CHAPTER 1. Introduction

Transcription

1 CHAPTER 1 Introduction 1.1 Study Background The tourism sector in Lao PDR has seen a fairly considerable growth over the period since the early 1990s with one major contributing factor being a designation of Luang Prabang as UNESCO World Heritage site in As a result, the sector has become a top foreign exchange earning sector in Lao PDR, and is given a high priority in the country s national development policies and plans. Nonetheless, the inbound tourism of Lao PDR is not considered to have grown to a satisfactory degree, compared with that of neighboring countries 1, and the country is now in the process of developing its tourism infrastructure in both soft and hard areas. According to the Draft National Tourism Development Strategy 2005 to 2015 (an English version that has become a basis for the ongoing preparation of an official strategy by the Government of Lao PDR), the objectives of tourism development in Lao PDR include: product diversification based on Lao s unique cultural and natural attractions; enhancing service quality, education and training; and spreading the benefits from tourism to remote and minority communities, among others. Luang Prabang, positioned as a transportation hub in the Northern Region of Lao PDR that suffers from the country s highest poverty ratio (compared with the Central and Southern Regions), is expected to grow as a development core or a gateway in the Region. Foreign visitor arrivals in Luang Prabang have increased steadily since its designation as UNESCO World Heritage site, from 20,000 in 1995 to 106,000 in However, Luang Prabang has been faced with various bottlenecks that would hinder continued and sustainable tourism growth, including a lack of awareness as tourist destination in the international market, inconvenience and limited capacity of transport access to the area, heavy reliance of its tourism on a narrow strip of the World Heritage site and a need for product diversification to relax this reliance, a need for adequate environmental management to address several issues in the town such as potential increase in disorderly development, increasing demand for solid waste disposal and traffic congestion, and so on. These issues need to be addressed adequately in order to achieve continued and sustainable tourism growth in Luang Prabang, thereby contributing to the development in the Northern Region as well as in the country. Subsequently, Japan Bank for International Cooperation (JBIC), an executing agency for Japan s Official Development Assistance (ODA) loans, initiated the Pilot Study for Project Formation for (the Study). This study seeks to identify promising sub-projects and programs that will contribute to sustainable tourism development in Luang Prabang and to formulate a project that will be a potential candidate for future JBIC lending. Accordingly, JBIC commissioned the Study to a 1 Foreign visitor arrivals to Lao PDR were 895,000 in 2004 while those to neighboring countries in 2004 were as follows: 11.3 million for Thailand, 2.9 million for Viet Nam, and 1.06 million for Cambodia. As of 1995, Lao PDR had attracted more foreign visitors than Cambodia (220,000 in 1995), but the position of the two countries reversed as of In addition, for Lao PDR the arrivals with border passes accounted for more than a half of the total arrivals as of 2004, although foreign visitors entering Lao PDR with passports increased significantly in 2005 as described later in this report. 1

2 team formed by PADECO Co., Ltd. of Japan (the Study Team). 1.2 Study Objectives Under the aforementioned background, the objective of the Study is to formulate a project as a potential candidate for future JBIC lending that will contribute to tourism sector development and cultural and historical heritage conservation in Luang Prabang, in order to achieve sustainable tourism development and continued increase in international tourists in the area, thereby contributing to enhancing foreign exchange earnings of Lao PDR as well as to social and economic development in the country. 1.3 Study Tasks The Study Team carried out the Study, according to the tasks indicated in Table 1-1, which were specified in the Terms of Reference approved by JBIC. Table 1-1 Study Tasks from the Terms of Reference (TOR) Task Description of Task 1. Review of the necessity of tourism sector development in Lao PDR and Luang Prabang: 1-1 Review the priority of tourism development in Luang Prabang in the national development policies and plans 1-2 Review tourism demand for Lao PDR and Luang Prabang, and revise them where needed 1-3 Review existing plans, and identify major issues as well as development and conservation needs with respect to tourism sector development in Luang Prabang 1-4 Review current measures and plans for tourism promotion, and identify major issues (including carrying out tour operators interview surveys in neighboring countries and in Japan) 2. Identification of the socio-economic structure and tourism-related stakeholders in the Project area: 2-1 Review socio-economic conditions and structure in the area, including existing linkages between tourism and other industries in the area, mechanism with which tourism development can potentially benefit local communities, and potential to strengthen such inter-industry linkages and undertaking to benefit local communities 2-2 Review undertakings and capacity of concerned organizations of Lao PDR, other donors (e.g., UNDP, UNESCO, ADB, JICA, the Thai government, universities) and concerned NGOs, and examine collaboration measures with these entities during project implementation 3. Formation of sub-projects/programs which have high degree of necessity: 3-1 Propose promotion measures (including suggestions to increase the demand) to enhance the effect of the Project 3-2 Establish needs-based criteria for selecting sub-projects and programs to be included in the Project based on the tasks above 3-3 Prepare a detailed plan for these sub-projects/programs, including cost estimate for implementation and for operation and management/ maintenance (O&M), project implementation/o&m scheme, project implementation schedule, economic evaluation of the Project, and setting of performance indicators of the Project) 2

3 Task Description of Task 3-4 In light of the JBIC Environmental Guidelines, investigate necessary procedures in Lao PDR with respect to consideration of environmental and social impacts of the Project, and examine mitigation measures for potential impacts (including conservation measures for landscape and cultural heritage, and consideration toward the poor) 3-5 Assist the Government of Lao PDR and other stakeholders (such as other donors, concerned entities in Luang Prabang, and concerned residents) to build consensus toward the Government s requesting Japan s ODA loan for implementation of the Project 1.4 Study Phasing and Reporting The Study officially started in mid-april 2006, and an Inception Report was presented to JBIC and concerned entities in Lao PDR in late April The Study Team composed of six international consultants with local consultants in Lao PDR then conducted the first phase of field activities in Luang Prabang and Vientiane from late April to late May The international team consisted of the following members: Tourism and Regional Development Specialist (Team Leader); Tourism and Regional Planner; Cultural Heritage Conservation Specialist; Tourism Promotion and Marketing / Human Resource Development Specialist; Infrastructure Planner; and Environmental Management and Social Consideration Specialist During this period, the Study Team carried out field surveys on major and potential tourist sites as well as on major transport links between these sites, and held meetings with key local officials in the concerned ministries, Luang Prabang Province and its departments, etc. as well as with people in the tourism industry and major donor agencies providing tourism-related assistance in Lao PDR. This will be submitted to concerned entities in Lao PDR at the end of June The second phase of field trips will be conducted in July-August 2006 to discuss the interim results of the Study and to conduct detailed planning of promising sub-projects and programs that are expected to be part of the project to be eventually formulated in the Study. The Draft Final Report that will incorporate overall study results will be prepared by early September 2006, which will then be presented to concerned entities in Lao PDR as well as to JBIC in September The results of the discussion will be incorporated into the Final Report, due for submission in October

4 CHAPTER 2 Lao PDR Tourism Today Lao PDR is endowed with unique cultural, natural and historical tourism resources that have potential to offer quality experience to visitors from across the world. Major attractions include: 2 the national capital of Vientiane located on the Mekong River, offering well-known Buddhist monasteries and monuments; Luang Prabang, an ancient capital situated between the Mekong and Nam Khan rivers, listed as a UNESCO World Heritage site; Champassak that has rich history as well as Wat Phu, a temple complex recently designated as a UNESCO World Heritage site, which is considered to be one of the finest Angkor-inspired edifices outside Cambodia; the Plain of Jars in Xieng-Khouang with hundreds of giant, mysterious stone jars of various dimensions; and abundant nature and minority people in the mountainous north the Mekong River and its tributaries are running through, offering rich experience of eco- and cultural tourism. This chapter reviews government policies on tourism development and tourism demand in Lao PDR and in Luang Prabang, the target area of this Study, as well as provides major issues in the tourism sector in Lao PDR. 2.1 Government Policies and Strategies on Tourism Development The tourism sector has become a top foreign exchange earning sector in Lao PDR, with its revenue amounting to US$ million in 2005, followed by exports of minerals (US$ million), garments (US$ million), electricity (US$ 94.6 million) and wood products (US$ 74.0 million). Table 2-1 shows revenues from tourism and major exports in Table 2-1 Revenues from Tourism and Major Exports for Lao PDR, Product $ Million Share $ Million Share $ Million Share $ Million Share Tourism % % % % Garments % % % % Electricity % % % % Wood Products % % % % Coffee % % % % Agricultural Products % % % % Minerals % % % % Handicrafts % % % % Other Industries % % % % Total % % % % Source: LNTA, 2005 Statistical Report on Tourism in Laos. Note: Totals and shares were calculated by the Study Team based on the revenues by product available in this statistical report. As such, the tourism sector in Lao PDR has been given high priority in the country s national development policies and plans including the National Socio Economic Development Plan (NSEDP) and the National Growth and Poverty Eradication Strategy (NGPES) as detailed below. 2 The description on these major tourism resources is based partly on Mintel, Lao People s Democratic Republic Travel and Tourism Intelligence, May

