UN'S ESCAP POINTS TO TOURISM AS MEANS TO ALLEVIATE POVERTY

Financial Times Information, May 5, 2005

The disasters that have affected the region recently appear to have awakened the economists at the UN Economic and Social Commission for Asia and Pacific (Escap) to the importance of tourism to poverty alleviation.

In Escap's annual state of the Asia-Pacific economic report, released last
week, tourism is mentioned 64 times in assessing the conditions of
countries, considered in UN classification as being "least developed
economies".

This is a big change from the past, when tourism was frivolously treated
in the report as a fringe industry. But the recent Sars and tsunami
disasters showed how dependent these countries are on tourism for both
jobs and export earnings.

Indeed, the report takes resolute notice of the fact that Nepal, Maldives,
Sri Lanka, Fiji, the South Pacific island countries all have extensive
exposure to travel and tourism, with precious other resources to provide a
means of sustenance.

Paradoxically, although these countries have long stressed the positive
impact of tourism on their economies, it is not until the negative effect
hits that economists suddenly realise that travel and tourism is a serious
business, not just a fun-and-frolic means of recreation for foreigners.

The report also notes that region-wide, earnings from services are
beginning to catch up with those of earnings from manufactured goods, and
the looming threat of oil prices is again exposing the industry to the
possibility of a downturn due to the impact on transportation costs.

The subject of the report is "Dealing with Shocks" and the first paragraph
of the foreword alone begets a mention.

The "wide spectrum of shocks" hitting the Asia-Pacific all through 2004
ranged from avian influenza to persistent high oil prices, from the spread
of HIV/Aids to cyclones, typhoons, floods and drought.

"The tsunami catastrophe alone is estimated to have taken more than a
quarter of a million lives, while severely damaging the physical and
social infrastructure of the affected countries, as well as
export-oriented sectors such as fisheries, agriculture and tourism." In
repeated references, the report rues the impact of these shocks on local
economies.

In India and Sri Lanka, hardest hit by the tsunami in South Asia, in
addition to the loss of entire fishing communities, "people dependent on
the tourism industry in the affected areas have lost their jobs and
earnings. Since this disaster occurred during the peak tourist season,
many people were deprived of a major part of their earnings for the entire
year. All this will add to the incidence of poverty." While in India,
along with larger, more diversified economies like Indonesia and Thailand,
the likely GDP growth loss is expected to be less than 0.5% in 2005, "the
repercussions on local communities in the areas affected, especially those
reliant on fishing and tourism, have been massive, particularly where many
residents were already poor with substandard housing and living
conditions." The Maldives, particularly hard-hit by the tsunami, "is
expected to lose four percentage points of GDP growth in 2005 owing to its
small size and heavy reliance on tourism and fisheries. Sri Lanka is also
expected to face a reduction of 1% in 2005 economic growth, for similar
reasons." In the South Pacific, tourism has grown in Fiji, Samoa, Tonga
and Vanuatu, thanks to strong economic growth in Australia and New Zealand
(the main source of visitors to the South Pacific islands) and the
increase in flights from those countries to Pacific destinations.

However, the high oil prices, if they persist, will directly raise the
costs of power and transport in Pacific island countries, the report says.

In Southeast Asia, countries such as Laos "continued its comparatively
strong performance", aided by strong investment and exports and a recovery
in tourism.

For other countries, regional and global factors such as the prevalence of
bird flu adversely affected both agriculture and tourism, while the
anticipated expiration of the Multi-Fibre Agreement had a substantial
impact on both the manufacture and export of garments." Like Laos, Bhutan
is a landlocked country dependent on sales of electricity and
construction, which comprise nearly one third of GDP. The report notes
that both tourist arrivals and tourism revenues doubled in the third
quarter of 2004 over the same period in 2003 as a result of renewed
international interest in Bhutan.

The report warns that tourism development may be widening the urban-rural
gap in small economies with unused arable land and a large unskilled
labour force.

At the same, however, it notes that post-tsunami reconstruction has
provided governments with an opportunity to ensure that future development
of devastated coastal areas will embody greater respect for the
environment and for human safety.