Tourism is poised to become the 3rd brace of the economy

The tourism sector is poised to emerge as the third phase of the economy, boosted by remittances from Filipino migrant workers and income generated by the business process outsourcing sector. It is a plan of President Ferdinand Marcos Jr., who previously identified tourism as the low-hanging fruit that could help the Philippines recover quickly from the economic impact of the pandemic.

Tourism Secretary Cristina Garcia Frasco

Tourism Secretary Cristina Garcia Frasco

In a recent forum Manila Times, Tourism Secretary Cristina Garcia Frasco said that before Covid-19, the sector contributed 12.9 percent to the economy. Remittances from migrant workers and income from the outsourcing sector contributed about 10 percent each.

Besides „revenge travel,” Frasco said local tourism is also growing, with the sector generating about 5.2 million jobs. The sector has also been instrumental in community development projects, with tourism receipts projected to reach P1.8 trillion this year.

Recently, the Department of Tourism (DoT) released a new tourism development plan that not only lays out a road map for the sector. The plan also has provisions for sustainability. Ms. Frasco assured that the DoT is working in concert with other government departments to develop the infrastructure needed to realize the sector’s full potential, such as land transport networks and world-class airports.

The decision to allow e-visa for tourists is another good development. This could be a game changer as requiring prospective tourists to appear in person in front of Philippine embassies and consulates seems impractical and turns travelers away. This policy change helps the Philippines to be more competitive compared to tourism magnets in Southeast Asia such as Thailand and Singapore.

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Work is in progress

Even with the developments mentioned here, more needs to be done to fully tap tourism. One area that needs improvement is air connectivity.

In that regard, the Senate must ratify the aviation agreement signed with India during the Duterte administration. It seems odd that the Philippines does not have an airline agreement with a country that is on track to become the world’s third largest economy.

China, the world’s largest economy, is also an important tourism market. But based on history, it can be affected by geopolitical issues.

On a positive note, tourism can also serve as a diplomatic tool to promote better understanding between China and the Philippines and contribute to peace in the region.

More about connectivity, the authorities should reconsider the open skies policy that was proposed a long time ago. That policy could be an alternative to airline contracts, which take time to negotiate. If local airlines and policymakers are concerned about the resulting increase in competition, authorities may test „pocket” open skies before full liberalization.

On a related note, policymakers should also review the Philippine implementation of the ASEAN Single Aviation Market (ASAM). ASEAN is the Association of Southeast Asian Nations, a regional gathering of 10 countries that includes the Philippines.

Proponents of a single aviation market argue that it benefits tourism throughout Southeast Asia, as well as trade and investment by facilitating travel within the region. The concessions allowed only with certain freedom rights in the ASAM flight agreements allow airlines to make additional stops in ASEAN after landing at a primary destination in the region.

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ASAM was expected to boost travel and tourism to the Philippines, but policymakers pulled Manila out of the deal. It is true that the Ninoy Aquino International Airport is already operating beyond capacity, but the government can now promote some newly upgraded international gateways like Cebu and Clark.

Tourists don’t just come by plane. Policymakers should also review the open seas policy that helps attract ships to dock regularly in the Philippines. But like aviation, the government needs better infrastructure and more staff to process the arrival and departure of tourists.

It is true that the Philippines really needs to build as many legs as possible to build a strong economy. The country has many underperforming sectors which, if turned around, can rapidly propel the country towards becoming an upper-middle income economy.

Officials need to investigate them, but tourism is already ripe for the taking.

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