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Tourism and Regional Economic Development in Southeast Asia

Conference Paper · July 2006

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 Tourism and Regional Economic Development in Southeast Asia

Mohammad Nurul Huda Mazumder

Faculty Of Management, Multimedia University,
Cyberjaya Campus, Jalan Multimedia, Cyberjaya 63100, Selangor Darul Ehsan, Malaysia
Tel: +603 8312 569; Fax: +603 8312 5590
E-mail: mohammad@mmu.edu.my

Md. Wahid Murad

Faculty Of Business And Law, Multimedia University,
Melaka Campus, Jalan Ayer Keroh Lama, Melaka 75450, Malaysia
Tel: +606 252 3024; Fax: +606 231 8869
E-mail: wahid.murad@mmu.edu.my

Elsadig Musa Ahmed

Faculty Of Business And Law, Multimedia University,
Melaka Campus, Jalan Ayer Keroh Lama, Melaka 75450, Malaysia
Tel: +606 252 3807; Fax: +606 231 8869
E-mail: elsadig.musa@mmu.edu.my

Mohamed Sharif Bashir

Faculty of Economics and Muamalat, Islamic University College of Malaysia,
Bandar Baru Nilai, 71800, Nilai, Negeri Sembilan, Malaysia
Tel: 06-798 8000 Fax: 06-799 3843
E-mail: msharief@hotmail.com

Abstract
Tourism, a key economic activity, which significantly contributes to the regional
economic development of Southeast Asian economies, has been assessed in this
paper in realizing the progress made by this industry. The economic impacts of
tourism are felts at all levels of the economies of Southeast Asian nations. This paper
reviews the potentiality of tourism in regional economic development, cooperation
and prospects of tourism in Southeast Asian economies by examining the nature of
the development of tourism and identifying the problems of tourism industry that
exist in the Southeast Asian tourism industry. It also explores the strategies needed to
develop tourism collectively to achieve gains through the formation of pertaining
environment and mobilization of endowed strategic resources. The conclusion of this
paper suggests giving attention on a range of issues such as transparent objectives in
aiming successful tourism development, implementation and integration of these
objectives into national plans, participation of community people, tourism
entrepreneurship and co-operation and integration of governments in developing
tourism. It considers some aspects of the development of tourism and reveals to do
further research in other relevant aspects. The paper reveals, successfully
overcoming the tourism development difficulties, Southeast Asian tourism industry
has the potentiality to get benefit from economies of scale.

Key Words: regional tourism, regional economic development, strategy, Southeast

Asian economies.

1
 Introduction:

The purpose of this paper is to examine tourism within the context of Southeast Asian
regional economic development, to consider critical factors that might stimulate and inhibit its
development, to draw implications from the analysis to assist tourism policy initiators in the region for
the development of this intangible sector.
These issues are discussed in three parts. First, a review of the overall pattern and
performances illustrates the significance of tourism in the world economy and in some countries. The
second part identifies and analyses some key issues in the development of tourism as a tool for
regional and economic development in the region. And in the last part, emphasis is given in dealing
the policy aspects to these concerned areas. The challenges and opportunities associated with the
course of developing tourism are referred to as issues considered in this paper.
Regional development through tourism will be obvious and occur where regional countries
are prepared to collaborate, cooperate and support as partners. As anticipated, tourism developing
countries supposed to be competitor of each other which practically contradicted with the current
trends of tourism. Tourism products and attributes are unique in nature in each countries of the world.
Recent studies (Rogerson, 2004; Chang, 1998) show that the greater expansion and economic impact
of tourism rely on how countries within the region cooperate and support each other rather than
competing.
The term “development” is described in this paper as an improvement of existing quality of
life and opportunities by encouraging tourism. To formulate a distinctive regional tourism policy,
strategic development scenarios has been taken into the consideration in policy making to overcome
the areas of concern through prioritization.

Tourism in Economic Development:

Immediately After the Second World War, tourism was considered to be an alternative
industry for developed countries. It has been regarded as a panacea for the developing and Southeast
Asian countries to mitigate their macroeconomic disparities only after 1970’s. Robert Erbes pointed
out that “Everything seems to suggest that developing countries look upon tourism consumption as
manna from heaven that can provide a solution to all their foreign settlement difficulties” (Erbes,
1973). To some extent, this statement of tourism as “manna from heaven” got some support, in part
because tourism is a highly multidisciplinary and visible activity. Given the well recognized and
widely accepted weakness approaches of tourism as a feasible economic development strategy for less
developed countries, some critics conversely argue that the statement is rather absurd if it is not over-
simplistic. Though the outcome of this particular debate was a matter of concern, since then Erbes’
point of view and research (Archer and Owen 1971; Archer, Shea and Vane 1974; Armstrong, Daniel
and Francis 1974; Archer 1976; Kadt, 1979; Jenkins, 1994; Sinclair, 1998) have focused attention on
the far-reaching implications of tourism (for instance, its strength and limitations” as being a means of
assisting in the process of development).
Now a day, many less developed countries (LDCs) view tourism as an important and integral
part of their economic development strategies (Sinclair, 1998). For those countries, tourism is
perceived as a cushion for their delicate economies that are described by a scarcity of development
resources such as finance and expertise. These resources are necessary to achieve the economic
growth and budget surplus, without which these countries would be forced to rely on few agricultural,
traditional exports and international aid to support their development efforts. The well-recognized
benefits of tourism are therefore important reasons to get Southeast Asian governments support for the
sector.
Economic benefits of tourism are usually felt at two levels; national or macro, and sub-
national or micro level. Tourism is expected to foster economic growth through foreign exchange
earnings and an increase in state revenue at the first or macro economic level, and at the second level,
an improvement in citizen’s well-being in the areas of job creation, revenue or income distribution and
balanced regional development. For many developing countries, tourism is the engine of growth and

2
development. According to Bryden (1973), de Kadt (1979), Blackman (1991), Bull (1992) and others,
tourism should positively affect economic growth and development for several reasons. First, tourism
earns the country foreign exchange which it is used to import not only consumer goods but also capital
and intermediate goods. Second, tourism facilitates the use of resources that are in line with the
country’s factor endowment. Third, tourism provides employment opportunities for workers in the
economy. Fourth, tourism promotes improvements in the country’s economy. Fifth, tourism is seen as
serving as the conduit for transferring new technology and managerial skills into the economy.
Finally, tourism is viewed as possessing the potential for creating positive linkages with other sectors
of the economy particularly agriculture, manufacture, and other service industries. In this respect
tourism is defined as an industry although it has no single production characteristics or absolute
operational parameters. Though tourism is mainly an economic phenomenon, its economic dimension
cannot be measured without inputs of social, cultural and environmental nature.
Before proceeding to the further point, it needs to be stated that as demand for tourism
increases rapidly, it will not only bring opportunities for linkages with other sectors in the economy but
also will develop consequences of an economic, social, cultural and environmental costs. These
consequences, such as inflation, overcrowded airports and urban traffic congestion, affect both the
private and public sectors. A well managed tourism industry has the potential to maximize these
consequences for integrated economic development.
However, it is mandatory to remember that tourism is more than an economic activity. In
essence, it is a massive interaction of people, demanding a wide range of services, facilities, and inputs
that generate opportunities and challenges to host countries. For this reason, it is vital to manage the
growth of the sector and to have clear guidelines to ensure that growth is compatible and fulfilling
national and sectoral objectives. Policy provides the guidelines and the reference which seek any
development of the sector should be evaluated.
Although tourism development creates the provision of integrated facilities and services, there
are, conversely, afflictions when these facilities are not available to local residents. Correspondingly,
tourism has been criticized for exacerbating the problems of societies such as the destruction of social
patterns, custom and cultural aspect of the society, neo-colonialist relationships of exploitation and
dependence, inflationary pressure, among others. It is acceptable to have merit whatever the positions.
To focus on a more balanced view, this paper explores the issues within a broader framework
of international tourism economy, related to the synthesis of Southeast Asian tourism perspectives, and
assesses the critical factors, which might stimulate and inhibit tourism development in Southeast Asia.
The success of this paper also expected that the analysis should provide policy directions, which
should be taken into account before Southeast Asian policy makers take major decision in this field.

