Sunday, March 8, 2009

Nepal’s tourism industry: High hopes amidst weak foundation

It seems like this spring break is getting productive(I still have to finish my thesis by the end of this break!). On the first day of the break, I wrote this opinion piece about Nepal’s tourism industry and the need to rethink promotion campaigns and policies amidst global recession. The need for price competitiveness without compromising on quality of service has not been higher. I argue that the government needs to formulate realistic policies and targets that are consistent with Nepal’s macroeconomic situation (especially exchange rate appreciation), regulatory structure, and infrastructure. I use the latest Travel and Tourism Competitiveness Report to back up my arguments.

Travel and tourism (T&T) industry has been playing a vital role in sustaining GDP growth rate, which has been stagnating at 3.8 percent in the past decade. At a time when the industrial sector is going bust due to power cuts, labor disputes, and declining price competitiveness, a prosperous tourism industry is of supreme importance. The travel and tourism industry has been one of the largest employers (more than 548,000 in 2008) and fastest entry-vehicle into the workforce for youths.

To lure more tourists, the government announced Visit Nepal 2011 in January with the aim of attracting one million international visitors. The targeted number seems pretty ambitious because during a similar campaign in 1998, Nepal hosted only 464,000 tourists, earning US$ 24.8 million in revenue.

Does Nepal have the appropriate supporting regulatory structure, flexible policy framework and basic infrastructure that would increase price competitiveness without compromising on quality of service? According to the latest Travel & Tourism Competitiveness Report, published annually by the World Economic Forum, the answer to this question does not look that encouraging. Out of 133 countries, Nepal ranks 118 in travel and tourism competitiveness. It was ranked 116 in 2008’s report, which means competitiveness of this industry has actually declined.

Tourists are highly sensitive to price competitiveness and value added services provided by this industry. Generally, three factors – macroeconomic risks, regulatory structure, and tourism infrastructure – are essential to improve price competitiveness and to induce more per capita visitor spending in the Nepali tourism industry.

Read the full opinion piece here

International tourism, Nepal

Links of Interest (03/08/2009)

The poverty trap facing low-income countries

The need for a new paradigm in economics to explain current global crisis

Remaking the WB in a time of crisis

The state of maternal mortality in Nepal

Visa-restriction index 2008

Two pics sourced from Nepal: A Himalayan Kingdom in Transition by Karan and Ishii (reminds me of my village and work on the field!)

house harvesting