Tourism to boost growth in Lao PDR

by Eijas Ariffin

According to World Travel and Tourism Council, in 2017, the total contribution from travel and tourism to Lao PDR’s gross domestic product (GDP) was around US$2 billion, which accounted for 13.7 percent of total GDP. This figure is expected to rise up to US$3.3 billion by 2028.

The growth of the tourism sector will also create additional jobs for the people of Lao PDR and further improve its services sector. According to the United Nation’s World Travel and Tourism Council, tourism has directly resulted in 114,000 jobs being created in Lao PDR. As a whole, tourism and its related services have contributed over 385,000 jobs in the country. With Lao PDR’s workforce being largely unskilled, the expansion of the country’s tourism sector is key as it allows workers to develop skills and move up the economic ladder. A thriving tourism industry could also improve per-capita income of the country. Lao PDR currently has one of the lowest per-capita incomes but the influx of foreign tourists exchanging their stronger currencies with Laotian Kip could cause a knock-on effect on workers’ wages.

To help develop the sector, Lao PDR collaborated with the Asian Development Bank (ADB) in 2015 to launch a Tourism Infrastructure Project. The ADB provided the country with a US$40 million project loan to help it build tourism infrastructure.

Role of China

While Lao PDR welcomes all tourists, it is upgrading its tourism sector with one target audience in mind, China. A local media report from last month said that the Lao PDR government is enhancing certain tourism services to attract more tourists from China in particular.

Last year, tourist arrivals in Lao PDR dropped to 3.86 million from 4.23 million. Despite the drop, the number of Chinese visitors to Lao PDR in 2017 increased by 17 percent. The government there wants the numbers to continue rising.

Among the reasons for the government going above and beyond to cater to Chinese tourists could be due to the reputation of Chinese tourists being big spenders abroad. Last year alone, Chinese tourists spent an estimated US$115 billion overseas.

Aside from the government’s efforts to woo Chinese tourists, the numbers look likely to increase anyway. Lao PDR has also become a big part player in China’s Belt and Road initiative with its inclusion in the Kunming-Singapore railway. The railway, also dubbed the Pan-Asia railway connects China with Southeast Asia and Lao PDR is among the stops. It’s inclusion in the railway system will most definitely boost tourist numbers. Furthermore, China has become the largest foreign business operator of hotels, entertainment venues and restaurants in Lao PDR.

If Lao PDR successfully improves its tourism sector it would be seen as a boon to the economy and to its people. However, it needs to be careful to not fall into the trap of “overdevelopment” where it could so easily become a typical commercial tourist destination, losing its original charm and uniqueness along the way.

Source: The ASEAN Post

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