5 2.1.1 National Socio Economic Development Plan (NSEDP) As of the time of writing this, the Sixth National Socio Economic Development Plan (NSEDP) for has been under preparation in Lao PDR, expected to be finalized in June-July The draft of the sixth NSEDP issued in January 2006 summarizes the growth of the tourism sector that was achieved in the fifth NSEDP period ( ), pointing out that the strong growth experienced in recent years was supported by the Government s increasingly open tourism policy, which upholds tourism as one of the eight focal economic sectors to be development in the fifth five-year plan (see section 2.3 of this report for tourism demand in recent years). Specifically, it indicates the following: (i) Lao PDR has established tourism relationships with many countries around the world with a focus on ASEAN members and countries in the Mekong Sub-Region; (ii) entry visa requirements were lifted for tourists from several countries in the region by the end of 2005; (iii) thirteen land border crossing points were upgraded into international border crossing points to welcome tourists, and facilities provided for the issuance of visas on arrival; and (iv) participation in different events was ensured to attract tourists from different markets, and a multitude of events relating to domestic and international tourism were organized in Lao PDR. The January 2006 draft of the sixth NSEDP indicates the following plans for the tourism sector in : Research and amend policies to facilitate the growth of the tourism sector, diversifying funding sources, especially mobilizing private and foreign investment; Research and develop laws/decrees on tourism as a base to complete the Law on tourism; Implement effective measures to raise the quality of tourism services in response to increasing needs of both foreign and domestic tourists; Improve tourism infrastructure including communications (transport) and information systems, electricity, water supply, hotels and guesthouses to provide better services to tourists; Enhance the competitiveness of tourism products for export; Cooperate with the mass media in order to advertise and access different types of tourists, and organize an international trade fair in coordination with the airlines, trade, information and cultural agencies to promote tourist sites in the country; Continue to develop ecological, cultural and historical sites and attract investment in tourist sites; Pay full attention to human resources development in the tourism sector, including establishing a tourism department in the Lao National University in order to develop highly qualified tourist officers, encouraging the private sector to participate in tourism training activities, and coordinating with various partners in Asia to provide relevant training on tourism; 5

6 Further enhance the roles of the Lao National Tourism Administration at all levels; and Establish a National Tourism Council under the chairmanship of the Deputy Prime Minister, with the involvement of representatives from relevant line ministries, central authorities and leaders of key provinces where important tourist sites are located National Growth and Poverty Eradication Strategy (NGPES) The National Growth and Poverty Eradication Strategy (NGPES) of Lao PDR that was approved by the National Assembly in February 2004 provides, with a dual objective of enhancing growth and development, and reducing poverty, the strategic framework under which all of the Government s future growth and poverty eradication programs are to be developed and implemented. The medium-term operational framework of NGPES comprises four main sectors, various supporting sectors, several cross-sector priorities as well as specific national programs addressing poverty eradication, specifically as follows: The four main sectors are agriculture/forestry, education, health, and infrastructure, especially rural roads. Tourism is selected as one of the supporting sectors (or potential growth sectors) that also include energy and rural electrification, agro-forestry, mining and construction materials industries. In particular, market linkages and trade facilitation is an essential factor for the expansion of key sectors such as agriculture, industry and tourism. For tourism to benefit poor people, priority investments should be directed especially toward eco-tourism and encouragement of handicraft production. Cross-sector priorities encompass environment, gender, information and culture, population and social security. An all-cross-cutting issue is capacity building. Three poverty-related national programs include: the National Drug Control program, the UXO Decontamination program, and the National Action Plan for HIV/AIDS/STD. All sectors refer, one way or another, to i) macro-economic requirements to improve their role and mandate, ii) private sector/market orientation/trade facilitation to enhance efficiency, iii) capacity building priorities, iv) environmental concerns, v) gender equality, vi) governance and institutional strengthening, and vii) coordination among sectors and agencies to achieve higher synergy National Tourism Development Strategy The Government of Lao PDR is currently in the process of developing a National Tourism Development Strategy for As of May 2006, a draft strategy has been prepared partly based on the Draft National Tourism Development Strategy for Lao PDR that was drafted with fund provided through the ADB-financed Mekong Tourism Development Project (MTDP) currently undertaken in Lao PDR as well as in Vietnam and Cambodia. This draft National Tourism Development Strategy for (prepared in the Lao language) is now awaiting government s official approval, which expectedly is to be given in June-July

7 2.2 Priority of Luang Prabang Tourism Development Luang Prabang, the ancient capital of the Lam Xang Kindgom, was listed as a World Heritage site by the United Nations Educational, Scientific and Cultural Organization (UNESCO) in Due to its extreme importance as a major tourist attraction in Lao PDR, tourism development in Luang Prabang has been given high priority in the national-level development strategies and plans including NSEDP (and (draft) National Tourism Development Strategy) National Socio Economic Development Plan (NSEDP) The January 2006 draft of the sixth NSEDP indicates national plans for regional development by region. The development strategies and targets for the Northern Region that are related to the tourism development in Luang Prabang are as follows, clearly indicating its priority in the national development plan: Invest and develop high quality services in Luang Prabang, Luang Namtha and Xiengkhouang, with priority to be given to telecommunications and financial, commercial and tourism services, and encourage information dissemination on tourism, culture and health (as well as other services such as agro-forestry technical services) in the villages; Create economic and service centers in Luang Prabang, which combine the development of tourism sites, eco-tourism and culture; Diversify tours to border area economic zones and cross-border tourism, integrating Lao tourism into the Mekong sub-region tours; Encourage all provinces in the region to put forward eco-tourism and culture/history-based tourism; Support investment in tourism infrastructure, promote the economic sectors to invest in eco-tourism, and develop traditional products such as handicrafts and weaving with local raw materials; Rehabilitate the Luang Prabang airport to reach a sub-regional level to expand flights to all GMS countries, Hong Kong and Singapore; 3 Construct the Suphanouvone University in Luang Prabang that is expected to offer technical and managerial training in such areas as agro-forestry processing and tourism; and Attract a total number of 700,000 to 800,000 tourists to the Northern Provinces, receiving a total income of US$ million, with a target of the tourism sector growth set at 5.5% per year National Tourism Development Strategy As mentioned earlier, the draft National Tourism Development Strategy for has been prepared by the Government of Lao PDR (in the Lao language), currently awaiting government s official approval. The Study Team will follow up its approval process and plans to review the contents of the strategy once it is finalized. 3 See section 3.5 of this report for the current plan regarding the Luang Prabang airport. 7

8 2.3 Tourism Demand International Tourism (1) Overall Trend As shown in Figure 2-1, foreign visitor arrivals to Lao PDR have increased significantly since the beginning of 1990s, from 37,800 in 1991 to 1,095,000 in 2005, the first hit to the one-million line for tourism of Lao PDR. The average growth rate in was 27.2% per year, and the rate from 1995 (in which Laung Prabang was designated as the first UNESCO World Heritage site in Lao PDR) to 2005 was 10.5% per year. While a stagnant trend continued after 2000, particularly in 2003 in which uncertainties due to Severe Acute Respiratory Syndrome (SARS) virus and international terrorism apparently caused the arrivals to decline, a significant recovery occurred in 2004 with 895,000 arrivals, up from 636,000 in Foreign visitor arrivals 1,200,000 1,000, , , , , Year Source: LNTA, 2005 Statistical Report on Tourism in Laos Figure 2-1 Foreign Visitor Arrivals to Lao PDR in Table 2-2 indicates the number of foreign visitor arrivals by source region since 1991 along with the data of average length of stay estimated by LNTA based on statistical surveys conducted periodically. Note that Regional Tourists are defined by LNTA as those from neighboring countries that share borders with Lao PDR including Thailand, People s Republic of China (PRC), Myanmar, Vietnam and Cambodia; they include those entering Lao PDR with valid border passes or passports. International Tourists are those entering Lao PDR with a valid passport and visa other than Regional Tourists. Key points are as follows: A significant number of visitors to Lao PDR are coming from Asia and Pacific, accounting for 78-82% of total foreign visitor arrivals since 2000 (though the proportion is down from that in 1990s). It should be noted that these visitors include those from neighboring countries entering Lao PDR with border passes, as shown later. The proportion of European visitors to Lao PDR has increased in recent years compared with that in 1990s, accounting for 12-15% of total foreign visitor arrivals since Those from the Americas, mostly from the USA and Canada, account for 5-6% of total arrivals since

