shore frontage by foreigners; some provinces also give priority to provincial residents in the acquisition or leasing of public lands. The Philippines prohibits any ownership of land by non-citizens. Indonesia does not recognize the right to freehold land by individuals although certain rights to use land are recognized. Chile has relatively few land ownership restrictions except for land adjacent to frontiers and the coast, and the restriction that land on Easter Island may be owned only by the indigenous population. Peru also restricts foreign ownership of land near borders on the ground of national security. It also prohibits the acquisition of land occupied by indigenous populations, although such land can be leased. Some of these regulations clearly act as a deterrent to tourism development. While some restrictions can be justified on the grounds of environmental protection or even national security, prohibiting ownership of land by foreigners may be based solely on political grounds even though such policies deter foreign direct investment that would promote tourism growth and job-creation.
Over-regulation or slow decision-making processes sometimes needlessly frustrates tourism investment and development. Lengthy approval times for business start-up applications were especially cited in Indonesia. Chile has extensive environmental regulations to protect its land base, especially agricultural and environmentally sensitive areas. While there is strong support for environmental protection in Chile, questions were raised about whether some restrictions in certain areas could be eased or, at least, the approval process accelerated. Conversely, Chile’s strong free market environment sometimes works against government regulations and certification in the context of, for example, eco-tour operators. Some representatives of the tourism industry felt that greater regulation over the quality of tourism services would actually benefit the industry and ensure higher quality services, and protect scrupulous operators from the fall-out of operators who delivered sub-standard tourism services.
While member economies refer to sustainable tourism development in their plans and policies, and acknowledge the importance of enhancing the sense of community and of protecting and nurturing their cultural communities, there generally are no monitoring mechanisms or research initiatives to assess whether policies achieve their intended results. Without the ability to show that a particular policy or regulation actually achieves a desired goal, it is difficult to assess whether the policy or regulation represents a reasonable restriction on tourism planning and development or, instead, is an unnecessary bit of ‘red tape’.

Taxes

Taxes are unavoidable if a government is to provide social services. However, tourism is increasingly targeted for disproportionate taxation. Part of the reason is that visitors have no political voice in the country they visit, so levying stiff taxes on them is politically expedient. Visitors may be used as the sole source of funding for non-tourism initiatives that a government wishes to pursue but appears to feel lacks sufficient political support to pay for through general revenues. An example of this is the US$40 fee charged to Peruvian passport applicants to support child protection programmes. Other taxation issues include the following:

Travellers are routinely charged airport fees that may or may not be used to improve airport facilities. They are often charged an additional tax to help pay for security equipment or personnel that are used to protect the general public, not just the travelling public. Fuel surcharges, air navigation charges, and other air-related taxes are increasingly common. While these may represent only a small portion of long-haul, full-fare air ticket costs, they can represent a significant portion of the cost of short-haul airfares. For example, the various air-related taxes in Canada can double the cost of a domestic discount air ticket.
Excise taxes on alcohol and fuel are common across the member economies. These taxes are charged to all consumers but affect visitors disproportionately because alcohol and gasoline typically represent a higher percentage of visitor spending, rather than resident spending.
Retail sales taxes and VAT/GST are common among the member economies. Visitors are sometimes exempted from VAT/GST as in Canada or are able to obtain partial rebates, but other member economies, such as Chile and Indonesia, do not yet extend this possibility to international visitors.
Taxes are sometimes levied on citizens of a country as a condition for their ability to travel internationally. The Philippines government charges a tax of PhP1,620 on citizens seeking to travel internationally. The Indonesian government requires a partial pre-payment of income tax of citizens travelling internationally.

Travel Advisories and the Media

Each of the member economies studied has been hurt by travel advisories or, more precisely, sensationalistic media stories arising out of these advisories. For example, the outbreak of SARS in Toronto, Canada, which was limited to health care workers in less than a dozen hospitals and clinics, led to dramatic losses in tourism businesses across the city and a drop in travel even to Canadian destinations thousands of kilometres from Toronto. The 2002 bombing in Bali caused an immediate collapse of tourism on the Indonesian island. Ironically, advisories in the US and Canada warned their citizens against travelling to Bali even though there were no travel advisories issued against travel to New York in the wake of the terrorist attack on 11 September 2001, which killed many more people than the attack in Bali. Travel advisories issued by several Western governments warn potential visitors of the risk of theft and violent crime in some sections of Lima, Peru.

