DECLINE IN FOREIGN INVESTMENT IN TOURISM

FOREIGN EXCHANGE EARNINGS SLID TO $245 MILLION IN 2008

TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
Oct 12 - 18, 2009

Pakistan seems to have lost complete charm for foreign investment in tourism sector since over one year. Not a single penny was transferred as foreign direct investment during financial 2008-09. No foreign direct investment was received in the starting two months (July-August) of this financial year. The yearend 2001 had augured a new beginning for the Pakistan's economy. Tourism in the country had also to bear restructuring of socio-economic realities. Since 2001, tourism sector of Pakistan has been one of the bottommost recipients of FDI. It saw an acceleration of foreign investment only in FY07 when $30.18 million was received, highest in 9-year period. Last time the country recorded FDI of $6.6 million in FY08. Main reasons of dampened mood of foreign investors are international portrayal of Pakistan as militants-fraught country and degradation of its ranking in internationally acclaimed tourism indices and rankings. Pakistan ranks 132nd on a list of safe destinations for tourists, 99th in terms of provision of air transport facilities, 35th on cost of goods and services, 44th in terms of possession of cultural resources.

The disturbed law and order situation in Pakistan is affecting every parts of the economy. Unemployment is on rise in the once tourists-attraction places as hotels and restaurants are closing down. Foreign tourists are cutting short their visits to the country because of the security risks. Although there are no latest statistics to prove that how in recent months tourism witnessed decline in international tours Ministry of tourism's January to May 2009 compilation of foreign tourists data show that only 0.289 million tourists landed in Pakistan during the period under review. On the contrary, in corresponding month last year, total 0.324 million tourists were registered. Interestingly, during the period most of the tourists coming to Pakistan had primary motives of pilgrimage. The data reveal 56 percent of total foreign tourists headed towards the province of Punjab that boasts of historical memories and religious monuments. It is not assumed that visiting Punjab might shorten their itineraries. Almost one year of widely spread war against militants discouraged the recreational and other visits of especially foreign tourists in northern areas.

The data show only five percent dared to enter northern areas. 2006 and 2007 were maverick years in the period 2001-2009, when Pakistan registered 0.839 million and 0.898 million tourists respectively. 0.499 million tourists in 2001, 0.498 million in 2002, 0.5 million in 2003, 0.648 million in 2004, 0.798 million in 2005, and 0.4 million in 2008 traveled to the country. While Pakistan's internal instability played key role in falling tourism trend, global recession was also the underlying cause. According to June 2009 UNWTO World Tourism Barometer, the decline in tourism demand continued to intensify in the four months of 2009, sliding to negative 8 percent in comparison to corresponding figure previous year. The 2009 outlook is dependent on world economic performance and the evolution of influenza outbreak, it says. Nevertheless, international tourist arrivals reached 922 million in 2008 up 18 million over 2007, representing 2 percent growth. Receipts rose by 1.7 percent to US$944 billion. The overall export income generated by international tourism including passengers transport reached $1.1 trillion in 2008 that means $3 billion a day. Tourism exports account for 6 percent of overall exports of goods and services. There is a variation in share of tourism sector in gross development products of different countries, ranging from two to 10 percent. Pakistan's share in international arrivals in Asia and Pacific stood at 0.5 percent in 2008 while its share in total receipts of $206 billion was 0.1 percent, sliding to $245 million from $276 million in 2007.

Indian government is battling with four anti-state movements mainly in northeastern part of Naxalism and etc. and it may go as far as strafing militants' positions in some areas. Nepal, Thailand, and Sri Lanka are facing the similar insurgent risks Pakistan does. However, all of them are earning huge foreign exchanges because of their thriving tourism industries. For example, four million tourists who visited India in 2006 spent US$8.9 billion. Other vibrant industries in India like outsourcing information technology and plentiful business trips give a great support to its tourism industry to grow. However, one cannot ignore the marketing and image building exercises Indian government takes up. Shining India and likewise slogans have become aspiration-arousal catch lines in international market. Many people around the world specifically from Asian nations seek medicinal facilities in India. According to an estimate, such visits would increase to one million giving a boost to medical tourism in the dominant destination in South Asia, where tourism grew 6 percent.

There is a forecast that China would become a favorite destination of foreign tourists in year to come and that its tourism industry would get second position in the world by 2015. The possibility of this is not far from the reality since China is already making huge contribution in the world tourism industry in terms of foreign visits by its denizens. Since last nine years, Chinese tourism industry has been growing with 100 percent rate according to an estimate. In 2001, approximately 10 million Chinese tourists travelled to different countries of the World and by 2020, it is estimated, that this number would reach 100 million.

Tourism industry is known for its accelerating socio economic developments in a country through creating jobs and enterprises, and by enhancing exports revenue. South Asian's tourism sees fastest growth rate of 2.7 percent per annum. Pakistan can increase its share in international arrivals and receipts by promoting tourism, maintaining tourist sites, giving travelling comforts, and developing tourism infrastructure.