9 The estimated average length of stay for International Tourists has increased in recent years, up from in 1990s to in , while that for Regional Tourists has been much shorter mainly because Regional Tourists include a large number of visitors from neighboring countries with border passes who are allowed to stay in Lao PDR only for a couple of days. Table 2-2 Number of Foreign Visitor Arrivals by Region and Length of Stay, Number of Foreign Visitor Arrivals Average Length of Year Stay (days) Asia & Europe The Africa & Total Int l Regional Pacific Americas Middle East Tourists Tourists ,937 2, ,613 NA NA ,022 4,496 2, ,571 NA NA ,836 5,986 2, , NA ,114 8,019 1, , NA ,470 20,635 11, , NA ,692 30,582 14, , ,781 38,583 18,213 2, , ,196 52,076 25,326 1, , ,703 68,564 31,780 3, , ,254 86,462 42,111 4, , ,249 80,736 34,370 5, , , ,924 46,704 8, , ,185 93,960 39,453 4, , , ,092 47,153 5, , , ,326 60,061 4,655 1,095, Source: LNTA, 2005 Statistical Report on Tourism in Laos Importantly, those entering Lao PDR with border passes account for a significant portion of total visitor arrivals. The essence of issuing a border pass is to grant greater freedom of border crossing to those residing in border areas while imposing a reasonable level of restrictions on their rights in terms of the duration of stay and the areas where they can visit. 4 Table 2-3 shows the number of visitors with border passes (those from Thailand, Vietnam and PRC), compared with those entering with passports. Main points are as follows: Those entering Lao PDR with border passes accounted for more than a half of total visitor arrivals in Most of these arrivals with border passes are of Thai nationals, although Vietnamese border pass holders entering Lao PDR have increased significantly over the past few years. Those entering Lao PDR with passports have drastically increased in 2005 by 57.3% from As described later, this is largely due to a dramatic increase in Thai visitors (with passports) while many other nationals also contributed to this surge. On the other hand, total arrivals with border passes were stagnant in In case of border crossing between Lao PDR and Thailand, for example, border passes may be issued by relevant authorities to nationals permanently residing in the border areas. A border pass is valid for one year, and the border pass holders may stay no longer than three days and two nights in the territory of the other country. Also, the areas border pass holders are allowed to visit are restricted to border areas designated for respective border crossing point. 9

10 As a result, visitor arrivals with passports have exceeded those with border passes in 2005, even by a substantial margin. This can be regarded as a sign of Lao tourism entering a new era, suggesting its high potential for further growth in the coming years. Table 2-3 Foreign Visitors to Lao PDR with Border Passes and Passports, Visitors with Border Passes Visitors with Passports Year Thailand Vietnam PRC Total % of Total Arrivals Total % of Total Arrivals ,349 25,440 33, , % 300, % ,396 22,409 13, , % 358, % ,657 12,329 9, , % 289, % ,975 58,404 14, , % 407, % ,644 74,282 18, , % 627, % 04/01 Growth 31.7% 129.6% -55.8% 30.6% % - 05/04 Growth -9.5% 27.2% 28.2% -4.0% % - Source: LNTA, 2002 & 2005 Statistical Report on Tourism in Laos (2) Arrivals by Market Table 2-4 shows top ten countries for Lao tourism in in terms of the number of visitors entering Lao PDR with passports. Note that these arrival figures do not include those entering the country with border passes (those from Thailand, Vietnam and PRC). More detailed arrival data by market are provided in Appendix A. Key points include the following: Top ten markets for Lao tourism have been relatively stable in recent years, with Thailand and Vietnam being the top two even without considering border pass holders from these countries visiting Lao PDR (except in 2003 in which SARS apparently caused a substantial drop of Vietnamese visitors as well as Thais). One significant event over this period is a dramatic increase in Thai visitors in 2005, indicating that great interest of Thais in visiting Lao PDR is being manifested. The majority of Thai visitors (including the border pass holders) are entering Lao PDR through the Friendship Bridge linking Vientiane in Lao PDR and Nongkhai in Thailand as shown in Table 2-5. On the other hand, most of the Vietnamese visitors are coming through the checkpoints bordering Vietnam as indicated by a high percentage of Vietnamese visitors entering Lao PDR at Others in the table. Following these two countries are mostly major tourist generating markets in Europe and North America (plus Australia). Japan is the only Asian country among these top ten markets (except neighboring countries). The position of PRC is getting higher although they are still largely coming through Boten in Luang Namtha Province bordering with Yunnan Province. 10

11 Table 2-4 Top Ten Markets for Lao Tourism, Thailand 81, % 1 Thailand 53, % 1 Thailand 75, % 1 Thailand 228, % 2 Vietnam 48, % 2 USA 30, % 2 Vietnam 72, % 2 Vietnam 90, % 3 USA 35, % 3 Vietnam 29, % 3 USA 37, % 3 USA 47, % 4 France 26, % 4 France 23, % 4 France 27, % 4 France 35, % 5 UK 21, % 5 UK 22, % 5 UK 27, % 5 UK 29, % 6 Japan 19, % 6 Japan 17, % 6 Japan 20, % 6 Japan 22, % 7 Germany 12, % 7 Germany 12, % 7 PRC 18, % 7 PRC 20, % 8 Australia 12, % 8 PRC 11, % 8 Australia 15, % 8 Australia 20, % 9 Canada 9, % 9 Australia 11, % 9 Germany 14, % 9 Germany 16, % 10 PRC 8, % 10 Canada 8, % 10 Canada 9, % 10 Canada 11, % Sub-Total 276, % Sub-Total 220, % Sub-Total 317, % Sub-Total 523, % Grand Total 358, % Grand Total 289, % Grand Total 407, % Grand Total 627, % Note: These figures are the numbers of visitors entering Lao PDR with passports and their shares in total. Source: LNTA, 2002 & 2005 Statistical Report on Tourism in Laos As shown in Table 2-5, the visitors from these non-neighboring countries are widely distributed across ports of entry. For Europeans (from France, UK and Germany), those coming through the Friendship Bridge (i.e., by land) are more than those arriving at Vientiane International Airport. In addition, many of the European visitors are arriving at Houei Xay (from northern Thailand) from which they can enjoy Mekong cruise down to Luang Prabang. Although more visitors arrive at Vientiane International Airport than at the Friendship Bridge for Japan, USA and Australia, they are not necessarily dominant. These arrival trends by port of entry are consistent with the result of the market survey conducted in this Study (described later), indicating that a variety of visitors are visiting Lao PDR from non-neighboring countries in terms of age group, tour patterns and expenditures. For example, a number of backpackers or FITs (Free, Independent Tourists) are visiting Lao PDR, typically traveling by land, while there are also many package tourists coming by air, who are widely distributed across different age groups. Table 2-5 Arrivals from Top Ten Markets by Port of Entry in 2005 Country Friendship VTE LPB Bridge Airport Airport Houei Xay Boten Others Total Thailand 404,759 6,629 8,152 19, , ,189 Vietnam 32,889 6, , ,151 USA 14,510 20,846 4,584 3, ,717 47,427 France 12,835 8,755 3,166 4, ,507 35,371 UK 9,040 5,562 3,383 7, ,110 29,977 Japan 7,910 8,527 1,614 1, ,039 22,601 PRC 3,684 8, , ,210 Australia 6,023 7,471 1,365 2, ,408 20,323 Germany 5,173 3,615 2,730 2, ,312 16,752 Canada 3,222 3,236 1,081 2, ,628 11,447 11

