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3 Apr, 2001

Tourism Set for New Poverty Alleviation Role

The travel & tourism industry is undergoing a significant change of positioning, one that will have a long-term impact on the way it is funded and developed.

KUNMING: The travel & tourism industry is undergoing a significant change of positioning, one that will have a long-term impact on the way it is funded and developed. After years of being touted as a job- creator, income-generator, culture-protector and various other epithets, the industry is being elevated to the level of a ‘poverty- alleviator’. For the first time, a seminar on the role of well-managed and well-developed tourism in reducing poverty will be on the programme of the Asian Development Bank (ADB) when it meets in early May 2001 for its annual Board of Governors meeting in Honolulu.

The change should not be taken lightly. Amongst politicians and policy-makers, it is now set to be seen in entirely different context. Bragging about its bigness, job-creation and foreign exchange generating prowess has struck a welcome albeit limited chord among bureaucrats and politicians. But when bankers and investors begin to think of travel & tourism in terms as a potential poverty- alleviator, politicians are bound to follow.

The issue is not entirely new. Institutions like the World Travel & Tourism Council and World Tourism Organisation for some years have been talking to the World Bank and its associated agencies about moving tourism higher up on the poverty-reduction agenda. World Bank chief James Wolfensohn has responded, and tourism is getting its fair share of funding from the International Finance Corporation as well as support from the Multilateral Investment Guarantee Agency. While the ADB has been well ahead of the boys in Washington in terms of funding tourism, it is now changing the nomenclature to reflect the new realities and more directly respond to the bottom-line priorities.

It was in 1999 that the ADB announced that poverty-reduction was its ‘over-arching goal.” At the ADB’s annual Board of Governors meeting in Honolulu, the two-hour seminar is designed to come up with a set of policies on how to factor tourism into this policy and fine-tune strategies on how its loan and consultancy money can be used to create jobs, especially for women, distribute income to the rural areas, and protect culture and the environment.

The subject has never featured in past ADB annual meetings, but one of the bank’s senior executives said last week many bank governors are warming to the importance of well-managed and well- developed tourism, for several reasons. They recognise that most of Asia’s poorest countries also have the best tourism-promotion potential. And the travel & tourism industry globally is not only rising rapidly, but also tends to bounce back from crises faster than other industries.

The words “well-developed and well-managed tourism” are being underlined. Rather than focus on pursing the traditional style of development by handing out loans for more construction of roads, highways and airports, and equally conscious of the flak it is taking from NGOs for continued funding of such mega-projects, the bank is seeking to focus on developing ecotourism and community development.

At a meeting of the Greater Mekong Subregion (GMS) Tourism Working Group in Kunming on March 31, the bank’s Arjun Thapan, Manager of the Water Supply, Urban Development and Housing unit, said: “Tourism growth must be based upon long-term sustainable strategies, including concern for distribution of the economic benefits of tourism, employment generation, development of conservation ethics, promotion of local products and infrastructure development. If it can develop along these lines, we believe tourism has the necessary characteristics to make it an ideal tool for addressing poverty.”

In a subsequent interview, Mr Thapan said the bank believes ecotourism “is an area where there is a direct link between the potential for economic development and the conservation of natural resources.” The drum-beat is now being picked up by other influential groupings like the UN Economic and Social Commission for Asia and the Pacific (ESCAP) which is also echoing the language. Said ESCAP’s Tourism Unit chief Ryuji Yamakawa, “ESCAP has affirmed that sustainable tourism development can help alleviate poverty in rural areas by creating new economic opportunities and raising rural incomes.”

The change of gauge is important for tourism in many ways. Poverty is the root cause of public frustration, civil unrest and conflict, environmental problems and many other issues which directly impact on tourism in Asia-Pacific and indeed world-wide. By addressing issues like say, the environment, crime and even pillaging of cultural artefacts, the industry is only treating the symptoms. Now, the focus is shifting to the cause.

The ADB has long been involved in funding tourism-related projects in Asia, but in a low-key and indirect way. Two regions that have been a special focus are the six GMS countries (Laos, Vietnam, Cambodia, Myanmar, Thailand and Yunnan Province of China) and Nepal. With the exception of Thailand, the other areas have some of highest poverty levels in Asia. Their tourism potential, by contrast, is immense.

