Many moons ago Singapore’s then prime minister tried to encourage the government to develop Myanmar’s tourism sector, writes Lars Henriksson. He’s finally getting his wish.
In the book General Ne Win: A Political Biography academic Robert H. Taylor writes that “on 16 January 1986, Singapore Prime Minister Lee Kuan Yew visited Ne Win at his home on Ady Road for a couple of hours. He found the lack of development deplorable and when he subsequently tried to convince Prime Minister Maung Maung Kha to develop the tourism industry, he got no response.”
Lee Kuan Yew was known as a man not of just ideas but of action.
In the mid 1980s Singapore received about two million tourist arrivals per year. Three decades later – in July 2016 – the figure reached an all time high of 16.2 million – an eightfold increase.
Singapore is also home to top-ranked hotels, two casinos, the Formula 1 Night Race and the Asian Civilisations Museum to name a few. Collectively, they yield billions for entrepreneurs, jobs and tax contribution for the government’s coffers.
Tourism and travel, which the World Travel & Tourism Council defines as “the activity of travellers on trips outside their usual environment with a duration of less than one year – ” is a buoyant industry right now.
In 2015, for the fifth consecutive year, the growth the travel and tourism sector exceeded that of the global economy – 2.8% versus 2.3% – as well as that of a number of other major sectors, such as manufacturing and retail.
Globally, the sector generated $7.2 trillion, or nearly 10% of global GDP, and supported 284 million jobs, equivalent to 1 in 11 jobs in the global economy.
Looking ahead over the next decade, it is expected to continue to outpace most industries and anticipated to support over 370 million jobs by 2026.
The Birth of Club Asia
For centuries tourism was mostly the privilege of aristocrats or otherwise very well-off people.
In the early part of the 20th century, middle class people started taking trips to seaside or mountain resorts in search of recuperation, better health and family time.
Then in the 1950s through 1970s, mass tourism came into vogue. A combination of newly minted economic wealth combined and technological discoveries allowed people in middle and northern Europe to fly south for some sun and recreation in the Mediterranean.
Club Méditerranée SA, commonly known as Club Med, a French public limited company specializing in the sale of package holidays is probably the best example of this trend.
I believe a ‘Club Asia’ is unfolding. People from Asia’s colder North are flocking to ASEAN for the same reasons northern Europeans began to flock to the Mediterranean. The growth momentum is further strengthened by travelling within ASEAN, which is booming on the back of the proliferation of low-cost carriers, affordable hotels and visa waivers, like the one between Myanmar and Singapore recently.
The Golden Land
The way the Ministry of Hotels and Tourism paints the tourism industry in Myanmar makes things seem rather dull. In 2015, the ministry says, tourist arrivals reached 2.5 million. Each foreign tourist spent an average of $171 a day and stayed for an average of nine days, meaning the sector generated $2.1bn in total revenues.
The World Travel & Tourism Council offers a more exciting assessment.
Figures relating to the direct contribution of travel and tourism – encompassing domestic tourism, hotels, travel agents and other related restaurant and leisure industries which deal directly with tourists – showed that the industry contributed 2.6% of GDP, the council said. And this is expected to grow by 7.6% a year up to 2026.
On top of that, the total contribution – which includes capital investment, government spending linked to the sector, supply chain effects (goods and services purchased by industries within the sector) – was 5.9% of GDP in 2015. Over the next decade it is expected to rise K9,766.4 billion, or 6.5% of GDP by 2026.
Directly, the sector employed 661,000 people in 2015, and that number is expected to nearly double to 1.12 million by 2026. The total number of those employed in relation to the tourism industry stood at 1.4 million in 2015 and is estimated to hit 2.1 million in 2026.
Meanwhile, investment in the industry accounted for 0.7% of all investments in 2015. And that is expected to grow by 9.8% through 2026 to become 1.1% of the total.
On an absolute level, Myanmar’s tourism industry is nothing to brag about. In terms of contribution to GDP it ranked 94 among nearly 200 countries in 2015, according to WTCC.
But a dynamic assessment, which is what investors are really interested in, offers a different picture.
Myanmar ranks number two in the world in terms of long-term growth potential, with an estimated growth rate of 7.8% a year through 2026.
It leaves its neighbours in the dust. Vietnam is ranked number five on the same list, Thailand number 15, Cambodia 24 and Laos 39.
Undoubtedly the WTCC’s assessment of the tourism industry hinges on various liberalisations being brought in and support from policymakers. But the key is to watch what investors do.
Yangon is strategically located between India and China with two-thirds of the world’s population within six hours flying range. That includes cities such as Tokyo, Dubai, Singapore, Beijing and New Delhi. And the city is receiving more international carriers, opening new airport terminals and improving services and capacity.
ASEAN is winning global recognition as a tourism hub. Bangkok will host WTCC’s 17th Global Summit in April, and the theme will be “Transforming our World.” Interestingly, David Cameron will be a guest speaker, presumably based on his well-known approach of ‘chillaxing’ during his time as Prime Minister of Great Britain.
Singapore is the single biggest investor in Myanmar’s hotels and commercial complexes. with a total of $1.5 billion in investments, three times more than countries like Vietnam, Thailand and Hong Kong.
In 2014 a Singapore-led consortium clinched a $15 billion contract to build a second international airport located 80 kilometres north of Yangon. Known as the Hanthawaddy International Airport, it is said to open in five years and will serve 12 million passengers a year – twice as much as the current Yangon International Airport.
I think these developments would put a smile on late Lee Kuan Yew’s face. Lars Henriksson is an expert on emerging markets based in Asia
Source: Myanmar Business Today