12 Share by Port of Entry for Arrivals from Each Country Country Friendship VTE LPB Bridge Airport Airport Houei Xay Boten Others Total Thailand 67% 1% 1% 3% 0% 27% 100% Vietnam 20% 4% 0% 0% 0% 76% 100% USA 31% 44% 10% 7% 0% 8% 100% France 36% 25% 9% 14% 1% 16% 100% UK 30% 19% 11% 25% 1% 14% 100% Japan 35% 38% 7% 5% 1% 13% 100% PRC 9% 21% 0% 1% 67% 2% 100% Australia 30% 37% 7% 14% 1% 12% 100% Germany 31% 22% 16% 17% 1% 14% 100% Canada 28% 28% 9% 19% 1% 14% 100% Note: These figures are for total arrivals including visitors entering Lao PDR with passports and border passes. VTE and LPB represent Vientiane and Luang Prabang respectively. Houei Xay is located in Bokeo Province in the northwest of Lao PDR, linking with Chiang Khong in Thailand. Cruse ships are operated between Houei Xay and Luang Prabang on Mekong River. Boten is located in Luang Namtha Province, bordering with Yunnan Province of PRC. Most of Others are located in Central and Southern Regions, linking with Vietnam and Thailand as well as with Cambodia. Source: LNTA, 2005 Statistical Report on Tourism in Laos (3) Main Interests of Foreign Visitors In Lao PDR, an international visitors survey has been conducted every year at Vientiane International Airport and Friendship Bridge to obtain information on the profile of foreign tourists including the areas of their main interests. Figure 2-2 provides the result of the main interests of those surveyed in , showing average percentages of those interested in these tourism resources and/or activities over the four-year period. Key points are as follows: Culture and nature are the two major resources of Lao PDR attracting foreign visitors, followed by temple and monuments. In addition to these, about 30% of the surveyed visitors answered that they were interested in minority people, food and Lao PDR as new destination. Obviously, major selling points of Lao PDR are culture, nature and history, while minority people and food can also be an important, attractive feature of Lao PDR if properly promoted. Shopping opportunities in Lao PDR are considered not very attractive to foreign visitors. There should be much room for improvement in this aspect. 12

13 Nature Temple & monuments Culture Minority people Food Shopping New destination Other % of Total Surveyed Visitors Source: LNTA, 2005 Statistical Report on Tourism in Laos. Note: Averages were taken from the data in Figure 2-2 Main Interests of Foreign Visitors to Lao PDR (4) Seasonality Seasonality is one of the important issues in Lao tourism. In Lao PDR, the dry season (October-April) is considered a high season for tourism while the rainy season (May-September) is regarded as low season. Figure 2-3 shows foreign visitor arrivals in 2005 by month (January-December), including (i) total arrivals, (ii) arrivals from ASEAN countries, (iii) arrivals from non-asean countries in Asia and Pacific (excluding PRC), and (iv) arrivals from Europe, the Americas and others. Total arrivals and those from ASEAN countries include visitors with passports and border passes as readily available arrival data by month do not permit their distinction. Key points are as follows: Although the arrivals from ASEAN countries include border pass holders that may not be strongly influenced by seasonal difference, some seasonality is still observed. 5 There is clear and strong seasonality for the visitors from Europe, the Americas and others, with their arrivals being particularly low in May-July and September. Likewise, arrivals from non-asean Asia and Pacific are relatively lower in May-October except in August. It is considered extremely important to take measures to promote tourism in Lao PDR in the May-September period, thereby creating more jobs in tourism-related fields during the rainy season as well as bringing additional foreign exchange for the country. 5 Note that the trend of the arrivals from ASEAN countries by month in 2004 is somewhat different from that in 2005, with the arrivals in January and February being not so low, unlike those in On the other hand, June through September were relatively lower months for arrivals from ASEAN countries in 2004 as in the case of the arrivals from non-neighboring countries. 13

14 Total Arrivals ASEAN 120, ,000 80,000 60,000 40,000 20, ,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Non-ASEAN Asia & Pacific Europe, Americas & Others 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,000 20,000 15,000 10,000 5, Note: These figures by month include those entering Lao PDR with passports and border passes that are readily available. Note also that Non-ASEAN Asia & Pacific excludes arrivals from PRC in order to eliminate the influence of the arrival trend of border pass holders. Source: LNTA, 2005 Statistical Report on Tourism in Laos. Figure 2-3 Foreign Visitor Arrivals to Lao PDR by Month in Regional Tourism for the Target Area (1) Foreign Visitor Arrivals to Luang Prabang Foreign visitor arrivals to Luang Prabang Province have increased rapidly in recent years as shown in Figure 2-4, from 51,200 in 2001 to 133,600 in 2005, at an average annual growth rate of 27% per year in This rate of growth for Luang Prabang is significantly higher than that for Lao PDR as a whole. 6 Foreign visitors to Luang Prabang grew robustly even in 2003 in which total visitor arrivals to Lao PDR dropped considerably. No question that Luang Prabang is one of the main engines of tourism growth in Lao PDR. 6 Note that total foreign visitor arrivals to Lao PDR including border pass holders grew at an annual average rate of 12.9% in , and those with passports at 20.2% per year in the same period. 14

15 160, ,000 Foreign Visitor Arrivals 120, ,000 80,000 60,000 40,000 51,207 65,872 99, , ,569 20, Source: LNTA, 2005 Statistical Report on Tourism in Laos. Figure 2-4 Foreign Visitor Arrivals to Luang Prabang Province in Table 2-6 shows foreign visitor arrivals to Luang Prabang by source region in , compared with those for Lao PDR as a whole (visitors with passports). European tourists account for a significant portion of foreign visitors to Luang Prabang, which is much higher than their proportion in total arrivals to Lao PDR. On the other hand, the visitors from ASEAN countries show an opposite trend, although their share in arrivals to Luang Prabang increased substantially in 2005 due mainly to a significant rise of Thai tourists to Luang Prabang while increases in tourists from Malaysia, Vietnam and Singapore also contributed partly to this hike of ASEAN tourists to Luang Prabang. Appendix A provides detailed data of arrivals to Luang Prabang by nationality. Table 2-6 Foreign Visitor Arrivals to Luang Prabang Province and Lao PDR by Source Region in ASEAN Non-ASEAN Asia & Pacific Europe Americas Africa & Middle East Luang Prabang % 19.7% 51.8% 11.0% 7.0% 100% % 14.1% 46.9% 13.3% 5.9% 100% Lao PDR % 18.8% 27.5% 11.6% 1.3% 100% % 13.8% 20.9% 9.6% 0.7% 100% Note: Arrivals to Lao PDR are those entering the country with passports. Source: LNTA, 2005 Statistical Report on Tourism in Laos. (2) Arrivals of Lao Nationals to Luang Prabang LNTA started to publish visitor arrivals of Lao nationals to Luang Prabang Province (in addition to foreign visitor arrivals) in its 2005 Statistical Report on Tourism in Laos. In fact, Luang Prabang attracts a significant number of Lao visitors as well. It is reported that the arrivals of Lao nationals were 128,381 in Adding it to the foreign visitors, total visitor arrivals to Luang Prabang Province in 2005 were 261,950. (3) Results of Tourist Survey conducted in Luang Prabang Luang Prabang Provincial Tourism Office (LNTA s branch in Luang Prabang) conducted a Total 15