Growth of Tourism:

Travel has existed for thousands of years. Throughout history, people have travelled for the
purposes of trade, religion, economic gain, war, migration, and many other motivations (Theobald
1998). However, while travel has been part of human existence for a long time, the concept of
tourism has not. Tourism as we know it today is a distinctly twentieth century phenomenon. Modern
tourism evolved primarily after the Second World War, when the advent of commercial airlines
allowed individuals to travel to further and more distant places with quicker ease and speed. In
addition, increasingly higher standards of living and leisure time, primarily in Western nations,
afforded people to take greater opportunity for travel. As a result, the development of what we
consider tourism was established. Since this time, the number of travellers worldwide has grown and
international tourism has emerged over the past half a century as a dynamic and growing industry.
With the growth of tourism, an increasing amount of attention has been given to the study of
the industry. The study of tourism is a multidisciplinary phenomenon. For example, tourism has been
analyzed in terms of the economic development it can promote. If has been examined for the impact it
has on the environment. Research has also been conducted on the social impacts of tourism
development. The nature of the industry, the type of growth it promotes, and the impact it has have all
been discussed in tourism literature.

3
 The growing importance of leisure as well as rising standard of living is the factor of
increasing awareness about tourism that has integrated its significance towards new heights. The
factors of tourism growth are being identified as:
(1) Increasing leisure time: the International Labour Organization convention provided
one-week leave per year for workers in developed countries in 1936. In 1970, this was
expanded to three weeks, and in 1999 to four weeks.
(2) Increased disposable income: Spending on leisure in the UK has risen from 9 per
cent of household income in 1978 to 17 per cent in 1998 (Tearfund, 2000). In 2002-3 the UK
Family Expenditure Survey found UK households spent £660 a year on holidays, totalling
£308 million for the year. The real disposable income is increased 4.5 times more in real
terms than 30 years before.
(3) Falling real cost of travel: Between 1978 and 1998, the real cost of air travel fell by
35 percent (Air Travel Association). A thousand miles of air travel now requires 61 hours
less work than it did a generation ago. (Peopleandplanet, 2004)
Barcelona Field Studies Centre SL addressed some other social and economic determinants
that cause the growth of tourism. The organization defined the growth of tourism as (i) increase in car
ownership, (ii) increase in leisure time which included holiday entitlement, shorter working week and
early retirement with pensions, and ageing population (iii) greater wealth initiated because of larger
incomes, fewer children and two wage-earner families (Geographyfieldwork, 2005).
An exceptional increase in leisure provisions in many First World countries along with higher
wages in the West and introduction of social legislation governing holiday allocation for workers take
advantage of producing what we now recognized as the contemporary tourism industry.
It has been seen that Tourism has become one of the fastest growing industries within the
service sector from the past few decades. The tourism industry is considered by some countries to be a
more reliable source of foreign exchange earnings than minerals, raw materials, cash crops and
manufactured goods, which has increasingly unstable prices. The destination countries are
increasingly interested in tourism because tourism generates foreign currency and contribute to the
Balance of payments. It generates employment and contributes to the diversification of the economy.
It also helps to the development of weak regions or regeneration of regions in decay. Multiplier effect
is another characteristic of the tourism. Tourism generates Tax revenue for the government. Tourism
products are perishable where tourism investments have the advantage of longer period existence.
Two principal advantages of the switch to tourism as a major economic activity are: 1) the tourism
product is renewed every twenty-four hours with minimal additional investment; and 2) tourism is a
labour-intensive industry whose workers in the majority perceive directly or indirectly incentive
remuneration in addition to a base wage or salary (Crespo and Díaz 1997).
Today, Tourism has become a huge phenomenon both in terms of the movement of people as
well as in terms spending pattern. World Travel and Tourism Council (WTTC, 2004) predicts that
tourism, along with Information Technology and Telecommunications, will drive the economy of the
21st century. Tourism is the largest generator of wealth and employment in the world. Tourism is the
economic engine for many developed and developing economies.
One of the fastest growing industries in the global economy, tourism is an activity that has
flourished tremendously over the years as an economic and social phenomenon. Tourism is one of the
biggest areas of economic activity, which revealed its importance through embracing it as a concerned
matter in the world trade, and gets its place to be covered under the WTO’s General Agreement on
Trade and Services (GATS). Even developed and developing countries have given tourism as an
industry status.
Based on these sense some say that tourism will become the most important industry globally
by this century. If tourism’s economic consequences are to occur efficiently, therefore, it cannot be
viewed as an isolated economic activity. Rather the links between tourism and other economic
activities should be appropriated (Yan & Wall, 2001)

4
 Tourism in the World Economy

Tourism, as a sector that comprises an extensive range of economic activities, can be

considered the largest industry in the world1 (UN, 2001a; Neto, 2003). International tourism is also
one of the fastest growing and most ramified sectors of the global economy, covering a broad range of
enterprises, sectors and stakeholders. During the 1990s, when the globalization of tourism reached
unprecedented proportions, international tourism receipts had a much higher average annual growth
rate (7.3 per cent) than that of gross world product 2 (UN, 2001a; Neto, 2003). By 1999, international
tourism receipts accounted for more than 8% of the worldwide export value of goods and roughly 35%
of exports of services, overtaking the export value of other leading world industries such as automotive
products, chemicals, and computer and office equipment (see Table 1).

TABLE 1 Worldwide Export Earningsa of Top Ten Industries, 1999

Industry Export Earnings Share (%)
(US$ billion)
International Tourismb 555 8.1
Automotive Products 549 8.0
Chemicals 526 7.6
Food 437 6.3
Fuels 401 5.8
Computer and Office Equipment 394 5.7
Textile and Clothing 334 4.8
Telecommunications Equipment 289 4.2
Mining Products (other than fuels) 155 2.3
Iron and Steel Products 126 1.8
Total Worldwide Export of Goods 6890 100.0
and Services (including other industries)

Source: Tourism Market Trends – 2001 Edition, (World Overview and Tourism Topics), op. cit.

