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By Kevin Martin
When people talk about economic growth in Asia, they tend to highlight the region’s role in global trade and an ever increasing amount of physical goods being shipped from country to country. But this picture fails to capture the movement of people – andin particular, the way that tourism is a major contributor to development in the Asia-Pacific region.
So when people talk about how important it is to promote the free trade of goods, they should not forget there are many steps that can be taken to stimulate the business of tourism. Improving regional air connections, making airports more traveller friendly, and reducing restrictions on international travel are just some of the measures that can make a destination more attractive to potential visitors.
All Asian countries stand to benefit from improvements in these areas, but perhaps none more so than those in Southeast Asia, where tourism is a particularly important driver of economic growth. According data from the World Travel & Tourism Council, travel and tourism directly contributed $117.9 billion to the gross domestic product of Southeast Asian countries in 2014, representing 4.8% of the total. In addition, the industry supported 11.2 million jobs across the region, while investment in this sector was $49 billion over the same period1.
Tourism looks set to grow in significance, with the WTTC predicting that its contribution to GDP will grow by 5.4% per annum to $209.4 billion by 2025. The industry also helps shine a light on how Asia is becoming increasingly interconnected, with the movement of leisure travellers across the region mirroring the growing trade flows between countries.
The rise of the Chinese tourist is a case in point. Now that the country boasts the world’s second largest economy, its growing middle class is proving to be a major source of outbound travellers. In just a few short years, it has become a huge tourism market for destinations across the world; and in Asia, this has translated to a surge in Chinese visitors in Singapore, South Korea, and Japan.
Thailand is one of the biggest beneficiaries, receiving 7.9 million Chinese tourists in last year – nearly three times the 2.8 million seen in 20122. They are attracted to the abundant shopping opportunities that the country has to offer, along with its world class hotels and resorts. In addition, the destination has a position in Chinese popular culture – themovie ‘Lost in Thailand’ is one of the country’s highest grossing films. Three years after its release, and Chinese tourists still mention the movie as an inspiration to visit Thailand.
The surge in visitors looks set to continue. We estimate that the number of Chinese travellers will jump by 46.2% this year. Singapore looks set to get 13.7% more visitors from China in 2016.
The movement of people also goes in the other direction, as Southeast Asia’s rapid economic growth is making international travel an option for a growing segment of the population. We can see that travellers in the region are willing take advantage of countries that reduce travel restrictions. In 2013 for example, Japan started to provide visa-exemptions to tourists from Thailand and Malaysia – a move that had an immediate impact. In the second half of the year, the number of Thailand visitors to Japan nearly doubled and Malaysian travellers increased by 53%3.
The biggest market for Southeast Asian tourists is actually quite close to home, with 46% of visitors to members of the Association of Southeast Asian Nations coming from other ASEAN countries, according to data from the organisation’s strategic tourism plan4.
Travel in the region is supported by an agreement that allows citizens of ASEAN member states visa-free access to holiday in other members of the organisation5. This makes it especially easy for the region’s travellers to experience the wide cultural diversity on offer from the 10 countries that make up the organisation.
Away from ASEAN, we can see industry support from Asia Pacific Economic Cooperation (APEC) – another major organisation devoted to the promotion of free trade. In late May, the APEC Tourism Ministerial Meeting will take place in Peru, with the increase of regional travel and tourism at the top of the agenda.
It should be clear by now that tourism is more than just about holidays, it is big business.This is especially true in Southeast Asia, where there are already measures in place to facilitate the movement of people. We should welcome any further developments in this field – not only because travel provides rich life experiences, but also because it is a major driver in Asia’s economic development.
1https://www.wttc.org/-/media/files/reports/economic%20impact%20research/regional%202015/southeastasia2015.pdf
2 HSBC equity research – The Panda’s Travel Log
3 http://www.apec.org/groups/som-steering-committee-on-economic-and-technical-cooperation/working-groups/tourism.aspx
4 http://www.asean.org/storage/2012/05/ATSP-2016-2025.pdf Page 3
5 http://www.asean.org/?static_post=asean-framework-agreement-on-visa-exemption-kuala-lumpur-25-july-2006-2
The writer is the Group General Manager and Head of Retail Banking & Wealth Management HSBC, Asia Pacific