16 tourist questionnaire survey in The results of the 2002 survey are summarized in a report titled Luang Prabang community-based sustainable tourism programme Programme document for Phase 1 prepared by SNV (Netherlands Development Organization) that has long been assisting in capacity building for Luang Prabang PTO. Key results of the 2002 survey are as follows: A total of 500 questionnaires were distributed to hotels and to the guesthouses that were randomly selected, of which 168 questionnaires were filled out. Although the majority of the respondents were younger than 30 years old (51% of the respondents), there were a reasonably large number of the middle-aged and the elderly, with those older than 40 years of age accounting for 26% of the respondents. The average length of stay in Luang Prabang of the respondents was slightly less than 4 nights, with the majority staying for 2-3 nights. Top reasons for visiting Luang Prabang and Lao PDR include: (i) culture (71%), (ii) people 31 s way of living (60%), (iii) temples (55%), and (iv) nature (52%). The respondents generally are satisfied with accommodation and food, while their level of satisfaction is not high (or at average) for information, entertainment and souvenirs. They showed interest in other activities than the major sites such as the World Heritage site and Kuang Si Waterfall. Those activities include trekking (to remote villages), knowing more about traditional way of living, rafting, and meditation, followed by caving, elephant riding, and mountain biking. The individual travelers stayed, on average, 4.3 days in Luang Prabang and spent about US$20.6 per person per day. Tourists traveling in groups and in couples stayed shorter, but spent more, about $35.3 per person per day Tour Patterns The Study Team surveyed the tours to Lao PDR offered in selected markets in Asia and Pacific Region, conducting (partly on a sub-contract basis) interviews with travel agencies in those markets. The objective of the survey was to understand the trend of the tours to Lao PDR currently offered in these markets, and to identify their views on major issues and problems of Lao tourism, its potential, and recommended measures to be taken by Lao PDR for destination development. The countries/cities selected for the market survey include: Japan/Tokyo, Thailand/Bangkok, the People s Republic of China (PRC)/Kunming, Vietnam/Hanoi, and Australia/Sydney. As indicated earlier, Thailand is by far the biggest market for Lao PDR in terms of the number of arrivals, followed by Vietnam. Japan and Australia currently are the two major markets for Lao PDR in Asia and Pacific Region, outside of the neighboring countries. Kunming was included as it might potentially be an emerging market for Lao tourism. (1) Overall Itinerary Typical tour patterns obtained from the survey are summarized as follows (with details provided 16

17 in Appendix A): Japan: The most popular group tours for the Japanese market are six-day tours, visiting two major cities of Lao PDR, Vientiane and Luang Prabang, with two nights in Luang Prabang. The next most popular tours are eight- to ten-day tours, visiting major tourist destinations in Lao PDR including Vientiane, Luang Prabang (2 nights), Xieng Kouang and Pakse. For FIT tourists, five- or six-day tours seem to be the mainstream. In both cases, the average length of stay in Luang Prabang is less than two nights. (Note that the tour patterns for other surveyed countries are currently under study.) (2) Transport Routes to Luang Prabang According to the surveyed travel agencies as well as the travel industry in Lao PDR, there are three routes to Luang Prabang with the following characteristics: By Air Routes: Bangkok/Chiang Mai/Hanoi Luang Prabang Market: Almost all Japanese tours, most American tours, many European tours, some tours from neighboring countries. By Boat Routes: Houei Xay Luang Prabang Market: Many European tours, some American tours, some Thai tours. By Coach (Land) Routes: Route 13: Vientiane Luang Prabang Market: Many tours from neighboring countries, backpackers. These are essentially consistent with the arrival trend by port of entry described earlier. (3) Itineraries in Luang Prabang For Japanese tours, typical itinerary in Luang Prabang is a 30 two nights, three days program, typically including visits to: (a) the World Heritage site, (b) Pak Ou Cave, (c) Khouang Si Waterfall, and (d) some traditional villages near these tourist sites (see section 3.1 for major tourism resources in Luang Prabang). It is generally considered that a program with three nights in Luang Prabang would hardly be marketable, although this view is due partly to a lack of information on Lao tourism available to the travel industry in Japan. They admit that the information on tourism resources and products in Luang Prabang is absolutely lacking. (Note that typical itineraries for other surveyed countries are currently under study.) Other source of information on the offerings in Luang Prabang is tour packages sold by local tour operators. Table 2-7 shows the major tour programs available in Luang Prabang. 17

18 Table 2-7 Major Tour Programs Sold in Luang Prabang Day Tour Type Typical Tour Program Price Range (US $) Half day Tour World Heritage Site Tour Visit main highlights of heritage sights e.g. Wat Xieng Thong, Vixoun, Vat May, Phousy hill, Ban Phanom and former king s palace, by car, tuku tuku or bicycle. Visit major heritage sights of Luang Prabang and one or two traditional villages e.g. Ban Phanom (Thai-Lu Handcraft) M:20/30$ S:40/60$ Full day Tour Overnight (more than one day) Pak Ou Cave Tour Khouangxi Waterfall Tour Cooking Class World Heritage Site Tour Pak Ou Cave Tour Khouangxi Waterfall Tour Soft Adventure Tour Soft Adventure Tour Soft adventure & village home stay Source: JBIC Study Team Visit Pak Ou Cave and one or two traditional villages e.g. Ban Xang Hai (sticky rice wine distillation) by traditional boat, tuku tuku or car. Visit Kouangxi waterfall and one or two traditional villages Visit local fresh food market by tuk tuk with the chief (Cooking teacher). Cooking lesson for local dinner + tasting. Visit major heritage site e.g. Vat Visoune, Vat Aham, Phousi Hill, Vat Mai, National Museum (former Royal Palace), Vat Sene, Vat Xiengthong Visit major heritage sights and one or two traditional villages e.g. Ban Phanom (Thai-Lu Handcraft) Visit Pak Ou Cave and traditional villages e.g. Ban Xang Khong (weaving and blacksmith village), Ban Xang Hai (sticky rice wine distillation) including traditional boat tour of Mekong river and lunch at a local restaurant of Pak Ou village (opposite of Pak Ou Cave), Tham Ting, Tham Phoum, Ban Xieng Mene, Wat Long Khoune, etc. Visit Kouangxi waterfall by car or Tuku-Tuku and traditional villages - e.g. Ban Thinkeo (H Mong village), Ban Xom or Ban Ou (Lao Loum village), Ban Thapene village (Khmou village) and Ban Phanom (weaving village) including picnic lunch near by the water fall or at a local restaurant. Trekking-e.g. Kuang Xi Waterfall Day-Trek Rafting-e.g. Xaisomboun Special Zone Kayaking-e.g. Nam Ou River, Nam Kham River, Nam Pa River, Nam Xeuang River Biking-e.g. Tad Se waterfall, Nam Pa, Ban Xieng Lom Climbing-e.g.Gecko Mountain Elephant Riding Trekking - e.g. Kuang Xi Waterfall, Pak Ou District-trek Rafting - e.g. Xaisomboun Special Zone Kayaking - e.g. Nam Ou River, Nam Xeuang & Nam Kham River, Nam Xeuang River Climbing - Gecko Mountain * Combination tour of Trekking, Rafting, Kayaking, Biking is provided Eco Tour Muang Ngoi Gao & Nong Khiaw (village visiting & soft adventure experience tour) * Each travel agent has their own tour program and activity area for this kind of tour. M:25/50$ S:50/80$ M:30/50$ S:60/80$ M:20/40$ S:30/60$ M:40/60$ S:60/100$ M:30/60$ S:80/120$ M:30/50$ S:60/100$

19 The most popular tours sold over the counter are half-day or full-day tours to Pak Ou Cave and Khouangxi Waterfalls. They are the major tourist sites in Luang Prabang outside of the World Heritage site. Visits to villages are also included in some programs, which can be featured more if the quality of the visits is improved. Although it is still a niche product, the combination of soft adventure tours (trekking) and village home stays in Luang Prabang has been offered in recent years especially targeting the European market. (4) Major Issues on Itineraries Major issues pointed out by the travel agencies interviewed include the following: Lack of magnetic image in Lao tourism. In Lao PDR, physically magnificent tourist sites such as Ankor Wat in Cambodia are lacking, making it difficult for them to convey the image of Lao tourism to the market. At the same time, Lao PDR does have sources that can be marketable if they are well promoted and improved in quality, including Laung Prabang, the Mekong, local lives, villages and culture with relaxing atmosphere, and ethnic minorities. This view is consistent with the main interests of foreign visitors obtained from the tourist interview surveys as described earlier, as well as with the willingness of visitors to Luang Prabang to experience Difficulty to offer variations in tour programs for Lao PDR as a whole and for Luang Prabang. For travel agencies, it is currently difficult to differentiate their products from those offered by others mainly due to the following: - Limited information on tourism resources and products in Lao PDR that can be used for development of tour programs. - Lack of support of the Lao side for travel agencies in the surveyed market to develop new or attractive tour programs and to promote them to the market. (It should be noted that the travel industry in such market as Japan is so competitive that they generally do not have much incentive to develop new tour programs entirely at their own cost, especially for new or low-demand destinations as it involves a lot of uncertainties.) Difficulty to develop efficient tour programs because of inconvenience or poor condition of transport, especially as follows: - Poor condition of domestic/international flights such as shortage of flight service to Luang Prabang, inconvenient flight connections, and many flight delays with Lao Airlines. - Bad road conditions with rain, hindering access even to major tourist sites including those in Luang Prabang during rainy season Demand Projection LNTA publishes its projection of foreign visitor arrivals to Lao PDR. The figure below shows the latest projection published in 2005 Statistical Report on Tourism in Laos, projecting that the tourist arrivals will reach 2,000,000 in 2010, growing at an average annual rate of 12.8% per year in