Pace of Growth of the World Tourism Industry:

Tourism has grown faster than the rate of growth of the world’s gross national product since
the beginning of the era of great economic progress between 1946 and 1987 (travelbigpicture, 2005).
Tourism has become the world’s largest industry, experiencing strong growth since the 1950s
(Murphy, 1994). The number of international arrivals has been increasing steadily. International
tourism has grown rapidly since the early 1950s particularly after the liberalization of tourism
exchange and travel restrictions that characterized the years following the Second World War (Go,
1997). Part of the growth is due to increased speed and convenience in transportation, communication
and technology, especially during the last fifteen years.
Prior to September 11th, peace negotiations that had been taking place around the
globe began to impact travel between nations. The negotiations among nations, which created several
agreements such as NAFTA, ASEAN, European Union, and South Pacific, and removed barriers to the
free movement of people between countries. Additionally, some other actions of governments spurred
tourism. China opened its doors to the world and built a large supply of hotel rooms to accommodate
foreign visitors; and the Japanese government pursued an active program to encourage its citizens to
visit foreign countries.

5
 TABLE 2 World Tourism Growth, 1950-2000
Year Int’l tourist arrivals Int’l tourist receipts
From To From To From To

1950 1960 25,282,000 69,320,000 $2,100,000,000 $6,867,000,000

1960 1970 69,320,000 165,787,000 $6,867,000,000 $17,900,000,000
1970 1980 165,787,000 285,997,000 $17,900,000,000 $105,320,000,000
1980 1990 285,997,000 457,217,000 $105,320,000,000 $264,647,000,000
1990 1999 457,217,000 664,437,000 $264,647,000,000 $454,553,000,000
1999 2000 664,437,000 698,800,000 $454,553,000,000 $475,800,000,000
Source: World Tourism Organization, 2002.
Records show that tourism industry has grown about 100% in every ten years. History shows
that both international tourist arrivals and international tourist receipts have been increasing at a high
rate and has been summarized in table 2.
Tourism can be considered one of the most remarkable economic phenomena of the twentieth
century. From an activity “enjoyed by only a small group of relatively well-off people” during the first
half of the last century, it gradually became a mass phenomenon during the post-World War II period,
particularly from the 1970s onwards (WTO 2001a).
Although domestic tourism currently accounts for approximately 80 per cent of all tourist
activity (UN, 2001a; Neto, 2003), many countries tend to give priority to international tourism
because, while the former basically involves a regional redistribution of national income, the latter has
now become the world’s largest source of foreign exchange receipts. According to latest figures
compiled by the World Tourism Organization (WTO), foreign exchange earnings from international
tourism reached a peak of US$476 billion in 2000, which was larger than the export value of petroleum
products, motor vehicles, telecommunications equipment or any other single category of product or
service (WTO, 2001a).
International tourist arrivals grew at an annual average rate of 4.3% during the 1990’s, despite
major international political and economic crises, such as the Gulf War and the Asian financial crisis
(WTO, 2001a). Even the Gulf War year of 1991 recorded a small increase of 1.2% in international
arrivals. Annual international arrivals include different visits to the same country by the same
international visitor during a single year. International tourists include both overnight and same-day
visitors (WTO, 2001a). According to the latest WTO figures, the turn of the millennium recorded one
of the most impressive annual growth rates in international tourism. All regions of the world recorded
significant growth in international tourism in 2000, during which the number of international arrivals
grew at an extraordinary rate of 7% cent to reach almost 700 million arrivals.
The September 2001 terrorist attacks in the United States, however, appear to have had a
more serious impact on the tourist sector than any other major international crisis in recent decades.
The attacks had a particularly severe impact on air transport, business travel and long-haul travel.
Worldwide travel reservations were estimated to have dropped by 15% at the end of October 2001,
although not every destination nor every part of the tourism sector was badly affected (WTO, 2001a).
For example, while air transport and luxury hotels have suffered from considerable fall in tourist
arrival travel within the same country or region, as well as travel by rail and road, appear to have
weathered the worst effects of the crisis, or even benefited from it.
Nevertheless, initial forecasts of 3-4% rise in international tourist arrivals for 2001, made
before the September 2001 attacks, were subsequently revised downwards to around a 1 per cent
increase over the 200 figures (Idem). The latest data, released by WTO in January 2002, show that
there was a sharp decline of 1.3 per cent in international arrivals, to a total of slightly over 690 million,
in 2001 (WTO, 2002). By the time the attacks took place; this significant drop confirms that the short-
term impacts of the attacks were devastating to international tourism as a whole. The last four months
of 2001, in fact, recorded a drop of almost 11 per cent in arrivals worldwide and substantial decreases
in all regions of the world (Idem). The estimated drops in the number of international arrivals by
region are: 30% in the Middle East, 24% in both the Americas and South Asia, 10 per cent in East
Asia and the Pacific, 6% in Europe and 3.58% in Africa, respectively.
It is worth noting, however, that this considerable fall in international arrivals was caused not
only by a widespread fear of travelling generated by the attacks – particularly in airplanes and to
certain destinations – but also by a downturn in the world economy. The economic downturn that

6
began in the United States during the first half of 2001 had an affect on the tourism sector before the
terrorist attacks were carried out. The attacks merely aggravated the economic slowdown already
under way.
According to the most recent United Nations economic forecasts (UN 2002a), growth of only
1.5% in gross world product (GWP) was expected in 2002, as compared to 1.3% last year. Such a
modest improvement was linked to a number of economic uncertainties, notably the high dependency
of the global economy on the recovery of the United States. Higher rates of population growth would
thus made 2002 the second consecutive year with no real growth in per capita GWP. This, in turn,
undermined the short-term prospects for a recovery in international tourism until mid-2002. Some
destinations experienced a prolonged decline in tourism revenues regardless of world economic
improvements.
In the medium and long term, however, international tourism continues its rapid growth, in
view of rising living standards and discretionary incomes, falling real costs of travel, expansion and
improvement of various transport modes, increasing amounts of free time and other factors. The
World Tourism Organization reiterated its long-term forecasts, made before the September 2001
attacks, of an average annual growth rate in international arrivals of over 4 per cent in the period up to
2020(WTO 2001). The number of international arrivals is thus expected to reach the striking mark of
1 billion by 2010 and 1.6 billion by 2020 (WTO 2001a).
In recent years, the tourism industry has become one of the fastest growing industries in the
world. International tourist flows in the Year 2002 have more than doubled since 1980. Moreover, the
economic impact of tourism is far greater than just the direct economic contribution alone. Through
multiplier effects, an economy will also benefit from tourism activities in terms of total output,
personal income, employment, and indirect tax (Gonzalez and Moral, 1996; Vanegas and Croes, 2000;
Papatheodorou, 1999). As estimated by the WTTC (2004), tourism has generated economic activities
worth approximately US$ 4,000 billion.
TABLE 3 Yearly international tourist arrivals and receipts 1980 – 2002
Year Arrivals Growth Receipts Growth
(x000) in Arrivals (%) (US$ Million) in Receipts (%)
1980 285997 1.03% 105320 26.37%
1981 287139 0.40% 107452 2.02%
1982 286097 -0.36% 100907 -6.09%
1983 289618 1.23% 102474 1.55%
1984 316357 9.23% 112707 9.99%
1985 327188 3.42% 118084 4.77%
1986 338854 3.57% 143475 21.50%
1987 363766 7.35% 176795 23.22%
1988 394810 8.53% 204290 15.55%
1989 426461 8.02% 221263 8.31%
1990 458229 7.45% 268928 21.54%
1991 463951 1.25% 277568 3.21%
1992 503356 8.49% 315103 13.52%
1993 519045 3.12% 324090 2.85%
1994 550471 6.05% 353998 9.23%
1995 565495 2.73% 405110 14.44%
1996 596524 5.49% 435594 7.52%
1997 610763 2.39% 435981 0.09%
1998 625236 2.37% 444471 1.95%
1999 650435 4.03% 455376 2.45%
2000 698793 7.43% 475772 4.48%
2001 692900 -0.84% 463600 -2.56%
2002 714600 3.13% --- ---
Average Growth 4.15% 8.45%
Source: World Tourism Organization, WTO (2003)