In Nepal, the ADB is now into its third and largest project whereby a loan of US$20 million is to be given to help fund infrastructure in a number of little townships nation-wide which will then pave the way for private investment in specific tourism products and services. The money, which will include upgrading of six provincial airports, will have to be matched by another US$5-10 million from the Nepalese government and other donor agencies. The head of the King Mahendra Trust Fund for Conservation, through which some of the money is being channelled, is to be one of the speakers invited to Honolulu to speak at the ADB seminar on tourism and poverty reduction.

In the GMS, Mr Thapan said, “Tourism is a sector where the subregional ‘whole’ can be greater than the sum of the individual parts.” The bank has funded infrastructure to facilitate access to tourism spots. However, in line with the new approach, a new feasibility study being prepared for priority projects along the Mekong/Lancang river will identify ways to strengthen subregional co-operation and management mechanisms to preserve and protect the river, its environment, and its cultural and historical heritage.

This will include means of financing and shared management, especially by involving the private sector, Mr Thapan said, adding that the “key challenge” facing tourism development in the GMS “is to strengthen the institutional basis for sustaining sub-regional co- operation over the long term.” The ADB also favours the convening of a GMS tourism ministerial meeting to provide higher-level backing for sub-regional co-operation schemes and catalyse private sector investment. It wants the GMS national tourism organisations to help ‘sensitise’ other government agencies in charge of securing official development assistance to ensure their full co-operation.

Additional help for poverty-alleviation and sustainable tourism development in the GMS is coming from groups like the Canadian Universities Consortium through its Training and Technology Transfer programme. The group was asked by the Mekong NTOs to research three villages earmarked for tourism development: Hong Phong, a basket-weaving village in Vietnam; Had Bai, Thailand, where a women’s group is running a weaving co-operative; and Pak Beng, Laos, a river-port that already gets a large number of river- cruise tourists every year but lacks adequate infrastructure to support them.

The CUC’s conclusion: A small-scale, gradual approach to tourism development that will allow tourism officials and local residents to manage the potential negative impacts of tourism as the industry develops. Community members must be equipped with the tools and training to independently manage tourism activities and plan for their future development. Indeed, in the case of Pak Beng, the CUC research team flatly suggested that “no further tourism development should proceed until the local infrastructure issues are resolved.”

Over the next few years, this poverty-reduction focus will seep into the lexicon of tourism development. It will mean more funding (see story below) for community-related grassroots projects. Most significantly, it will mean bankers and financiers making sustainable development a part of the agenda. That can only be good for the long-term future of travel & tourism.



BERLIN: Private-sector led initiatives in the Asia-Pacific that promote new approaches to tourism that help alleviate poverty are eligible for grants of upto 100,000 pounds from the UK Department for International Development. Under its Tourism Challenge Fund (TCF), the DFID will provide grants for projects that:

• Develop business and employment opportunities for the poor;

• Ameliorate the environmental impacts of tourism that affect the poor;

• Strengthen positive social and cultural effects of tourism;

• Develop frameworks for involving the poor in decision making.

The support is aimed at developing countries where there is a growing or strong tourism industry. International travel businesses anywhere can apply. The fund is administered by Deloitte & Touche whose Director of Tourism Services, Oliver Bennett, said this was the first time UK government funding is available direct to the travel trade to help address fundamental tourism issues in developing countries. “Deloitte & Touche will play an active role in guiding potential bidders.”

The DFID is the UK government department responsible for promoting development and the reduction of poverty. The present UK government has increased its commitment to development by strengthening the department and increasing its budget. The policy, set out in its first White Paper on International Development in 1997, is a commitment to the internationally agreed target to halve the proportion of people living in extreme poverty by 2015. A second White Paper on International Development, published in December 2000, reaffirmed this commitment, while focusing specifically on how to manage the process of globalisation to benefit poor people.

Challenge Funds are a new way of supporting enterprises and concepts that contribute to the development process in countries where there is a growing tourism industry, or where tourism is a strong part of the economy. The funds are competitive, which helps ensure that public funds are used to best effect.

