Monday, April 8, 2024
From bustling cities to serene beach destinations, travel and tourism industry’s impact is undeniable, making it a hot topic of discussion among professionals and general audiences alike.
So, fasten your seatbelts and join us as we delve into the exciting world of Travel and tourism and its immense potential to drive economic growth in the Asia-Pacific region.
The key takeaway for the Asia-Pacific tourism industry is that the region’s post-Covid economic situation is still fragile.
Travel and tourism can be a major part of the solution, but only without further external shocks.
This takeaway elevates the crucial significance of Thai Prime Minister Srettha Thavisin’s Ignite Thailand Vision strategy and underscores the importance of preserving and protecting peace and stability across the entire operating environment—social, economic, geopolitical, local, regional, and global.
Indeed, a close analysis shows that a reinvigorated Travel & Tourism sector can expedite the recovery by helping alleviate national debt burdens, broadening the tax base, mobilizing savings, creating jobs for women and senior citizens, addressing climate change, and facilitating digital transformation.
It opens a clear window of opportunity to examine the entire taxation structure of Travel & Tourism, a hugely cash-rich industry, especially the multinational corporations and booking engines.
Says the report, “Global services trade, particularly in tourism, has seen an uptick with the continuing recovery from pandemic restrictions on travel.
Tourism recovery strengthened in 2023, with arrivals in the Asia-Pacific region rising on average to about 62 percent of pre-pandemic levels.
Tourist arrivals have climbed to pre-pandemic levels in Armenia, Fiji, Georgia, Kyrgyzstan, Maldives, Türkiye, and Uzbekistan.
In tourism-dependent countries in Southeast Asia, the return of arrivals has reached approximately 70 percent of the pre-pandemic level.
For the Pacific, tourism has been a critical driver of GDP growth, particularly for Cook Islands, Fiji, Palau, and Samoa.”
Addressing the launch at the Foreign Correspondents Club of Thailand, UNESCAP Executive Secretary Ms. Armida Salsiah Alisjahbana said: The 2024 edition of the Economic and Social Survey of Asia and the Pacific depicts a mixed picture of the region’s economic landscape.
While there has been an upturn in the average economic growth rate in 2023 and projected steady growth for 2024 and 2025, showcasing the region’s robust economic resilience, the rebound was uneven and limited to a few large economies.
High inflation and interest rates, weak external demand, and heightened geopolitical uncertainty are casting shadows over near-term economic prospects.
Moreover, despite relatively steady economic growth, underlying issues exist, such as subdued job creation, weakened purchasing power, and increased poverty and socioeconomic inequalities across the region.”
A core focus of this year’s report is the cost of borrowing and debt maturity that is weighing down on Asia Pacific economies due to the debt burden created by the COVID-19 crisis. ESCAP executives shared the following info:
Total external debt stocks in developing Asia-Pacific in 2022 totaled $5.4 trillion (Based on World Bank, WDI, accessed April 2024).
Total public external debt stocks in developing Asia-Pacific in 2022 amounted to $1.7 trillion (Based on World Bank, WDI, accessed April 2024).
The total public debt for developing Asia-Pacific amounted to $17.3 trillion in 2022 and is estimated at $20.5 trillion in 2023 (Based on IMF Fiscal Monitor, October 2023).
In a powerful introduction to the report, UN Secretary-General Antonio Guterres says, that governments of developing countries across Asia and the Pacific are victims of an unjust, outdated, and dysfunctional global financial architecture.
They face fiscal constraints, rising borrowing rates with shorter loan maturity, and heavy debt burdens.
Up to half of low-income countries in the region are already in, or at high risk of, debt distress, forced to choose between servicing debt or investing in education, health and social protection for their people.
To address this, the report recommends a three-pronged approach:
1. Donors should honor their overdue commitments and match allocations with needs: Official development assistance in 2022 amounted to only half of the commitment made since 1970.
This assistance should be provided to developing countries with wider development financing gaps and greater exposure to shocks rather than those with shared political interests.
2. Addressing underutilized resources and capacities of multilateral development banks: Fresh capital injections for multilateral development banks are urgently needed to catch up with the growing development needs of developing countries.
In the meantime, the banks can better leverage their existing capital, increase lending in local currencies, reduce the administrative burden of loan packages, and work closely with each other to amplify their collective lending capacities.
3. Towards more development-aligned and long-term sovereign credit ratings: Credit rating agencies should incorporate the potential long-term impacts of demographic shifts and climate risks on sovereign risks in their assessments and recognize that public investment in sustainable development raises sovereign creditworthiness over time.
Meanwhile, ideas to set up a regional credit rating agency that better understands the development context of Asia and the Pacific could be explored. ESCAP can facilitate experience-sharing in this regard.
While grappling with this unstable and fluid scenario, the report flags three megatrends reshaping economies, directly influencing fiscal resources and fiscal policy conduct, and presenting risks and opportunities.
1. Population aging: A shrinking workforce and lower labor productivity among older workers could hamper tax collection. Fiscal needs for old-age health care, social protection, and lifelong learning will rise. Fiscal policy could also become less effective, as older people’s consumption is less responsive to fiscal incentives.
2. Climate change and environmental degradation: Fiscal revenues would be eroded due to weaker productive capacity amid natural resource scarcity and less productive workers. Sizeable fiscal spending will be needed to rebuild post-disaster economies and invest in green development. Climate change can push up inflation, thus interest rates and government borrowing costs, through lower crop yields and removal of fossil fuel subsidies.
3. Technologies and digitalization pose both risks and opportunities. Countries with traditional tax systems based on the tangibility and physical location of goods and services find it difficult to tax the increasingly digitalized economies. However, digital tools can also help enhance the efficiency and effectiveness of public financial management systems, such as electronic procurement and tax return filing.
The bottom line is that Covid-19 may be over, but many new dangers are on the horizon and getting worse.
The Asia-Pacific, the world’s most populous region, needs at least ten years of peace and stability to maintain the recovery.
Steering clear of internal conflict and shielding itself from the fallout of external conflicts is critical to the growth, which could otherwise hit the skids in a split second.
The ESCAP report provides a comprehensive fiscal checklist against which travel and tourism strategies can be created and adapted to strengthen the overall recovery, especially in many tourism-dependent countries.
It is also a handy point of reference for regional tourism organizations such as PATA and ASEANTA and the tourism units of sub-regional bodies such as BIMST-EC, the GMS, and IMT-GT to bolster intra-regional travel.
Tags: asia-pacific, travel and tourism
Tuesday, April 30, 2024
Tuesday, April 30, 2024
Tuesday, April 30, 2024
Tuesday, April 30, 2024
Tuesday, April 30, 2024
Tuesday, April 30, 2024
Tuesday, April 30, 2024