7
 Table 3 shows that international tourist activity measured in terms of arrivals has increased
steadily over a period of twenty two years. Despite some slow-downs, recorded during the second
energy crisis in 1979-1980, the Gulf War in 1991, and the 9/11 terrorist attacks in 2001, the number of
international visitor arrivals was recorded at an average increased rate of 4.2% over a period of twenty
two years. The figures show an increase from 286 million in 1980 to 693 million in 2001 visitor
arrivals, while international tourism receipts, measured at current prices, increased at an average rate
of 8.4%, from US$105 billion to US$464 billion.
The contribution of tourism to the economic development of a region or country could also be
assessed by expressing tourism receipts as a proportion of national income. As shown in Table 4, the
relative importance of tourism grew by half between 1980 and 1995, from 0.95% to 1.42% of the
world GNP. Among the 184 countries in which data are calculated, small island countries dominate
the top rankings in terms of tourism contribution to GNP. Under developed countries, as well as a few
large countries, with many other extensive economically exploitable resources, make up the list of least
tourism contribution to the GNP, as depicted in Table 5.

TABLE 4 Contribution of World tourism receipts to economy

Tourism World Ratio Number
Receipts (US$ bn) GNP (US$ bn) (%) of countries
covered
1980 104 10971 0.95 147
1981 106 11343 0.93 146
1982 99 11148 0.89 148
1983 101 11352 0.89 149
1984 112 11884 0.94 152
1985 117 12461 0.94 158
1986 142 14691 0.97 157
1987 174 16583 1.05 160
1988 202 18474 1.09 160
1989 219 19129 1.14 165
1990 265 21029 1.26 173
1991 272 22101 1.23 172
1992 310 23514 1.32 181
1993 317 23913 1.33 183
1994 351 25587 1.37 183
1995 398 28060 1.42 184
Source: WTO Tourism Economic Report 1st Edition – 1998
TABLE 5 Countries with the highest and lowest contribution of tourism receipts to GNP
The 10 countries recording highest Contribution The 10 countries recording lowest contribution of
of tourism to GNP tourism to GNP
% of Tourism Receipts to GNP % of Tourism Receipts to GNP
Maldives 83.3 Libya 0.02
Anguilla 80.3 Guinea 0.03
Antigua, Barmuda 72.3 Armenia 0.04
Br. Virgin Is 69.5 Myanmar 0.05
US Virgin Is 60.8 Japan 0.06
Cook Is 56.3 Iraq 0.07
St. Lucia 51.0 Algeria 0.07
Macau 42.0 Bangladesh 0.08
Guam 41.7 Rwanda 0.09
Bahamas 41.6 Burundi 0.10
Source: WTO Tourism Economic Report 1st Edition 1998

8
 By generating foreign exchange earnings, through tourism receipts, many countries are able to
alleviate problems concerning their deficits on balance of payments, unemployment, and poverty
alleviation.
In terms of creating employment opportunities, two unique characteristics of the travel
industry are especially relevant. First, owing to the multi-disciplinary nature of the industry, a wide
variety of jobs are created at different levels. Second, tourism is a labour-intensive industry and hence
it renders an effective source of employment opportunities. Although the number of employment
tourism generates is still subject to controversy, the World Travel and Tourism Council (WTTC) has
estimated that travel and tourism is expected to generate direct employment of Seventy-three million
jobs and indirect employment of 214 million jobs in Year 2004, correspondingly representing 2.8 and
8.1% of total world employment (WTTC, 2004). Predicted by World Travel and Tourism Council
(WTTC), the tourism industry is anticipated to generate Eighty Seven million employments directly
and indirectly employment of 259 million jobs, which correspondingly represents 2.9 and 8.6% of total
world employment by the year 2014.
Tourism benefits the world economy and individual countries in several different
ways. First, the tourism industry employs an estimated 214 million people, with most of this
employment in small and medium sized firms. Employment in the tourism industry is growing
rapidly, creating jobs at a rate 1 and ½ times faster than any other industry. Second, tourism is the
largest source of export earnings in the world, even larger than petroleum and motor vehicles. Third,
governments earn significant tax revenue from tourism, which can lessen the tax burden on domestics.
Fourth, tourism initiates development of infrastructure that can benefit all of the citizens of a country,
not just tourists. Finally, for developing countries the contribution of tourism to their GDP is often
much larger than the world average of 10-12% (WTO 1998a).
International tourism has clearly been a thriving industry, generating revenue and
involving millions of people worldwide.

Contribution of Regions in Generating Tourist Arrivals and Originating Tourist Flows:

While world tourism has been growing at 4.8% rate, this growth has not been equally
dispersed in all regions of the world. European and the North American countries have been
contributing the significant portion of tourist arrivals and tourists originating flows. The rate of growth
of recently industrialized countries of Southeast Asia has been increasing very fast as a result of
economic development of those countries and diversification of world tourism destinations.
TABLE 6 International Tourist Arrivals by Region, 1990-2001
Region Million Arrivals Market Share (%) Growth Rate Ave.
(%) annual
Growth
(%)
1 1990 1999 2000 2001 1990 1999 2000 2001 00/99 01/00 95-00
Africa 15.0 26.2 27.2 28.4 3.3 4.1 4.0 4.1 3.7 4.3 6.3
Americas 92.9 122.3 128.5 120.8 20.3 18.8 18.4 17.4 5.0 -0.6 3.4
East Asia and
Pacific 54.6 96.8 109.2 115.2 11.9 15.0 15.9 16.6 12.7 5.5 6.1
Europe 282.7 380.6 402.5 399.7 61.8 58.5 57.8 57.7 5.8 -0.7 4.4
Middle East 9.0 20.5 23.2 22.7 2.0 2.8 3.0 3.3 13.2 2.5 12.2
South Asia 3.2 5.8 6.1 5.8 0.7 0.9 0.9 0.8 5.4 -4.5 7.7
World 457.3 652.3 696.8 692.6 100.0 100.0 100.0 100.0 6.8 -0.6 4.8
Note: Totals may differ from the sum of columns because of rounding
Sources: World Tourism Organization, Tourism Market Trends – 2001; and revised updates released in
January 2002.
At present, three quarters of all international travellers visit a country in either Europe or
North America. In 1950, 97% of international tourists went to Europe or North America (in fact, to
just fifteen countries). In 1999, more than seventy countries received over a million international