In each case, the precipitating event represented a risk but the magnitude of that risk has not always been accurately reported in the media. Generally, the governments of the participating member economies have responded by ensuring the media receive accurate information rather than by attempting to refute the stories directly or to control the stories published (which would be impossible in most cases). Governments of each member economy strive to find the right balance between acknowledging risks to visitors and conveying accurate information about the level of risk. However, ensuring a balanced story and accurate facts are communicated to the public is difficult in an age dominated by headlines, video clips, and Internet blogging that can present distorted, sensationalistic images and stories.

Political Status of Tourism

The political context of tourism in the five member economies varies significantly. Within the governmental organization, responsibility for tourism is assigned to a range of structures, from a department whose sole mandate is tourism (such as the Philippine Department of Tourism), through departments/ministries where tourism is but one of multiple responsibilities (such as the Peruvian Vice Ministerio de Turismo), to arm’s-length agencies (such as the Canadian Tourism Commission). However, in all cases, tourism is seen as having a low political stature and suffering from a high degree of fragmentation. In other words, while many governments pay lip service to the importance of tourism, it does not, in the practice of many national governments, carry political weight commensurate with its economic importance.

Part of this is due to the fact that tourism-related activities and enterprises are spread among many different ministries or departments and industries, with the result that there is no single voice or champion promoting the needs of tourism to government. In particular, tourism is subject to policy priorities and administrative actions by agencies that do not view themselves involved in tourism and yet have a profound impact on the health of the tourism sector in their economy. For example, ministries responsible for issuing visas set policies and implement regulations typically without consultation with the tourism industries who will be serving the needs of visitors who have received those visas. More fundamentally, tourism offices in government often are not consulted about proposed changes in visa regulations. Policy decisions are often made about transportation services in transport ministries without consultation with interested tourism agencies. As one official with Transport Canada put it when approached for an appointment, ‘I’m willing to talk with you but I don’t know that I have anything worth saying to you. I’m in transportation, not tourism.’

Recommendations for Further Research

This study identified a range of impediments to the growth of tourism as an internationally traded service – impediments that restrain either the growth of businesses or the ability of individuals to travel internationally (either into or out of an APEC member economy). While some of these impediments may be found in all five economies, strategies to reduce the impediments have to be specific to the circumstance in each economy. These strategies must reflect social and cultural values, the nature and structure of the tourism sector in each economy, and the political environment in which tourism operates. Specific recommendations to address certain impediments in the five member economies were developed from the review of impediments, discussions with public and private sector representatives, and a review of the contents of their individual action plans. These are not presented here due to page limitations. However, a number of broad initiatives were identified that can help create both information as well as a mind-set that promotes awareness of the need for reducing impediments to tourism. These recommendations are identified as initiatives to be pursued under APEC TWG’s Collective Action Plan.

Develop Performance Measures to Assess Progress Towards Goal 3 of APEC’s Tourism Charter

Goal 3 (see Table 5.1) is to sustainably manage tourism outcomes and impacts. There is little debate about the desirability of sustainability as a broad principle. However, deciding what the term means in practice and, especially, how to track whether specific policies and practices are contributing to the attainment of this goal requires more work. There is, in particular, a need to develop performance measures that operationally indicate whether policies and practices implemented by a member economy are leading towards a more sustainable tourism sector. These measures must not only be meaningful, reliable, and relevant to the circumstances specific to each economy, they should also – as far as possible – be based on common concepts, metrics, and methodologies. Commonality among the measurement methodologies will allow for more informed tracking and comparisons of progress made in different economies.

Measure Tourism’s Contribution to Government Revenues

One of the most powerful arguments for removing impediments to the growth of tourism is the lost potential for the economic benefits that can be obtained from wise tourism development and marketing decisions. The contributions to GDP and job-creation are fairly well known and the basic methods for tracking these contributions are well established, most visibly through the recommended methodological framework of the tourism Satellite Account. Unfortunately, the contribution of tourism to government revenues is neither well understood nor systematically and reliably measured.

These contributions take the form of direct taxes (such as business property taxes and income taxes), indirect taxes (such as sales taxes or value-added taxes), government fees (such as charges for business permits, visas, passports, airport security fees, hunting and fishing licenses), admissions to government attractions (such as museums and historic buildings), and duties charged on items imported by private individuals or by businesses in the context of tourism activity. Information collected during the five case studies suggests that tourism is disproportionately taxed compared to many other business sectors. In other words, the percentage of government revenues generated by tourism activity tends to be higher than the percentage of GDP created by tourism. More information – supported by credible and standardized measurement tools, ideally in the context of a module in a Tourism Satellite Account (TSA) – are needed to identify the tax burden on tourism.

