Among the most-basic requirements needed to allow a national tourism industry to flourish and prosper is an ‘enabling environment’ – a business-friendly culture that will attract investment; both domestic and foreign. Investor cash is the lifeblood needed to build the service infrastructure – the resorts, hotels and other amenities. Without it the sector will wither.
But tourism is a highly competitive field and so investors can pick and choose where they put their money. What they want, of course, is a reasonable return on their investments and so jurisdictions that can offer favourable terms – such as tax incentives; low set-up costs and a reliable legal system in the event of disputes – will do well. The corollary of that is that those that don’t, won’t.
Unfortunately, this is an area of tourism where the Philippines is falling behind its immediate competition in the Association of Southeast Asian Nations (Asean). This is a peer group in which it should be much closer to the front – particular, given its wealth of natural resources and its universal English-language skills.
The ‘enabling environment’, however, lets it down. Here’s how the Philippines fared in the World Economic Forum’s 2017 Travel & Tourism Competitiveness Report in the ‘business environment’ category. Listed here are the eight Asean member states covered in the report – Brunei and Myanmar were not part of the survey – with their global rankings out of 136 countries.
Singapore, 2nd; Malaysia, 17th; Thailand, 45th; Laos 47th; Indonesia, 60th; Vietnam, 68th; Philippines, 82nd; Cambodia, 125th. So, next to last in a category where it could reasonably come fourth. Singapore, Malaysia and Thailand may be out of reach right now, but surely Laos, Indonesia and Vietnam could be reeled in. We have no way of assessing what the Philippines next-to-last ranking means in terms of lost tourist dollars, but we’d assume it’s pretty sizeable.
As the report states: the “diminished protection of property rights, less effective judicial system and stricter rules on FDIs [foreign direct investments] have reduced the conduciveness of the business environment” in the Philippines.
The problem is that the industry itself is virtually powerless to change the ‘enabling environment’. That has to come from government. So first of all there has to be a will – and historically that’s been conspicuously lacking.
Furthermore, the changes that are needed – whether full-blown reforms or amendments to existing rules and regulations – would involve all three branches of government; and given the public-sector’s propensity for red tape that doesn’t auger well for any swift movement on these issues. Meanwhile, the archipelago’s competitors are in a position to move even further ahead.
Thus, if the Philippines wants a vibrant tourist industry it’s going to have to do a lot more to make it an attractive cash destination. And, we would argue, it needs to do it fairly quickly.