World body urges Asean to build up its tourism infrastructure

Singapore

INVESTMENT in travel and tourism (T&T) infrastructure within Asean over the next decade will grow faster than the global average, but some regional markets are still not investing enough to match the expected tourism boom, says the World Travel & Tourism Council (WTTC).

The council cited Myanmar, Cambodia and the Philippines as being among markets already facing infrastructure constraints, but yet are not committing enough funds into developing their airports, hotel sector and tourist attractions.

Nonetheless, Asean will account for nearly 10 per cent of global investment in T&T infrastructure between 2016 and 2026; this translates into US$782 billion.

At a growth rate of 6.3 per cent per year, this investment outpaces the global average, which is nearly two percentage points slower.

David Scowsill, WTTC president and chief executive, said: "Investment in infrastructure is critical to the future sustainability of travel and tourism.

"Public- and private-sector leaders across Asean must prioritise tourism investment and channel it effectively to ensure the region's infrastructure can meet this increasing demand."

Tourism and travel is a key growth pillar for the region, contributing a collective 12.4 per cent of the gross domestic product (GDP) for the 10 member states in Asean, said WTTC.

In contrast, contributions from T&T stands at 9.6 per cent in Europe, 8.6 per cent in the Americas and 8.1 per cent in Africa.

The lure of the Asean states as tourist destinations is underpinned by factors such as their proximity to the major outbound market of China and their price competitiveness.

Within Asean, however, the level of investment differs. The US$782 billion to be spent in the decade starting from this year will likely be focused on five major destinations - Singapore, Thailand, Vietnam, Indonesia, and Malaysia.

At 3.2 per cent, Indonesia's share of global T&T infrastructure spending for 2016-2026 is bigger than that of the Philippines (0.3 per cent), Cambodia (0.1 per cent) and Myanmar (0.05 per cent).

Singapore's share is 2.3 per cent.

Mr Scowsill said: "Countries such as Singapore and Indonesia are leading the way in terms of their infrastructure development, but across Asean, much more is required.

"For some countries, this might mean expanding capacity, through increasing visitor accommodation, airport capacity and tourist facilities; others need to maintain and enhance their current infrastructure."

Indeed, airport infrastructure is an area where many Asean countries will need to invest more, say industry observers.

In fact, the International Air Transport Association (Iata), the umbrella aviation body whose 265 members account for 83 per cent of global traffic, warns that failing to build, upgrade or expand infrastructure comes with a hefty price.

Iata chief Alexandre de Juniac, speaking at the World Passenger Symposium in Dubai on Tuesday, said: "Inadequate infrastructure negatively impacts the passenger experience in the form of flight delays, longer routes and inefficient schedules.

"Then there is the cost to the economies in terms of lost business opportunities, employment and social development."

Amid the backdrop of Asean Open Skies, Iata has also flagged the widening gap between tourism growth in Asia and the infrastructure for air traffic control and airports; he singled out the airports in Jakarta and Manila as being in need of improvements.

The WTTC highlighted that air and ground transportation "should be a key priority" for investment in Vietnam, Cambodia and Myanmar; Thailand and the Philippines would both benefit from increased investment in ground transportation.

In Myanmar, for instance, tourist arrivals are surging; the number of visitors reported jumped 52 per cent to 4.68 million last year. The government is striving to pull in 7.5 million visitors by 2020, which is expected to put pressure on infrastructure, even with hotel room supply on the rise.

On the other hand, Singapore is expected to continue to invest heavily to maintain its strong T&T infrastructure, particularly its air hub. Changi Airport is due to open Terminal 4 in the second half of next year; Terminal 5 is likely to come onstream in the middle of the next decade. A third runway will be ready for commercial use by the early 2020s to alleviate air traffic congestion.

After a softer year in 2015, Singapore's tourism industry has picked up again this year. Preliminary figures from the Singapore Tourism Board show that visitor arrivals in the first seven months of this year grew at 11.5 per cent year on year to 9.79 million.

The WTTC concluded that, with the historically low interest rates and investors seeking higher returns, countries will have the opportunity to attract and fund the investments required.

"Asean countries that exploit this opportunity will be best placed to realise the economic growth, jobs and tax revenues that come from strong growing and successful T&T sectors."