It is up to the bidder to come up with their own concept, which is evaluated by an independent panel. Detailed proposals are then invited from those short-listed. Schemes can be led from either tourist originating countries or from developing country tourism destinations. The fund is open to any private sector organisation, including businesses and civil society organisations. All bids need to involve a commercial partner.

The Tourism Challenge Fund can only support projects that:

— Develop business and job opportunities for the poor. Examples are where mainstream tourism businesses link up with small enterprises, or where training or other initiatives improve tourism employment opportunities for the poor.

— Ameliorate the environmental impacts of tourism that most affect the poor. An example is where damage to the environment is limiting local livelihoods and where measures are taken to improve environmental practices and/or provide new opportunities for local communities.

— Strengthen the positive social and cultural effects of tourism. An example is where a tourism project reinvigorates community spirit and provides new opportunities which maintain and respect the heritage of the local community.

— Develop a supportive policy and planning framework, and processes that involve the poor in decision making in tourism. Examples are the provision of codes of conduct or other information to visitors which is likely to change their behaviour.

Project Examples

One project being supported aims to increases revenues and jobs by integrating small informal enterprises into the mainstream tourism industry. The scheme in The Gambia includes training on the quality and sales of handicraft together with other initiatives. Tourism industry associations, tour operators and a major retailer are participating in it.

A project in Indonesia seeks to enable poor families to own and operate small-scale community based tourism ventures. The fund is meeting about half the costs of the project which is under the aegis of a local private company.

Projects must be innovative, feasible and sustainable, and show commitment from the enterprises directly involved. Funding is not available for projects that involve construction works and the provision of equipment (except as an integral part of a wider project), Scholarships for full-time study, initiatives which fall within the ambit of other DFID funding programmes, Projects only involving research, or for business start-ups.

The amount of grant finance per project is likely to be ?50,000 – ?100,000 per year; although larger projects may be considered. Projects may be supported for up to three years. Applicants must contribute matching funding of about 50% of the total project cost in cash and/or in kind. It may come from a variety of sources such as tour operators, hoteliers and others in the tourism business who are playing a part in the project.

A Guidance Note for Applicants is available on www.challengefunds.org. All applicants will be studied by an independent panel. Short-listed parties will be invited to submit a more detailed proposal. The next deadline for submission of concept notes is Monday 1 October 2001.



Financiers from around the Asia-Pacific region will gather in Manila from 5 to 6 April for a United Nations Environment Programme (UNEP) conference on how they can influence the pursuit of sustainable development in the run-up to the 2002 World Summit on Sustainable Development (also known as Rio + 10).

“The meeting will highlight practical solutions and can create an exceptional networking opportunity for financiers who want to make the business case for performing in a sustainable manner in the run- up to the World Summit,” said Klaus Toepfer, UNEP Executive Director. “From the high level of interest in this UNEP Finance Initiatives meeting, it is clear that the financial sector in Asia-Pacific believes it has an important role to play in the Rio+10 process.

Keynote speakers from both the private sector, government, and civil society (including Mr Ahman Mehta, CEO of The Hong Kong and Shanghai Banking Corporation and Thailand’s Khunying Chodchoy Soponpanich, of the Magic Eyes non-governmental organisation), will set the framework for a discussion on how the finance sector can most effectively contribute to environmental protection, social development, and economic vibrancy across Asia- Pacific.

There will be a focus on four themes: “Market trends and best environmental performers in the financial sector”, and “Financing the environmental needs of Asia-Pacific” (day 1); and “Regulations, reporting and implications for the finance sector,” and “Thinking globally, acting locally – the finance sector’s role in sustainable development” (day 2).

The conference, initiated by the UNEP Finance Initiatives (FI) unit – based in Geneva – and in collaboration with the Department of Environment and Natural Resources (DENR) of the Philippines, will be an important event for the financial sector.

A spokeswoman for the Hanns Seidel Foundation, Germany, one of the meeting’s sponsoring partners, commented: “The growing need to address the concern of poverty alleviation has increased the demands for greater corporate social responsibility across industries. It is of great interest for us to support the integration of a sound environmental approach in the socio-economic development of marginalized communities.”

“The Finance Sector in Asia-Pacific. The Business Case for Sustainability Performance” Conference. See – www.unep.ch/etu/fi/mtgs/manila.

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