20 No.of Tourists 2,500,000 2,000,000 1,500,000 1,000, , , , , ,361 1,840,000 2,000,000 1,606,000 1,400,000 1,260,000 1,095, , Year Source: LNTA Figure 2-5 Projection of Foreign Visitor Arrivals to Lao PDR by LNTA, The Department of Civil Aviation has forecasts of air traffic, both domestic and international, for all of the airports in Lao PDR. The forecasts for the Luang Prabang Airport made as of 2003 are shown in Table 2-8, providing the forecasts in 2013 for three scenarios (based on the 2002 traffic) as well as the actual traffic in For High scenario, it is assumed that international traffic will grow at an average rate of 13.0% per year, and domestic traffic at 8.4% per year in Interestingly, the actual international passengers in 2005 already exceeded the 2013 forecast for Middle scenario. One of the reasons would be that Bangkok Airways started to operate flights between Bangkok and Luang Prabang in Table 2-8 Annual Air Traffic Statistics and Forecasts for Luang Prabang Airport Year International Domestic Traffic Passenger Traffic Passenger Actual Annual Air Traffic ,368 2,213 89, ,422 1,947 79, ,545 35,895 1,465 82, ,642 55,891 1,617 89, ,527 70,207 1, ,860 Forecast in 2013 for Three Scenarios High 1,926 76,818 2, ,290 Middle 1,568 67,160 1, Low 1,272 46,712 1, ,307 Source: Department of Civil Aviation In its report issued presumably in 2002, 7 SNV, Netherlands Development Organization, which has long assisted Luang Prabang Tourism Office as well as the tourism sector of Lao PDR, forecasted tourist arrivals to Luang Prabang from 2001 to 2005 as shown in the table below. In the maximum scenario, it is assumed that foreign visitors will grow at an average rate of 20% 7 SNV, Luang Prabang Community-Based Sustainable Tourism Programme, Programme Document for Phase 1. 20

21 per year, and Lao visitors at 30% per year in As described earlier, actual foreign visitor arrivals in LPB were 134,000 in 2005, which is very close to the forecast in the maximum scenario. For Lao visitors, on the other hand, it seems apparent that the number of Lao visitors in 2001, which was the basis for this forecast, was significantly underestimated, considering that the estimated number of Lao visitors to Luang Prabang was 128,000 in 2005, in which LNTA published this estimate in its Statistical Report on Tourism in Laos for the first time. Table 2-9 Forecast of Tourist Arrivals to Luang Prabang in Year Minimum scenario Maximum scenario Foreigners Lao Foreigners Lao ,000 15,000 65,000 15, ,500 16,500 78,000 19, ,000 18,150 93,600 25, ,200 19, ,300 32, ,000 21, ,000 42,800 Source: SNV, Luang Prabang Community-Based Sustainable Tourism Programme In summary, these existing projections suggest that tourism in Lao PDR and in Luang Prabang has good potential for further growth, and a fairly rapid increase in visitor arrivals is likely to continue in the years to come, though the extent of the increase would depend partly on the efforts to be exerted by Lao PDR for destination development. 2.4 Tourism-Related Institutional Issues Legal Framework and Administration (1) Lao National Tourism Administration Lao National Tourism Administration (LNTA) is a governmental agency attached to the Prime Minister s Office, and is responsible primarily for preparing draft laws, regulations and rules on the management of tourism and tourism industry, preparing guidelines, strategies and plans on the development of tourism and tourism industry, promoting tourism and tourism industry as targeted in the National Socio-Economic Development Plan, and administering, managing and monitoring the activities of tourism industry according to the relevant policies, laws and regulations. LNTA consists of Departments of Planning and Cooperation, Tourism and Hotel Management, Tourism Marketing and Promotion, and Administration as well as Tourism Training Center, and has branch offices (provincial tourism offices) in every province of the country. Figure 2-6 shows the organization of LNTA. 21

22 Vice Prime Minister Minister to the Prime Minister s office, Chairman of LNTA Vice Chairman of LNTA Vice Chairman of LNTA Tourism Marketing and Promotion Department Planning and Cooperation Department General Administration Tourism and Hotel Management Department Tourism Training Center Bokeo Provincial Tourism Office Phongsaly Provincial Tourism Office Xieng Khouang Provincial Tourism Office Khammouane Provincial Tourism Office Oudoumxay Provincial Tourism Office Luang Namtha Provincial Tourism Office Sayabouly Provincial Tourism Office Savnnkhet Provincial Tourism Office Luang Prbang Provincial Tourism Office Vientiane Provincial Tourism Office Bolikhamxay Provincial Tourism Office Champasack Provincial Tourism Office Houaphanh Provincial Tourism Office Xaysomboun Special Zone Tourism Office Sekong Provincial Tourism Office Attapeu Provincial Tourism Office Vientiane Capital Tourism Office Salavanh Provincial Tourism Office Source: LNTA Figure 2-6 Organization Chart of LNTA Major issues regarding the overall operation of LNTA include the following: (Note: The Study Team plans to review the issues raised in the National Tourism Development Strategy for once it receives official approval from the government.) Shortage of staff and their capacity: Currently the headquarters of LNTA have only some 70 staff including permanent and temporary personnel, covering the operations of all of the above-mentioned departments including running of Tourism Training Center as well as communication and coordination with the provincial tourism offices. Serious lack of fund: 8 LNTA receives most of its funding from the Tourism Promotion Fund that is raised with contributions from travel agencies through a levy of 5% sales tax on their income. However, the fund is used mostly for meeting LNTA s administration costs, providing very little, if any, for its promotion and marketing activities. Absolute lack of fund for LNTA s promotion and marketing is pointed out later in this chapter. It is considered that the lack of fund for LNTA s activities is a critical issue for the development of Lao tourism that must be addressed as high priority. 8 The information described here is based on the Draft National Tourism Development Strategy for prepared in 2004 with fund provided through the ADB-financed Mekong Tourism Development Project 22

23 (2) Tourism Law and Regulation In April 2006, the Tourism Law, the first tourism legislation in Lao PDR, was passed. This is a major step toward implementing focused, more consistent tourism development and promotion across the country as well as toward improving the quality of the tourism industry and other tourism-related services. In drafting the law, LNTA examined tourism legislation in other countries, particularly those in ASEAN countries, in order to identify a framework that would be useful for Lao PDR. One major issue related to the Tourism Law is a need for operationalizing the law by developing related decrees and regulations. Currently, LNTA is considering developing several regulations including those for hotels (together with hotel classification system), travel agencies and tour operators, tour guides, guesthouses, transport services, and tourist sites. The regulation for hotels has been examined as part of the ADB-financed Mekong Tourism Development Project, although examination of other regulations is yet to be started. LNTA is seriously in need of assistance in the development of these regulations that would probably start with carrying out a survey and investigation of relevant regulations in other countries. In connection with tourism-related regulations, one imminent issue is on promotion, and granting permission, of tourism-related investment, especially in hotel development. For example, LNTA has limited capacity in judging what types of hotels should be developed in what areas, and to what extent. This issue needs to be addressed urgently as Lao tourism is now growing rapidly, requiring new investment in tourist facilities as well as in other tourist services and related infrastructure Tourism Industry The tourism industry is now in the process of development in Lao PDR in response to the rapid growth of tourism demand. Trade associations have been established recently, including the Lao Association of Travel Agencies (LATA) and the Lao Hotel and Restaurant Association (LHRA). It is important to take concrete steps to consolidate cooperative ties between the tourism industry and the public sector. (1) Lao Association of Travel Agencies (LATA) LATA was established in 2004, initiated by major travel agencies in Lao PDR, with intent to develop tourism industry in Lao PDR. As of May 2006, 36 out of 65 travel companies registered at LNTA belonged to LATA. The major task of LATA is to activate tourism business of travel agencies in Lao PRD, and as such it is expected to take an important role of leading travel industry of Lao PDR. However, it lacks relevant expertise and capacity, and still is at the stage of developing a strategy for financial management, promotion and marketing as well as an implementation action plan with the assistance of experts dispatched by SNV. According to the management of LATA and of leading Lao travel agencies, LATA and its members are faced with major challenges, specifically as follows: Shortage of skilled human resources with good knowledge in the following areas: - Tourism business management (e.g. marketing analysis, strategy making, implementation of business activity in the international market) - Office operation work (e.g. computer skills, basic office work skills, communication 23