9
tourist arrivals. By 1999, the top Fifteen tourist-receiving countries saw their share decrease to less
than two-thirds and some traditional top destinations have been replaced by newcomers from Asia and
Central /Eastern Europe (www.rpts.tamu.edu). By 2000 this had fallen to 76.2%. In the mid-1970s,
8% of all international tourists visited East Asia and the Pacific. By the mid-1990s, this had risen to
15%.
Globalization is another feature of tourism: in 1950 the top fifteen destinations in the world
accounted for 97% of foreign visitor arrivals; in 1970 it was 75%; in 1990, 67% and in 2001 it
accounts for only 62% (www.rpts.tamu.edu).
However, According to World Tourism Organization, share of international tourists travelling
to Asia and the Pacific raised from just 1% in 1950 to 17.2% in 2003. Despite the impact of SARS,
which caused an estimated decline of 9.3% in arrivals in 2003, Asia has outstripped the Americas in
terms of international tourist arrivals received 16.2% of world tourism market, and is the most popular
destination after Europe.
The industrialized countries of Europe, North America, East Asia and the Pacific are the main
tourists originating markets for the world tourism industry as well as for the Southeast Asian tourism
industry. However, there has been a substantial proliferation of other tourist-generating markets such
as Middle East and Africa.
In analyzing international tourist originating regions that generated the respective tourist
flows, the following trends can be discerned:
Europe originates more than half of the total international tourist arrivals. Growth since 1985,
however, has been the same or slightly below the world average. According to the World Tourism
Organization (WTO, 1998), approximately one in five arrivals originate in the USA. There too, the
growth level is well below the world average. East Asia and the Pacific have been the fastest growing
regions in the last few decades, with average annual growth of 8.5% between 1985 and 1998. The
more developed countries in the region have doubtlessly made the largest contribution to this figure; in
recent year, however, the rate of outbound tourism from recently industrialized countries has been
growing steadily. As a result, the share of East Asia and Pacific tourist arrivals rose from 10% of the
world total in 1985 to almost 15% in 1998. In 1997 and 1998, the Asian economic crisis caused tourist
arrivals to slow down. As this region’s growth level is above the world average and the potential
demand of this region help in early recovery of the tourism industry.
Being contributing to the total number, the Middle East and South Asia originate roughly 5
per cent of arrivals worldwide. Growth levels for the period 1985-1998 were below the world average.
Over 80% of international tourists come from just 20 countries in the North - 17 in Europe
plus the USA, Canada and Japan. Five nations (the US, Japan, Germany, France and the UK) account
for almost half of all tourists spending. Around 15% of tourists originate in East Asia and the Pacific
and 5 per cent in Africa, the Middle East, and South Asia combined.
Table 7 represents International Tourists Originated by Regions of all over the world in the
year 2003. Europe generated the highest number of outbound tourism (404.9 million) followed by
Asia and the Pacific (131.2 million) and Americas (120.2 million).

TABLE 7 International Tourists Originating Regions, 2003

Tourist by Originating Region (millions)
Africa 16.8
Americas 120.2
Asia and the Pacific 131.2
Europe 404.9
Middle East 16
Others/unrecorded 13.5
Source: World Tourism Organization (WTO), 2003

10
 Tourism in Regional Context: The Southeast Asian Economy

At the regional level, Table 6 represent overall market share for selected country groupings.
The fastest developing area in 2001 continued to be East Asia and the Pacific, with a growth rate of 5.5
per cent and some 6 million more tourists than 2000. Africa was the next fastest growing region (4.3
per cent), followed by the Middle East (2.5%). Other regions showed negative growth of tourist
arrivals in 2001. For instance, Europe – which accounts for about 58% of international tourism (table
6) – had a negative patterns were also seen in tourist receipt terms (table 8), with the Americas, Europe
and the Middle East showing respective 7.7%, 1.8% and 3.5% records. Africa (8.8%), South Asia
(5.7%) and East Asia and the Pacific (0.2%) showed positive growths in their tourist receipts in 2001
showed in table 8.

TABLE 8 International Tourism receipts by (sub) region (for selected years)

Region Million Arrivals Market Share Growth Rate Ave.
(%) (%) annual
Growth
(%)
1990 1995 1999 2000 2001 1995 2001 00/99 01/00
95-00
Africa 5.3 8.1 10.5 10.8 11.7 2.0 2.5 2.7 8.8 5.9
Americas 69.2 99.6 122.1 132.8 122.5 24.6 26.4 8.8 -7.7 5.9
East Asia and
Pacific 39.2 73.8 75.0 82.0 82.2 18.2 17.7 9.4 0.2 2.1
Europe 143.2 211.2 233.9 234.5 230.4 52.1 49.7 0.2 -1.8 2.1
Middle East 4.4 8.9 11.2 12.2 11.8 2.2 2.5 9.1 -3.5 6.5
South Asia 2.0 3.5 4.6 4.7 5.0 0.9 1.1 3.5 5.7 6.4
World 263.4 405.3 457.2 477.0 463.6 100 100 4.3 -2.8 3.3
Note: Totals may differ from the sum of columns because of rounding
Sources: World Tourism Organization (2002, p. ix)
In summary, two brief comments on the above trends might be appropriate. First, there has
been a global redistribution in the foci of tourism activity, but this has benefited some regions,
although on an unequal basis, and thus highlights a heavy geographical concentration of both tourist
arrivals and receipts. The developments thus highlight the extent of tourist travel and the number of
destinations, and the competition among them which increased noticeably. Secondly, tourism in
Southeast Asia had a modest revival of growth in 2001, although this did not necessarily lead to a
substantial share of the market, which might prompt a number of questions, however, it is useful to
examine Southeast Asia’s current situation with regard to their overall tourism sectors.

Southeast Asia and International Tourism

Southeast Asia is comprised of ten countries and most of the countries are endowed with
islands blessed with natural flora and fauna. Southeast Asia is experiencing unprecedented levels of
tourism development as tourists respond to new and rapidly changing opportunities. Southeast Asian
countries considered they had a comparative advantage as they possessed exceptional tourist resources
and attractions, such as warm and sunny weather, attractive beaches, unique wildlife and tropical
forests and exotic or authentic cultures. Southeast Asian nations have political boundaries but strong
links in geographical, cultural, historical, archaeological and social similarities. A recent study (chang,
1998) revealed that APEC’s regional borders are flexible because historical ties, cultural links, and
trading interests of Asia-Pacific economies extend beyond APEC boundaries. A ‘conventional
[discriminatory] free trade area’, on the other hand, would engender political tension between nations
and deter growth in the transitional and developing economies of Asia (Garnaut, 1996)
There are different types of tourism available in the region from beach tourism, and “roots”
tourism to marine tourism. Some others incorporate Cultural, heritage, archaeological, ethnic tourism,
to some extent, business and sex tourism.