Develop Initiatives to Promote Cultural Tourism

Tourism leaders in each of the five economies studied identified tourism based on their distinctive culture and heritage as key to sustainable tourism development. Cultural tourism, in this context, is not limited to so-called ‘high culture’ of theatrical productions, dance, concerts, museums, galleries, and historic sites, although these are important components. Rather, cultural tourism should be broadly conceptualized to encompass tourism that focuses on experiencing aspects of social life in each member economy that makes each economy distinct. This includes cuisine, language, history, archaeology, indigenous peoples, and even ordinary aspects of life that visitors will immediately recognize or categorize as the ‘other’ (other than their own culture). ‘Packaging’ of cultural experiences through inventories of market-ready tourism products, quality control, and the development of delivery or distribution channels to make the experiences available to visitors will be essential.

At the same time, potential social impacts of developing, marketing, and delivery of cultural tourism experiences will need to be identified in order to minimize potential negative effects of the commoditization of culture. This work will involve consultation with both tourism service providers as well as local communities, especially any indigenous populations involved, to ensure the appropriate development of cultural tourism products. Special consideration should be given, where appropriate, to the involvement of the local community in the development and promotion of cultural tourism products and the creation of strategies to permit local communities to share in the benefits derived from the promotion of their culture.

Examine the Implications of Trade Liberalization for Tourism Statistics

Tourism is arguably the most liberalized sector of international trade. The number of commitments made under the General Agreement on Trade in Services (GATS) to open borders to tourism far exceed the number of commitments made for any other sector. This reflects the fact that many nations look to tourism as a strategy to rapidly increase their share of international trade. Tourism offers significant economic benefits that often are achievable with manageable environmental and social impacts, and relatively modest capital investments compared to other industries such as mining and oil and gas extraction. However, the nature of tourism as an area of economic development is often poorly understood by economic policy analysts in national governments. As a result, expectations and potentials associated with tourism often are not integrated with national economic policies and plans.

A prerequisite for ensuring more recognition of tourism in the formation of national policies and priorities is the development of credible statistics on tourism. Moreover, these statistics should be as consistent as possible across different national and international economic statistical systems. Unfortunately, definitions of tourism and related concepts still show significant variations among these systems. The TSA provides a conceptually coherent and logical structure for measurement of tourism as an economic activity that is consistent with the System of National Accounts. However, the World Trade Organization, which manages GATS, has a very different conceptualization of tourism (e.g. the WTO excludes air transportation services from its list of tourism industries). The International Monetary Fund’s guidelines for calculating balance of payments in an economy are based on a number of concepts that are not consistent with those of TSAs. For example, the balance of payments methodology does not recognize the concept of travellers (much less, visitors). Work needs to continue to reconcile, to the degree possible, tourism statistical concepts among these various international conventions.

Examine Alternative Tourism Industry–Government Networking Structures

The fragmentation of the tourism sector (accommodations, food and beverage services, attractions, travel trade, convention services, and so on) was cited in every economy examined. Two related problems associated with such fragmentation is the lack of a coherent voice by which tourism industries can speak to government on issues of importance, and the lack of a visible, effective political constituency for tourism that could press for more favourable policy and taxation treatment of tourism enterprises by governments. While no single ‘best practice’ was observed in the five economies studied, case studies of alternative forms of industry associations and industry–government relations might be examined to identify models or strategies that offer hope for improved communications. Case studies of approaches in member economies that were tried but failed to promote greater co-operation could also be useful. Examples of failure can sometimes be as or even more instructive than successful examples.

Develop Case Studies of Effective Media Relations During Times of Crisis

As noted previously, the mass media are drawn to stories involving disasters, whether natural or human-made. Although potentially less sweeping in their immediate impacts, crime and outbreaks of disease also garner media attention, especially if some of the victims are tourists. Destinations need to be able to deal honestly and effectively with media scrutiny of unfortunate events – addressing the effects, magnitude, and implications of events without contributing to hyperbole or inadvertently feeding hysteria. Unfortunately (or fortunately, depending on one’s perspective), many destinations now have experience in communicating bad news to the media and helping to manage the public’s understanding of the actual levels of risk as well as recovery efforts. A few examples include the murder of two Canadian tourists in Cancun (2006), Hurricane Katrina along the US Gulf Coast (2005), Hurricanes Emily and Wilma in Cancun (2005), bombing on the London Underground and buses (2005), attacks on tourists in Sharm al-Shaikh (2005), the Indian Ocean tsunami (2004), warnings by ETA that it would once again target tourists to Spain (2004), SARS (multiple member economies, 2003), bombing in Spain (2003), bombings in Bali (2005, 2002). Many more examples can be easily cited – but the point is that many destinations have had to learn to communicate the effects, aftermath, and recovery of crises that have hit them. A series of case studies of the lessons learned – what worked, what did not – in destinations that have dealt with ‘bad news’ stories can provide valuable assistance to destinations that have yet to deal with crises, or for destinations that will need to deal with them again.