24 skill with overseas clients in English) - Customer service (e.g. counter service, telephone service, internet service) Insufficient support from LNTA provided for the members in conducting tourism marketing and promotion activities. - Image building and positioning of Lao tourism in international market by LNTA are very weak. - Basic marketing and promotion materials prepared by LNTA are not enough both in quantity and quality. It is absolutely necessary to produce essential tourist brochures, maps, visual posters, promotional CD/DVD, travel planner kit for overseas travel agents etc. - Marketing and promotion channel of LNTA is very limited. Currently it doesn t have any official branches overseas, and the use of websites including its maintenance and collaboration with tourism industry is still poor. - More frequent and high quality HRD training by LNTA is required. Specially needed is quality training for tourist guides that should be provided not only in Vientiane but also in Luang Prabang province. 9 Basic conditions that would permit the industry to conduct aggressive tourism marketing and promotion have not been met in Lao PRD, specifically as follows: - Shortage of tourist guides (especially French, Germany, Italian, Spanish and Japanese. In future, maybe Korean and Chinese will be needed.) - Shortage of accommodation capacity in high season, especially in Luang Prabang. - Shortage of flight capacity and poor flight connection between key tourist destinations (i.e., Vientiane, Luang Prabang, and Pakse). - Lack of well-developed tourism resources and products that would allow extending the length of stay, or would make tourists spend more at tourist sites. At present, it is still difficult, though legally permitted, to establish and operate foreign-owned travel agencies in Lao PDR, forcing foreign investors to contract with local licensed travel agents at extra cost. (2) Lao Hotel and Restaurant Association (LHRA) LHRA was officially established in 2004 under the Lao National Chamber of Commerce and Industry, with the aim of developing the hotel industry to contribute to the development of the tourism and service sector in Lao PDR. As is the case with LATA, it is at its embryonic stage, still finding it difficult to provide services that can meet its members needs. Current conditions and major issues regarding hotels, guesthouses and restaurants in Lao PDR are summarized as follows: i) Hotels and Guesthouses As mentioned earlier, classification system for accommodations is now being developed in Lao PDR. Currently, however, there are only two categories for accommodations, Hotel and 9 Compared with other Asian countries, the cost of tour guides is very high in Lao PDR, for example, Thailand: US$20-30/day in general cases, while Lao PDR: US$25-30/day for English, US$30-50/day for French and German, US$50-75 for Japanese and Italian. On top of that, because there are only a few National licensed guides in Luang Prabang, it is usually necessary to take guides from Vientiane and have to pay extra for airfares and daily allowances. 24

25 Guesthouse. The capacity of accommodations in Lao PDR has increased rapidly in recent years as shown in Table In terms of capacity additions, the increase in Vientiane Municipality, Vientiane Province and Champassak Province is particularly pronounced, followed by that in Luang Prabang Province. In terms of growth rate, the increase in Luang Prabang Province is far below the national average during this period. In fact, hotel development in the urban area of Luang Prabang is becoming increasingly difficult due to lack of available land as well as to strict building regulation. On the other hand, hotel construction outside of the urban area requires infrastructure development that can hardly be afforded by the government due to budgetary constraint. Table 2-10 Number of Accommodations and Rooms in Lao PDR, Growth Lao PDR , % +13.7% (8,797) (8,625) (12,289) (13,666) (15,828) (+79.9%) (+15.8%) Vientiane % +15.5% Municipality (2,782) (2,739) (3,412) (4,004) (4,891) (+75.8%) (+22.2%) Vientiane % +16.2% Province (899) (900) (1,732) (1,657) (1,807) (+101.0%) (+9.1%) Luang Prabang % +35.8% Province (1,173) (1,275) (1,414) (1,410) (1,722) (+46.8%) (+22.1%) Champassak % +14.5% Province (889) (925) (1,298) (1,364) (1,616) (+81.8%) (+18.5%) Source: LNTA, 2004 and 2005 Statistical Report on Tourism in Laos. Note: Upper figures are number of accommodations, while lower figures in parentheses are number of rooms One important issue for the hotel industry is low occupancy during low season. According to the managers of several hotels in Laung Prabang, the average occupancy in high season is generally between 75% and 85% while that in low season ranges in 20%-35%. The lowest months are May, June and September. There has been some increase in customers in July and August, visiting Lao PDR during summer holidays. Seasonality of tourism demand tends to affect foreign-owned hotels (and restaurants) more strongly as they maintain operations during low season, requiring larger fixed costs than, for example, local inexpensive guesthouses where many of the staffs are employed on a part-time basis. Moreover, the shortage of manpower during high season is a serious issue especially in Luang Prabang. For many hotels in Luang Prabang, it is hard to cut the number of staff even in low season in order to keep good staff in high season. Currently, they can afford this practice as the average salary of local staff is low, but the shortage of manpower would be a big problem as demand for service staff and their salary become higher. It is extremely important to address this seasonality issue with joint efforts by the private and public sectors. Some of the hotels consider capturing more of the FIT market during low season, 25

26 for example, through direct marketing with internet/ . Such undertaking by the private sector is important, but the public sector should also recognize the importance of addressing this issue, which can potentially bring significant amount of benefit to the country and its tourist destinations including Luang Prabang. ii) Restaurants Table 2-11 shows the number of restaurants in Lao PDR and in selected provinces. As of 2005, 630 restaurants were registered at LNTA. In 2004, the number of restaurants decreased in major tourist areas including Vientiane Municipality, Luang Prabang Province and Champassak Province, which was caused apparently by the SARS epidemic in Asia that took place in 2003 and the threat of international terrorism. In 2005, however, the number increased substantially reflecting the rapid growth of arrivals. The increase was particularly pronounced in Luang Prabang Provicne, which lead to a serious shortage of manpower in the services sector during high season. Table 2-11 Number of Restaurants in Lao PDR, Area Growth Lao PDR % 28.3% - Vientiane Municipality % 9.8% - Luang Prabang Province % 218.8% - Champassak Province % 36.4% Source: LNTA 2004 and 2005 Statistical Report on Tourism in Laos Seasonality of tourism demand and shortage of service staff (especially quality staff) are two important issues also for restaurants in Luang Prabang. It is in fact not easy to find female service staff, especially waitresses, due to the local custom and tradition. In addition, those educated in Vientiane where most educational facilities are concentrated are hardly coming to Luang Prabang unless they are originally from Luang Prabang. It is still a remote area for those even from the Central Region. Also family ties in Laos are strong, making it very rare for young people to decide to move to Luang Prabang for their work. Therefore, it is considered that opportunities for tourist service training need to be provided in Luang Prabang Human Resource Development (HRD) (1) Current Condition of Tourism-Related HRD in Lao PDR According to concerned people in the tourism sector, the overall supply of quality manpower in the sector is still very small, unable to keep pace with the rapid growth of Lao tourism in recent years. One result is an increase in the headhunting competition within the tourism industry that is taking place particularly in Vientiane and Luang Prabang. In addition, provision of quality service is a prerequisite for attracting middle to high-end market, which is a desirable approach for achieving sustainable tourism development in Lao PDR. Given these current situations, both LNTA and the private sector indicate that HRD for tourism sector is one of the top-priority issues that should be addressed immediately. However, the current condition of tourism-related HRD is not favorable. In Lao PDR, it is still premature to leave tourism-related HRD to the private sector, which is a general practice in 26

