The China tourism boom is fizzling, with China visitor arrivals easing across most Asean countries in late 2018, said Maybank Kim Eng economists in a Jan 14 report. With slowing growth, a weaker yuan and waning consumer confidence, the current tourist slowdown may persist for most of 2019, they added. Nonetheless, the long-term outlook for Asean tourism is bright, with China's low passport penetration leaving much room for growth; airport capacity ramping up in both China and the region; and Asean also diversifying in other tourist markets.
China tourism slowdown to continue
China visitor growth slowed in late 2018, turning negative in four Asean countries: Singapore (down 12 per cent in November), the Philippines (down 3 per cent in October), Vietnam (down 2 per cent in December) and Thailand (down 15 per cent in November, though recovering with 3.5 per cent growth in December). This was in stark contrast to strong showings in the same countries during 2017, with visitor growth numbers of 13 per cent, 43 per cent, 49 per cent and 12 per cent in each country respectively.
In contrast to the previous China tourism slump in late 2016, driven specifically by Thailand's crackdown on zero-dollar tour groups, the current slowdown is broader and may persist this year alongside slower China growth, given the trade war with the United States, tighter credit conditions due to deleveraging, and a weaker yuan.
Thailand, Vietnam and Cambodia more dependent
China is the largest source of visitors to four Asean countries: Vietnam, where they form 31 per cent of all tourist arrivals; Thailand (28 per cent), Cambodia (22 per cent) and Singapore (19 per cent). However, tourist receipts from China are of varied importance, accounting for 3.4 per cent of GDP in Thailand, but just 0.9 per cent in Singapore, and 0.2 per cent in Indonesia, with the report not providing corresponding figures for Vietnam and Cambodia. Malaysia has the lowest proportion of China tourists at 9 per cent, with 0.7 per cent of tourist receipts coming from them.
Optimism for the long haul
Slowdown notwithstanding, countries such as Thailand and the Philippines are taking active steps to attract China tourists. Thailand's waiver of the 2000 baht visa-on-arrival fee for tourists from 21 countries, including China, was recently extended until the end of April. Chinese tourists will also be able to apply for Thai visas online, starting from Feb 15 in Beijing and Mar 1 in other Chinese cities. In the Philippines, the government plans to shorten the visa approval process for Chinese tourists to five days, down from the current 10, and to consider visa-on-arrival services for individual travellers.
Furthermore, Asean's tourism outlook remains bright in the long term, said the Maybank Kim Eng economists. First, China's passport penetration remains low at 9 per cent or some 120 million people, compared to countries such as the US (42 per cent), Canada (66 per cent) and the United Kingdom (76 per cent). Second, China is building more new airports for a total of 260 by 2020, up from 229 in 2017, which will spur outbound travel. Asean's airport capacity is also ramping up, including in Thailand, Indonesia, Vietnam and the Philippines. Asean is also diversifying to drive growth in other markets, including India where passport penetration is a mere 5 per cent.