11
 The extent and impact of international tourism in 2001 have been noted in Table 6 & 8.
Within the Southeast Asian region (Table 9), the dispersion of tourism arrivals and growth by each
country, for the period (1995-2004) in focus, was as follows. During the period in concern Malaysia
received the highest number of visitor arrivals (96 million) followed by Thailand (90 million) and
Singapore (72 million). Other countries share of visitor arrivals are Indonesia (48 million), Vietnam
(20.4 million), The Philippines (20 million), Brunei Darussalam (7 million), Lao PDR (6 million),
Cambodia (4 million) and Myanmar (2 million). In 2004, out of 49 million visitors, ASEAN
5(Indonesia, Malaysia, The Philippines, Singapore and Thailand) received 43 million tourist arrivals
while BCLMV(Brunei Darussalam, Cambodia, Lao PDR, Myanmar, Viet Nam) 6 million. But the rate
of arrivals growth is larger in BCLMV groups (11.8%) than ASEAN 5 (8.7) during 1998-2004 periods.
Available tourism receipts, in earned by ASEAN 5 (US$21,225.5 million in), against US$27,687.9
million, were greater than BCLMV (US$6,462.4 million) countries. Table 11 shows that the
contribution of tourism as percentage of GDP is higher in most of the BCLMV (9.41%, 50.5%, 6.28%,
1.08%, and 4.45%) countries than ASEAN 5 (2.11%, 7.12%, 2.27%, 5.85%, and 5.94%) in the year
2002. The significance of tourism in BCLMV countries is greater than ASEAN5 as tourism
contribution in GDP is higher compared to ASEAN5.

TABLE 9 Visitor Arrivals by Country of Destination, 1995-2004

Country of 1995 1996 1997 1998 1999 2000 2001
Destination
(1) (2) (3) (4) (5) (6) (7) (8)
Brunei
Darussalam - - 643 964 995 984 840
Cambodia 220 260 219 176 263 466 605
Indonesia 4,324 5,034 5,185 4,606 4,728 5,064 5,154
Lao PDR 346 403 463 500 624 737 674
Malaysia 7,469 7,138 6,211 5,551 7,931 10,272 12,775
Myanmar 110 163 189 198 195 271 205
The 1,760 2,049 2,223 2,149 1,971 1,992 1,797
Philippines 7,137 7,293 7,198 6,242 6,967 7,691 7,519
Singapore 6,952 7,244 7,294 7,843 8,798 9,509 10,062
Thailand 1,351 1,607 1,716 1,504 1,782 2,150 2,330
Viet Nam
ASEAN 29,669 31,193 31,340 29,733 34,215 39,136 41,960
ASEAN 5 27,642 28,759 28,111 26,391 30,396 34,528 37,306
BCLMV 2,027 2,434 3,230 3,342 3,819 4,608 4,654
Source: ASEAN NTO’s, as compiled in the ASEAN Tourism Database.
Notes: Brunei Darussalam: projection.
Myanmar: Others & Unspecified include tourist arrivals from border check points.

In 2004, for example, the most visited destination is Malaysia (as indicated in Table 9),
which took 31% of total of total traffic, followed by two neighbouring countries of Malaysia, Thailand
(23%) and Singapore (16%). The pattern of receipts is almost similar (as indicated in Table 11), with
Thailand the leading earner (27%), followed by Malaysia (24%) and Singapore (19%). However,
although Indonesia and Vietnam attracted considerable numbers of tourists, The Philippines,
Cambodia, Lao PDR, Brunei Darussalam, and Myanmar has the potential to earn more from tourism.

12
TABLE 10 Rate of Growth of Visitors Arrivals by Country of Destination, 1995-2004
Tourism Receipts (US$ Million) Share as % of GDP**
2001 2002 2001 2002
(1) (2) (3) (4) (5)
Brunei
Darussalam n.a. n.a. n.a. 9.41
Cambodia 296.0 379.0 7.83 50.5
Indonesia 5,428 4,305 3.29 2.11
Lao PDR 103.8 113.4 5.95 6.28
Malaysia 6,790.0 6,784.5 7.72 7.12
Myanmar 90.0 99.0 1.09 1.08
The Philippines 1,722.7 1,740.1 2.39 2.27
Singapore 5,350.0 5,176.5 6.23 5.85
Thailand 6,730.8 7,529.9 5.82 5.94
Viet Nam 1,370.0 1,560.0 4.20 4.45
ASEAN 27,881.9 27,687.9 4.83 4.29
Source: ASEAN NTO’s, as compiled in the ASEAN Tourism Database.
Notes: Brunei Darussalam: projection.
Myanmar: Others & Unspecified include tourist arrivals from border check points.

TABLE 11 International Tourism Receipt, 2001-2002

Country of 1998 1999 2000 2001 2002 2003 2004 2995- 1995-1998* 1998-
Destination 2004* 2004
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Brunei Darussalam 49.9 -1.0 3.1 -14.6 6.0 6.0 6.0 - - 0.6
Cambodia -19.6 49.5 77.4 29.7 30.0 -10.9 50.5 19.0 -7.1 34.8
Indonesia -11.2 2.6 7.1 1.8 -4.7 -11.0 21.7 2.3 2.1 2.4
Lao PDR 8.0 24.8 18.1 -8.6 9.2 -13.5 40.6 11.1 13.0 10.2
Malaysia -10.6 42.9 29.5 24.4 4.0 -20.4 48.5 8.6 -9.4 18.9
Myanmar 4.8 -1.2 38.5 -24.3 6.0 174.9 10.0 22.0 21.7 22.2
The Philippines -3.3 -8.3 1.1 -9.8 7.6 -1.3 20.1 3.0 6.9 1.1
Singapore -13.3 11.6 10.4 -2.2 0.6 -19.0 36.7 1.8 -4.4 5.0
Thailand 7.5 12.2 8.1 5.8 7.3 -6.6 16.4 6.0 4.1 7.0
Viet Nam -12.4 18.5 20.7 8.4 12.8 -7.6 20.6 9.0 3.6 11.7
ASEAN -5.1 15.1 14.4 7.2 4.3 -12.3 30.2 6.0* 0.1* 9.0
ASEAN 5 -6.1 15.2 13.6 8.0 3.2 -14.1 31.3 5.1 -1.5 8.7
BCLMV 3.5 14.3 20.7 1.0 13.0 0.9 23.1 13.9 18.1* 11.8
Source: ASEAN NTO’s, as compiled in the ASEAN Tourism Database.
Notes: * Preliminary figures.
** GDP at Current Market Price; from ASEAN Secretariat FMSU Database.

Amalgamation of the Facts

It is instructive to examine Southeast Asian regional countries tourism industry for at least
two reasons. At first, this region is one of the leading southern blocs, with significant experience in
regional economic cooperation extending for the last three decades. Second, tourism has received
comprehensive thought in the regional work and strategic planning, especially because the region is
one of the world’s major tourism destinations. The Southeast Asian nations view tourism to be ‘an
important industry providing substantial foreign exchange receipts and employment opportunities
(Ghimire, 2001). The A number of conclusions can be drawn from these facts and figures. First, the
statistics illustrate the nature and scope of international tourism in Southeast Asia and the significance
of tourism in some of its member countries, which is clearly influenced by the wider nature of
economic development. Second, there are considerable variations in the scale of tourism development
in Southeast Asia, from the dominant (i.e. developed) in theoretical development field to the Johnny-
come-lately (i.e. least developed or late starters). Some Southeast Asian countries, e.g. Thailand,

