Earlier this week, this column highlighted the need to adopt a sectoral and country-wise approach to finding solutions for weak exports and FDI (See BR Research column Forex troubles: Need a closer look, published December 28, 2016). In that context, one sector that the Board of Investment should put into FDI limelight is tourism. Here are four quick reasons why.
First, a vibrant tourism destination softens a countrys image. And with the security situation finally improving, Pakistan could make good use of a soft image, which in turn would have a positive impact in many different ways.
Second, developing the tourism industry can help boost the GDP. According to World Travel and Tourism Council, the sector contributes about 9.8 percent of GDP, creating about one out every 11 jobs. Its potential in Pakistan can be gauged by the fact that the countrys tourism exports are already very close to some of the box standard export items such as cotton yarn (See graph). And this is despite the fact that Pakistan is yet to tap its tourism potential.
Third, attracting FDI in tourism sector could help bring international best practises to the sector. The growing trends in Pakistans photojournalism would like people to believe that Pakistan is a beautiful place. But it is also true that the influx of domestic tourists has created a phenomenon of unsustainable tourism, whereas unplanned development has wrecked havoc on the natural environment. It wouldnt be an extremely stretched metaphor that Hunzas Karimabad now reminds visitors of Karachis Karimabad such is the height of litter and pollution in that once-pristine valley.
Little wonder that Pakistans ranks poorly in the natural and cultural resources sub-index of the World Economic Forums Travel and Tourism Competitiveness Index 2015. On that note, Pakistan ranks the worst (141st) on environmental sustainability and as CPEC grows along the KKH, the situation will only worsen unless sustainability is seen both as a mindset and as a process, instead of merely thought of as a product.
Lastly, tourism is more than just mountains. And if with that mindset the government develops tourism across the lengths and breadths of this country, then it would significantly boost local economies. To that end, as presenters at IGC Pakistans recent seminar highlighted, Punjab government is rightly exploring ways and means to tap its rich cultural, religious heritage including Islamic, Sikh, Hindu, and Buddhist hubs spread across the province.
In ten years time, one would hopefully see Sufi tourism prosper across Pakistan ala the Rumi tours in Turkey. In fact, the tourism industry on the whole is clearly identified as a national target industry for investment promotion in Turkey.
Despite the wide variety of Pakistans beautiful landscape, the country has only received $190 million in the tourism industry since FY97 to 4MFY17. Thats according to central bank data. While Pakistans international receipts from tourism have remained weak throughout the last four decades, globally international tourist numbers have grown continuously and are forecast to keep growing by 3.3 percent annually until 2030, according to the UN World Tourism Organisation. These flows are forecast to create 300 million jobs globally in a market which is becoming much less concentrated as new tourist destinations spring up.
In order to unlock the untapped potential of tourism, a concerted effort to develop the tourism industry is required by both federal and provincial governments, whereas their investment promotion agencies also need to pay greater attention to tourism.
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