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The new tourism policy

Northern Areas, if properly developed, can attract tourists from all over the world

From Shamim Ahmed Rizvi,
Islamabad
July 16 - 22 , 2001

The new tourism policy announced by the Federal Minister for Culture and Tourism reflected the thinking of President Musharraf, which he had expounded a few months back while addressing an international gathering at the annual silk route festival combined with Gilgit Trade Fair. General Musharraf had observed that Northern Areas, if properly developed, can attract tourists from all over the world as it offered the world most beautiful scenic spots.

He had announced that to harness the tourism potential of the area, his government was focusing on the speedy development of the areas. A network of Road Linking Chitral, Gilgit, Astoor, Hunza, Skardu and Chillas will be ready within the next 2 years while new tourism policy would announce attractive incentives to construct motels and other infrastructure for tourists. Development of Tourism Industry in Pakistan has a big potential, Gen. Musharraf had observed.

The new tourism policy has unfolded certain new directions which were hitherto not given due attention, in the promotional efforts to attract foreign tourists and thereby to meaningfully develop this important source of foreign exchange inflows into the country. According to the projections in the new policy, the minister expected 6.5 percent annual growth in tourist arrivals and subject to the implementation of the newly charted strategy, foreign exchange earnings from this source by the year 2005 should reach $800 million annually as compared to the present estimates of about $200 million.

The policy envisages a number of initiatives, including holding of car and motorcycle rallies in the Northern Areas of the country, one-window clearance of permission and arrangements for the intending foreign mountaineers, competition in the rock climbing, construction of road leading to scenic spots and historical monuments, building of tourist resorts, hotels and motels, allowing foreign tourists use of existing rest houses and bungalows owned by federal and provincial governments and autonomous bodies, construction of washrooms at petrol stations on highways in addition to similar facilities at appropriate distances on the highways, in addition to similar facilities at appropriate distances on the highways, promoting homecoming tours by overseas Pakistanis, encouraging greater participation of the private sector in tourist development by offering incentives for investment, improving the quality and functions of tourist guides within the framework of the Pakistan Tourism Development Corporation, in addition to larger representation of the private sector on the board of directors of this corporation, etc.

Additionally, the programme also envisages a wide publicity campaign through preparation of informative brochures and documentaries for distribution to foreign missions abroad. The publicity material would also include a calendar of national events such as national horse and cattle show and other occasions of interest in Pakistan for foreign tourists. It is proposed that package tours would be encouraged by allowing certain incentives to travelling agencies and others. The incentives mentioned in the policy statement propose income tax relief to tour operators who sponsor a minimum of 500 tourists during the course of a calendar year.

However, the new policy does not mention any details of fiscal incentives that might be permissible to private investors in the tourist development process. It may be mentioned here that the previous policy had allowed industry status to tourism development activity in order to make available such fiscal incentives to investors in tourism facilities as are available to the industrial sector. It is not clear whether such a treatment will continue to be available to investors in the tourism sector. In fact, the new policy is silent on fiscal or other incentives for the intending private investors in this sector although the development of adequate infrastructure facilities would alone ensure successful progress in the promotion of tourism in the country. The policy statement has indicated heavy reliance on the private investor's participation in the development of first class transport facilities, tourist resorts, hotels and motels of different sizes for foreign tourists. At the same time all weather roads would have to be constructed in different hilly areas of the north in order to facilitate visits from foreign tourists. Investment for this purpose would have to be attracted from the private sector through necessary fiscal incentives. When investment activity in the country as a whole remains at low ebb and tourism development activities carry a comparatively high risk, special incentives and reliefs in some forms would be necessary to organize an active touris industry. Additionally long term loan facilities at a reasonable rate of mark-up, preferably comparable with export refinance, would have to be given due consideration. It is common knowledge that all fixed capital investment consists of equity investment to the extent of 40 percent and debt capital to the extent of 60 percent. As such, liberal loan financing for this sector can hardly be overlooked.

Preferably, a specialised banking institution may be promoted jointly by the public sector land private promoters for exclusively catering for the development of tourism in the country.