13
Singapore, Malaysia and Indonesia are well-established, “successful” tourism destinations. There are
others, like The Philippines, Viet Nam, Cambodia, and Myanmar, which, for a number of reasons,
have limited tourism development but considerable potential.
Third, they further highlight possible underlying reasons why there is relatively little tourism
in some countries and more in others within the Southeast Asian region. The explanation of this
statement is not only because of its regional advantage and proximity to the major western tourist
generating markets but, more importantly, its long-standing economic and other ties with these areas.
There was also the suggestion in 1982 that, in respect of many less developed countries that “….Where
foreign enterprises were present in a country’s tourist industry they would be the most successful…”
(Britton, 1982). This explains why some countries of Southeast Asia are, in tourism terms,
significant.
There may some reviewer argue, although harshly, that the problems in Southeast Asian
tourism are closely related to structural imbalances in its overall development pattern. There are no
clear strategies for development in some of its member countries against some has clear strategies but
lack of integration and implementation due to hindered progress. As a consequence, whereas tourism
development in some countries has been insufficient (as in Myanmar), in others (for example,
Singapore) it has been uncontrolled and excessive. Organisation of the tourism sector has been
inadequate, which has contributed to a lack of profitability in many operations, promotion prospects
are still poor in some countries, with massive reliance on expatriate staff, leakages and lack of inter-
sectoral linkages. Above all, tourism’s economic impacts are not fully realized in the community
level. Inadequate training is also a major setback in successful tourism development.

Development Issues and Challenges

The governments of Southeast Asian nations have already accepted not only the importance
of tourism in economic development but also have played the dominant role in the planning and
implementation process as elsewhere in the developing world. This role might be adopted through
political preference or necessity, or both. It is evident that no two countries or sub-regions in Southeast
Asia are similar in the range and difficulty of problems they face. As noted, many Southeast Asian
countries have weak, embryonic tourism sectors, while other countries have vigorous, more developed
tourism sectors. Much of the investment, management and development in tourism come from private
sector driven initiatives for later countries. Anyone might presume that perhaps few South Asian
countries have given cautious consideration to the type of tourism they want, but to what extent their
stated objectives or aims are realistic, and what needs to be done to achieve those goals.
Through this concise background, it is possible to identify a number of issues and challenges
related to the development of tourism in Southeast Asia. Addressing the issue areas is important, last
but not least because the issues are crucial ingredients to maximize tourism’s contribution to regional
economic development of Southeast Asian nations.

Issues for the Southeast Asia’s Tourism Industry

The first of these issues is the need to outline the relative roles of the private local and foreign
tourism partners in development decisions in the region. In particular, the decisions in the areas of
investment, marketing and operation of the tourism catalysts appear to be critical to the tourism
industry. The vital issue for all concerned is to recognize that the development decisions made by
them do have wider economic consequences for Southeast Asia. It is therefore imperative that
investors infer the implications of their actions in the overall interest of the long-run economic
sustainability of the tourism sector.
Second, the major challenge is the need to develop human resources, particularly indigenous
and local personnel, both for delivering quality services for tourists, as well as enhancing general skills
of the local workforce. Achieving these broad goals will potentially encourage sound utilization of
local suppliers and thus enhance their productivity along with inter-sectoral linkages. In this aspect,

14
the spin-off effects are obvious: foreign exchange will not be leakage from the economy and further
income through multiplier effect would be generated.
The third major issue is Southeast Asian countries are facing problems that are characterized
by a large number of small and medium-sized tourism enterprises (SMEs). SMEs are at the forefront
of tourism development. SMEs provide useful functions in tourism (e.g. the development of linkages,
providing personal service, integrating remote businesses etc.), but for the most of them, life is a every
day struggle, with many of them operating at the marginal of survival. They also required experience
needed to run tourism business with modern management principles. Even the nature of tourism
demand delivers them uncompetitive opportunities but they are unable to capitalize the advantages that
accrue from the economies of scale. Again, their limited resource base makes these objectives hard to
reach.

Issues for South Asian Governments

The usual and conventional role of Southeast Asian governments is to formulate policy for the
tourism sector. This traditional focuses need a change because of changing priorities occurred by
development in the international tourism (e.g. the emergence of consumer interests). Thereby the task
of national governments is to formulate policies for the tourism sector; deliberate facilities to the local
enterprises; infrastructure development policy to facilitate tourism development, for the benefit not just
for tourism but the whole economy. Devising viable and sensible options for financing tourism
infrastructure is the last policy issue needed to be linked for greater interest of tourism. There are also
some other aspects of policy needed to refocus include entrepreneurial development initiatives,
policies to enhance tourist length of stay. At last, it is inevitably needed to identify the ways in which
the benefits from tourism can be spread more evenly throughout the economy.
Tourism is essentially an export, international economic activity. The view of Ong Keng
Yong, the Secretary-General of ASEAN, is instructive- “Tourism is an important sector of our
economies…tourism provides employment, helps to improve the quality of lives and promotes
friendship, networking and widening of the perspectives among nations. This sector is important not
only in terms of generating valuable foreign exchange revenues, but also in assisting to showcase the
diversity and richness of the various cultures and peoples in Southeast Asia…” This paper thus
identifies and examines some of those elements of the strategy that are relevant to the long-term
sustainable development of tourism in the Southeast Asian economies. The proceeding considerations
are particularly advantageous because of their importance in shaping a coordinated and supportive
Southeast Asian tourism development policy in practice.
First, international tourism has the potentiality to stay for the foreseeable future and cannot
casually be cast aside or treated less fatally than it deserves. The economic and other benefits and
costs ensuing from its development are well recognized in Southeast Asia. Despite the rising
criticisms of the negative effects of tourism development, there is a groundswell of evidence that many
Southeast Asian countries, encouraged by positive developments of tourism, continue to pursue its
promotion as part of their economic development strategies. Thus merits of tourism have been
included in national development plans of most Southeast Asian countries.
Secondly, as tourism develops and becomes complex it requires the process of strategic
management. The aim of which is to maximize the benefits, combat and mitigate the adverse impacts
in order for the economies to ensure that development matches with national policy objectives.
Additionally, the development of the sector requires to be supported by large injections of foreign
resources (e.g. financial, personnel). But governments need to be conscientious regarding foreign
injections because foreign involvement will obviously have wider repercussions for the decision-
making sovereignty of the host government and thereby threatening the long-term sustainability of the
tourism sector. In other cases, it is hoped that the function of government organizations and
policymakers may not create any trouble in advancing tourism sector and the economic impacts of
tourism are to be felt at levels of the economy.
The previous two points creates the raise of third point, explicitly, of tourism development
which is it should not be viewed separately from other aspects of the economy. By only creating

15
national, sub-regional and regional institutions or planning bodies responsible for tourism will be
ineffective in the absence of the political mandate, resource allocation and adequate resources to
perform their activity. Many of the difficulties in developing tourism in this region result from
ineffectual policies. Here lies the key to future advances in tourism development in the region.
Fourth, there is the need to empower the Southeast Asian tourism. This can be accomplished
by through a variety of ways: by generating awareness about the benefit of tourism, by permitting
those to access to entrepreneurial opportunities offered by this sector. Gender inequality is another
issue that has adverse effect on the spirit of state capitalism. The aim of the Southeast Asian tourism
policy should reflect these deficiencies.

