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Tourism: the Philippines’ Next Growth Engine

July 25, 2018 • GLOBAL ECONOMY, CULTURE & LIFESTYLE, SPECIAL FEATURES, Asia - Pacific

By Bernardo Villegas and Maria Cherry Lyn Rodolfo

Home to some of the world’s finest tourist destinations, the Philippines can indeed achieve significant economic headway by fostering its tourism industry. Discover how Dutertenomics and the government’s rebalancing strategy or pivot towards its Northeast Asian neighbours such as China, South Korea, Japan, and Taiwan are contributing to the positive outlook of the country’s tourism sector.

 

Under the Republic Act No. 9593 of 2009, Philippine tourism is recognised as an industry of national importance, an engine for investments, employment, growth and national development. Tourism has emerged as the third engine of economic growth in the Philippine service sector, next only to the remittances from Overseas Filipino Workers and the Information Technology-Business Process Management (IT-BPM) sector. Tourism’s contribution to the Philippine GDP reached 12.2% in 2017 and grew by 24.2% from the 2016 record.1 In terms of share to total Philippine export revenues, foreign tourism spending contributed 9.2%, next only to semiconductors and miscellaneous services. Its value expanded by 43.9% – from PhP 311.7 billion in 2016 to PhP 448.6 billion in 2017. The domestic tourism expenditure, accounting for 22.8% of household final consumption expenditure, reached Php 2.6 trillion in 2017, higher by 25.5% from its 2016 record.

There is good news to share with regard to tourism volume, a major component of the tourism expenditures. Domestic tourism, projected at 70 million in 2017,2 continues to serve as backbone of Philippine tourism, making it resilient to external shocks over the years. In 2017, the Philippines hosted 6.6 million foreign tourists or 11% higher than in 2016. For the first quarter of 2018, the number of foreign visitors increased by 14.8% from 1,784,882 to 2,049,094, half of them originating from South Korea, China, and the United States. These figures for the first three months of the year already represented 27% of the 7.4 million target number of visitors for 2018 under the National Tourism Development Plan. The not so good news is that the foreign tourism number of the Philippines is way behind its neighbours. In 2017, for example, the country attracted just 6.6 million foreign visitors compared to Thailand at 33 million, Malaysia 27 million, Singapore 16 million, Indonesia 12 million, Vietnam 10 million. One advantage of our neighbours is that they share borders with each other (unlike the Philippines where more than 98% of tourists enter and exit by air) and their road and airport infrastructure is very good to support multi-country trips and tour packages. The thrust of the new DOT leadership under Secretary Bernadette Romulo-Puyat to implement the National Tourism Development Plan, “to prioritize improving policies on access, connectivity, and security as well as enhance programs on tourism infrastructure”3 and to broaden and deepen the linkages of farming and agriculture with tourism markets in the value chain provide good opportunity to increase yields from longer stay and higher daily spending. By developing and offering diversified, competitive and sustainable product portfolios as well as efficient and seamless transportation across the Philippine archipelago, tourists will have better reasons to purchase multi-island and multi-destination packages thru the extensive network of airports and seaports across the country. Apart from investments in connectivity and access, tourist destinations need investments in destination infrastructure – rooms, water, sanitation, and power – to sustain growth.     

 
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About the Authors

Bernardo M. Villegas is a Visiting Professor of IESE Business School in Barcelona, Professor at the University of Asia and the Pacific (UA&P) and Research Director of the Center for Research and Communication, Manila.  He has a Ph.D. in Economics from Harvard University (1963) and is a Certified Public Accountant, having been one of the CPA board topnotchers.

Dr. Maria Cherry Lyn Rodolfo is an Economic Consultant on tourism to both public and private enterprises and former Assistant Professor of Economics at the University of Asia and the Pacific.

 

References

1. Philippine Statistical Authority. Philippine Tourism Satellite Accounts. http://psa.gov.ph/content/contribution-tourism-economy-122-percent-2017. Accessed on June 8, 2018.

2. National Tourism Development Plan 2016-2022. Department of Tourism. 

3. http://tourism.gov.ph/news_features/opening_statement.aspx . Accessed on May 30, 2018.

4. http://tourism.gov.ph/tourism_dem_sup_pub.aspx.  Accessed on May 15, 2018.

5. Philippine Statistical Authority. Philippine Tourism Satellite Accounts. http://psa.gov.ph/content/contribution-tourism-economy-122-percent-2017. Accessed on June 8, 2018.

6. Philippine Statistical Authority. Philippine Tourism Satellite Accounts. http://psa.gov.ph/content/contribution-tourism-economy-122-percent-2017. Accessed on June 8, 2018.

7. National Tourism Development Plan 2016-2022. Department of Tourism.

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