[Kabar-indonesia] Analysis: Asian economies feel the growing beat of tourism

[Joyo at aol.com]

Analysis: Asian economies feel the growing beat of tourism

By Dhara Ranasinghe

SINGAPORE, November 10 (Reuters) - "Discover" Hong Kong,
journey through "incredible India" or head off to "Malaysia
truly Asia."

Such advertising slogans should come as no surprise --
tourism is gaining in importance in Asia and helping to
reshape regional economies more towards services and away
from a traditional reliance on manufacturing and exports.

With consumer wealth on the rise, particularly in India and
China, which have more than 2 billion people between them,
more Asians are travelling in the region.

The rise of tourism is already encouraging some governments
to shift their economies more towards services, but the
trend is a long-term one, analysts say.

"In the past 20 years in Asia the focus has been on
industry, maybe in the next 20 years the focus will be on
services," said Sebastien Barbe, senior economist, Asia at
investment bank Calyon.

Southeast Asia travel and tourism should generate almost
$236 billion in economic activity this year, more than the
output of Hong Kong's economy, growing in nominal terms to
about $522 billion by 2016, the World Travel and Tourism
Council says.

It estimates that tourism in Northeast Asia -- China, Hong
Kong, Taiwan, Japan, South Korea and Macau -- will generate
more than $1 trillion of economic activity in 2006, a figure
that is expected to more than double in 10 years.

"Countries like China, India and Indonesia have low labour
costs and will continue to attract industrial production
investment, but Taiwan, Korea, Hong Kong, Malaysia and
Singapore may have to climb up the value added scale and
develop the services sector more," Barbe said.

Economists say that in India, tourism is playing a greater
role in driving the services sector, which accounts for just
over half of the economy's activity.

"The service sector in India is growing at about an annual
rate of 10 percent and in this tourism's role is picking up
because domestic and external tourism are on the rise," said
DBS Bank economist Aathira Prasad.

In Singapore, where manufacturing jobs have moved to cheaper
locations such as China, the government has launched two
ambitious casino and resort projects, partly aimed at luring
tourists.

The rise of tourism has great potential to create jobs, says
Tony Davis, chief executive officer at Singapore's low-cost
carrier Tiger Airways.
"The UK Department of Transport has a rule of thumb that
says when an airport develops and carries a million
passengers, that creates about 1,000 local jobs directly and
indirectly," he said.

"In Asia, where there is perhaps more manual processes, that
rule of thumb is probably understated and there is probably
more job creation."

THE WEALTH EFFECT

The picture is not rosy every where. Tourists were wary
about visiting Thailand after September's military coup.

Natural disasters and the threat of bird flu have kept some
visitors away from Indonesia.

But in general growing consumer wealth should drive tourism
and in turn services in Asia, analysts say.

"Asia has two major advantages, a large population and an
ever-expanding middle-class. Working together that creates
strong demand for travel and this is set to continue," said
John Koldowski, a director at the Pacific Asia Travel
Association.

According to MasterCard International, the number of people
earning $5,000 or more a year in Asia is poised to rise
sharply, increasing the number of potential travellers.

It says people earning less than $5,000 a year do not tend
to travel abroad. China should have 293 million people
earning $5,000 or more in 2014 versus about 119 million in
2004, while India's total is set to more than double to
102.5 million.

"We define 'middle class' as households that have
significant discretionary consumption power (hence the
$5,000 income threshold), and they will be about 650 million
in size by 2014 in Asia, with close to 300 million in China
alone," said MasterCard's Asia Pacific economic advisor,
Yuwa Hedrick-Wong.

"They will certainly push up the growth of the service
sector."

Domestic tourists are also boosting tourism. Better roads,
discount airlines and increasing car ownership have
encouraged more Indians to travel in the last few years.

India's hotel industry is expected to grow robustly for the
next three to four years as demand outpaces supply.

Suraj Arora, a 30-year-old Indian, based in Guangzhou,
China, has just returned home to Punjab in northern India to
take his parents and younger sister on their first trip to
the Taj Mahal.

"They have always wanted to see it, but this is their first
chance," Arora said. "Every year now I try to come home for
one month to visit and take them somewhere new."

Arora says he earns up to $8,000 a month exporting
electronic gadgets back to India and plans to spend about 10
percent of that on the week-long trip for his family.

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Joyo Indonesia News Service
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