Intra-ASEAN Co-operation for Tourism Development:

According to smith (1989), tourism regions ‘do not exist in themselves; they are created for,
and only for, some larger purpose’. This statement reflects the purposes and need for tourism in
economic development of the Southeast Asian region. These purposes include cooperative and
integrated planning, development, marketing and promotion of tourist destinations. Another important
role rendered by tourism, according to Pearce (1989), is to reduce economic and social imbalances
between different locales in a given destination area.
Regional development is an integration process and a region is consisted with linking together
of different locales, cities, or countries. Ohmae (1995) describes this arrangement as a ‘region state’ or
a borderless area developed around an economic regional. Therefore the major reason of regional co-
operation is to create a new geographic and economic alliance. Southeast Asian nations are also
benefiting from this regionalisation not only from the economic viewpoint but also from the
geographic aspects. Tourism provides opportunities for some of the Southeast Asian nations to
transcend it geographic limitations (such as Singapore) as other neighbouring countries are blessed
with ample resources, fulfil the leisure need of locals, and reduce risky competition between
destination areas. Similarly, some of the Southeast Asian nations have comparative advantage in well
organized tourism infrastructure (for example, Singapore) and resources (for example, Malaysia) from
which other countries can be benefited.
Intra-regional tourism is also less vulnerable than international tourism in the viewpoint of
international events. As cited by Secretary-General of ASEAN Ong Keng Yong in the tourism
conference in Korea (2005) - “Tourism, however, is a very tenuous industry. It is very sensitive to
environment changes and challenges. The outbreak of communicable diseases, for example, SARS, as
well as terrorism and natural disasters can easily hurt tourism very quickly.” In this aspect, intra-
regional tourism is a cushion for developing economies of Southeast Asia as tourism is fragile with
international events. It is evident that because of the strong growth of this intra-regional tourism
among the Southeast Asian economies, the effects of international events, such as 9/11, Iraq invasion,
tsunami, on the tourism industry in this region was less severe than other regions of the world. Intra-
regional tourism also constitutes a significant portion of tourist arrivals within the Southeast Asian
economies. In 2004, Intra-ASEAN visitor arrivals were 23 million (ASEAN NTO’s) which
constituted 46% of total visitor arrivals.
A significant number of tourists in most Southeast Asian economies are comprised by
regional visitors. In 1998, for example, these tourists comprised 21.3% and 26.8% of total incoming
tourists in Thailand and Singapore respectively. For Indonesia and Malaysia, they represented the
substantially higher proportions of 45.2 and 69.3% respectively. Among the original member of
ASEAN, only the Philippines has a relatively low number of regional tourists visiting the country,
reflecting the lack of tourist security and infrastructures (Ghimire, 2001).
The potential significance of regional tourism for the Southeast Asian economies was
acknowledged when regional tourism collaboration was seen as an important sphere soon after the
establishment of ASEAN in 1967(Ghimire, 2001). In the late 1960s and early 1970s, when trade and
economic development were the principal areas of regional cooperation, development in tourism was
already recognized to be an important element in fostering these activities. Nevertheless, until 1990s
regional tourism was of only minor importance for the Southeast Asian economies (Ghimire, 2001). In

16
ASEAN countries regional tourists comprised 36% of the total. The Percentage of regional tourists in
ASEN countries stands somewhat low, partly because there is a substantial international transit of
tourists through Singapore and Thailand (Ghimire, 2001). Within Africa, Asia and Latin America,
intra-regional tourism has been shown to be a major growth market in recent years (Scheyvens, 2002).
Given this, regional tourism held a certain degree of economic potential for increased investment and
entrepreneurship, thereby creating new employment and income prospects for various sections of the
population. The importance should be given to intra-regional tourism development in that the
economic benefits from regional tourism should remain within the region. However, most of the
initiatives to boost the tourism are still remain hypothetical. This requires a continual process of
policy monitoring and critical evaluation, which remain totally absent in present regional tourism
strategies. Most activities remained limited at the level of a declaration of good intentions and
elaboration of policy strategies (Ghimire, 2001).
Co-operation in developing tourism in Southeast Asian economies is advocated not only to
achieve self-support but also to advance exchange of ideas and international trade within this region
that could be implemented by constituting a unique tourism organization. Unlike other economic
sectors, Southeast Asian tourism industry experiences a significant lack of tourism experts. Therefore,
it is proposed that a Southeast Asian Tourism Experts Association (STEA) be formed. It would
operate as a “think tank” and meeting-point for experts with various skills required for tourism
development to work closely with each other for achieving greater economic benefit. Along with other
activities, research programmes and consultancies would be a part of its activities.
Industrial linkages should be integrated and financial leakages (import leakages, employment
of foreign experts, especially by trans-national corporations) arising from tourism development are to
be minimised for the greater interest of Southeast Asian regional economies. Governments and the
private sector should work together in the formulation of policies and strategies to enhance the
economic impacts to be felt at all levels of the economies.

Conclusion

The importance of tourism development in this region is not overstated in this paper. The
issues and challenges presented in this literature reveals that tourism growth has been almost entirely
demand-led with a comparative advantaged tourism sector in all Southeast Asian countries. But in
countries where the “finished tourism product” is still in infancy, the successful formulation and
implementation of a tourism development policy is expected to realize the benefits of tourism and to
boost the economies of the region. Economic resources lead any tourism policy, for they provide the
proper identification of the unique tourism product, operate its marketing, and are responsible for the
overall control of the sector and its integration into the national economy. If any of the economic
resources are inadequate, tourism policies will not succeed. The following elements should be taken
into the consideration:
 Analysis of the objectives of the tourism development consistent with the
national policy.
 Considerations of regional tourism integration into national plans.
 Well recognized and expressed but realistic tourism policy goals.
 Tourism development by means of local and community involvement.
 Foreign private-public sector partnerships the development of tourism.
 Enhance women participation in the tourism sector.
 Integration and promotion of regional tourism cooperation.
 Availability of proper and precise legal framework for tourism.
 Formation of image of a destination through marketing and promotional
campaign.
 Expansion of tourism entrepreneurial initiatives/investment opportunities.
In addition, it should be noted that for the tourism sector in this region to respond to changing
realities in the competitive international tourism market outlook, the nurturing of the industry is
inevitable. The pre-requisites for this are cooperation from all concerned bodies - the tourism industry,

17
the national governments and moreover, the regional and international community – to make it happen
by providing their political and authentic will.
This presentation has penetrated into some insights of the tourism development but the task is
not complete. Future research and investigation should be given to the tourism industry in the region
as part of international tourism study that would look at other relevant aspects.
The suggestions that have been made in this paper are to clarify how some of tourism
development difficulties can be successfully overcome and specific comments has been made to the
need for Southeast Asian cooperation to get benefit from economies of scale. Otherwise, Southeast
Asian would continue to stay behind in a highly vulnerable tourism industry.

NOTES:

1. The broad definition of tourism includes a complex range of economic activities accounted for in
several other sectors by means of a ‘tourism satellite account’. According to a set of methodological
references to a tourism satellite account recently adopted by the United Nations Statistical Commission
(see UN/WTO/OECD/EUROSTAT, 2001), tourism is measured from a demand side perspective as
opposed to the supply side approach used for more homogenous sectors.

2. International tourism receipts at current prices and excluding international transport costs (see UN
2001a and WTO 2001e)

a. For economic purposes, international tourism receipts are considered exports and international
tourism expenditures as imports.

b. Total International tourism receipts include those generated by international fares.

Reference

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