Examine Tourism Impediments in Other Economies

The consultative process employed in the review of impediments in this study and the previous one provided valuable information for the participating APEC member economies. The fact-finding and consultative processes facilitated the valuable exchange of information among public and private sector participants. In several cases, the discussions identified impediments (often in the form of administrative practices) that representatives from participating economies acknowledged should receive prompt attention.

Many of the findings provide important insights and information related to Goal 1 of the APEC Tourism Charter (to remove impediments to tourism businesses and investment) and partially to Goal 2 (increase the mobility of visitors and demand for tourism commodities in the APEC region). The examination of impediments to tourism growth provides information that is useful for a wide range of other APEC TWG initiatives. The next stage of work should involve a mix of developing, transitional, and developed economies in APEC. These might include China, the US, Viet Nam, Russia, and Hong Kong. The rationale for suggesting these members is described below.

The issue of the Approved Destination Status granted by China which facilitates the ability of resident Chinese citizens to travel to destinations that have received approval was raised frequently in the workshops held in the five case study economies, and was described as an issue of which a number of agencies would like to have a better understanding. Also, as China is expected to become one of the top destinations in the world in terms of revenues as well as person-visits and an important origin market for other nations, a better understanding of the impediments and potentials of Chinese inbound and outbound tourism is warranted.

Russia, with its social and economic structures continuing to go through dramatic transitions, would be another useful case study. Inbound tourism is not a significant aspect of the Russian economy but the degree to which this is due to impediments under the control of the Russian government (such as visa restrictions or barriers to investment in tourism businesses), weak product development, limited tourism marketing, or other factors merit closer examination.

The United States, as the world’s current largest inbound tourism market (in terms of revenues earned) and the largest outbound market (in terms of both person-trips and expenditures), represents a contrasting case to both Russia and China. Its lack of government involvement in tourism development raises questions about whether this ‘neglect’ represents a source of impediments or, instead, allows tourism businesses to be more responsive to the market. Increasing security concerns, tighter controls at US gateways, and more rigorous border-crossing formalities are certainly impediments. The degree to which tighter regulations constrain international tourism, and whether the full extent of these regulations is justified on the grounds of security, merit examination.

Viet Nam, an economy in a transitional stage but one in which tourism is rapidly emerging as an important export, would also be a useful case study. This economy is exploring a range of tourism development options, including eco-tourism, cultural tourism, and adventure tourism. Opportunities and challenges to the development of various forms of tourism, virtually de novo, could offer useful insights into the creation of a new tourism sector in an economy. Finally, as a free market economy, Hong Kong also presents an interesting case study possibility due to its unique relationship with China. Hong Kong’s tourism industry is well developed with continual investment in new attractions and infrastructure, but with tight land restrictions. Other impediments may exist that could merit examination.

In conclusion, the potential of tourism to achieve the economic objectives expected of it by policymakers, tourism entrepreneurs, investors, and residents depends on work to reduce or remove impediments to the growth of tourism wherever possible. On the other hand, reducing the potential of negative economic, environmental, and social impacts requires the informed implementation of policies, regulations, and practices that may constrain tourism growth. An objective assessment of existing impediments, including any rationale for their existence, is fundamental to growth of tourism as an internationally traded service.

Acknowledgements

This study would not have been possible without the assistance of the APEC Programme Director, Benyamin Carnadi, and the Project Overseer, Walailak Noypayak, and her team members. The committed support of the officers representing the member economies is gratefully acknowledged. These dedicated professionals helped us organize meetings, contacted workshop participants, handled innumerable logistical details, and provided escorts and translation services, and invaluable, candid insights into the nature of impediments in their respective economies. Without their unflagging patience and assistance, this project could not have succeeded at the level of individual economies. We wish to acknowledge, in particular and in alphabetical order by member economy: Irenka Farmilo (Canada); Monica Anderson and Jaime Toha (Chile); Yulia (Indonesia); Eduardo Sevilla (Peru); and Rolando Canizal and Alex Mactuno (Philippines).

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