27 advanced countries. Even in Vientiane, for example, there are still only a few small-sized private institutions organizing language courses or basic training for tourism-related services. At this development stage, it is essential for the public sector to provide training opportunities for meeting the demand of the travel industry and the tourism market. Current situation and major issues regarding HRD in Lao tourism are summarized as follows: i) National Level National University of Laos In 2005, the National University of Laos established the Department of Tourism and Hotel Management under the Faculty of Social Sciences in collaboration with Rikkyo University in Japan. This new department consists of two courses - tourism course and hotel management course, with 200 and 100 students respectively in the first year following its establishment. These courses are intended to provide management education for developing future tourism leaders in both public and private sectors. At this initial stage, however, there are many issues to be resolved, including a lack of budget, qualified teaching staffs, teaching materials, teaching equipment, etc. Tourism and Hospitality Training Center (THTC) Tourism-related technical training has been provided by Tourism and Hospitality Training Center (THTC) of LNTA, which was reorganized in 2004 from its predecessor unit called Tourism and Training Division of LNTA. The training programs currently offered by THTC are shown in Table Table 2-12 Training Programs Offered by Tourism and Hospitality Training Center (THTC) of LNTA Course Tour Guide Training Course Hotel, Guesthouse and Restaurant Training Course Other tourism training with assistance of international donors/ngos Source: THTC Contents / Characteristics - 45-day training course for developing national- and provincial-level tour guides. - The national-level training course is held once a year in Vientiane. (It is planned to offer two training courses in 2006) Provincial training course is a non-regular course, held depending on the budget. - Course includes classroom lecture and field study and experiments. - Trainers are from THTC, LNTA, Lao National University and tourism industry. - Participation fee: 50 US$ each, including field study and textbook fee. - Until now, 820 trainees from tour operators have participated in this course - 8-day basic skill training course for hotel, guesthouse and restaurant services, including front office operation, housekeeping, food and beverage service and professional cookery. - Trainers from THTC, LNTA and tourism industry (especially from hotels) - Until now, about 3,450 trainees from concerned industries have been trained. - Participation fee: depends on the course program. * Child Wise Tourism Training and workshop (by Child Wise), * Japanese Tourism Market and Japanese Language Course for beginners (By ASEAN Japan Center (AJC)), * Tourism development training course and workshop (By EC-ASEAN), * Tourism Marketing and IT application in the tourism business (ACMECS), * Hotel, Guesthouse and Restaurant Service Training (SNV) 27

28 The tourism industry strongly demands that THTC should play a bigger role in developing human resources (practitioners) for the tourism sector across the country. However, only several staffs are assigned to this center, and most of the staffs are lacking in high-level teaching skills that can meet the training needs in the current tourism sector of Lao PDR. In fact, there is a large gap between supply and demand for tourism-related training due to lack of budget, manpower, qualified staff, quality curriculum, training equipments, facilities and materials, and so on. First of all, training of trainers is absolutely necessary to produce quality trainers. Training equipment and facilities should also be improved. For example, there is only one computer without internet connection in the THTC office, and their current training facility is only one simple classroom located on the ground floor of LNTA building, with capacity of around 80 seats. In order to meet the demand for training needs, THTC is searching international assistance to newly develop their training facility and to improve their own capacity for providing quality training. LNTA is now attempting to apply for assistance from Belgium to establish a new vocational training facility in Vientiane, although the result is still uncertain. In relation to tourism-related training and HRD, the following assistances have been provided: ADB-funded Mekong Tourism Development Project (MTDP). Tourism-related trainings and workshops have been organized as part of MTDP, focusing mainly on developing Pro-Poor Community Based Tourism (Eco Tourism development). At the request of LNTA, SNV (Netherlands Development Organization) have been providing assistance in capacity building of LNTA and the tourism industry. Currently, four SNV consultants are working at LNTA in Vientiane, and two at Luang Prabang Provincial Tourism Office. While these assistances are considered of value, there still is a significant need for training and capacity building for the private sector (tourism industry) and for LNTA. ii) Luang Prabang Province LNTA-Luang Prabang Provincial Tourism Office (PTO) In Luang Prabang PTO, there is no department or section specifically responsible for HRD. HRD programs are operated by staff from administration section and business management and license section. Because of the lack of budget and manpower, limited amount of training and seminars are conducted. However, the demand for tourism-related training is growing due to the rapid growth in Luang Prabang tourism. In response, Luang Prabang PTO started to organize provincial tour guide course in 2004 in cooperation with LNTA-THTC, and 146 provincial guides were trained as of May 2006 (See Appendix B for details of the guide training conducted in Luang Prabang.) LNTA and Luang Prabang PTO have proposed establishing a tourism training center which is to cover the Northern Region. Another proposal made by them is to start mobile training course that can be offered to those unable to attend training program held at cities. In both proposals, it is important to cooperate with Suphanuvong University that is currently under construction with assistance from South Korea as well as with other related agencies and stakeholders. 28

29 Training Center and Ethnic Group School under the Ministry of Education 10 These schools are located at Ban Suane Luang, about 15 km to the south from the center of Luang Prabang. Under the jurisdiction of the Ministry of Education, the Ethnic Group School offers high school-level education, followed by vocational training provided by the Training Center, both for ethnic minorities in northern Lao PDR including Luang Prabang province. All of the students stay at the accommodations provided near the schools. The Training Center, established in 1996, offers basic training for cooking, restaurant services, furniture making, dressmaking, agricultural technique, constriction technique, and so on. In 2002, part of the classroom buildings and training rooms were re-constructed with support from GTZ of Germany. However, the accommodations for students are in very poor condition, requiring renovation or improvement. In addition, the demand for vocational training for minority groups is high, and the Provincial Department of Education is strongly willing to improve these schools. The Lao Woman s Union (LWU) Luang Prabang The Lao Woman s Union is a national-wide organization, with about 800,000 women being its members. The activities of LWU include: capacity building and institutional strengthening of LWU; promoting the advancement of, and protecting, the legitimate rights and benefits of women and children; and promoting women s participation in economic development and poverty alleviation. While they have a limited number of staff in the province and district offices, one advantage is that they have representation at all villages in the country. At its Luang Prabang office, several training courses are offered including classes for sewing, beauty care, massage, etc. With the assistance of two SNV consultants, they are now considering operating other types of training for generating income for women through tourism-related activities, including: i) mobile training for cooking, weaving and massage in villages, and ii) cooking training for women engaged in tourist services (e.g. women selling their food on the street and their own food shops). To put these ideas into practice, at least procurement of teaching equipment and training of trainers are needed. (2) Summary of Major Issues on HRD Major issues on tourism-related HRD in Lao PDR include the following: Training of trainers for guide and hotel training courses offered at THTC is urgently needed to respond to the demand from the market for improving service quality, which is an imminent issue in the Lao tourism industry. At the same time, training facility of THTC at least in Vientiane should be upgraded, and basic training equipment should be provided (e.g., PCs, LCD projector, photocopy machine, digital camera) to make the center capable of offering quality training. The training curriculum at THTC, which is too basic at present, should be upgraded in order to meet the requirement of the international tourism market. Improvement should be made in training of LNTA staff, managers and supervisors in the tourism industry, and service staff at hotels, restaurants, travel agencies and souvenir / handicraft shops. Given the budgetary constraint and the current lack of human resources at LNTA / PTOs to 10 In Luang Prabang province, there is another school of the same kind located in Nam Bak district, about 130 km to the north from the center of Luang Prabang. 29

30 operate training facilities in regional cities, it will be effective to collaborate with existing educational institutions for offering tourism-related training. At the same time, mobile training should be provided to a greater extent as a means of providing training for those in remote areas who can hardly come and take training in cities. 2.5 Major Issues on Tourism Development and Promotion Tourism Development Major issues on tourism development that have been identified by the Team in the course of the Study include the following: 11 Need to develop a tourism development plan. Even Luang Prabang Province that has been attracting a number of visitors lacks a concrete tourism development plan. Although the province has prepared and approved a tourism development strategy, it is not considered to be specific enough to mobilize resources toward implementing the development. Need to strengthen the capacity of provincial tourism offices (PTOs). Tourism development is a multi-sectoral undertaking, requiring coordination and cooperation among concerned agencies and departments. It is also essential to collaborate with the private sector for carrying out the development to meet the market demand. Line agencies at the central level as well as their departments in provinces have their own mandates and responsibilities, and thus can hardly become an entity to undertake active inter-agency or inter-departmental coordination for tourism development. LNTA and its branches in provinces (PTOs) should play this coordinating role under the guidance of the Prime Minister s Office at the central level and of the governor and vice governors at the provincial level. Currently, however, PTOs suffer from server shortage of staff and capacity, unable to play this role in an effective manner. Lack of fund for tourism development. A lack of fund is indeed a critical constraint in pursing tourism development as well as development in other areas. In Luang Prabang, for example, there are a variety of development needs (as described later in this report) that have been identified by concerned departments of the province, but due to absolute lack of fund, the province has not been able to meet the needs. One major issue regarding the ADB-financed Mekong Tourism Development Project is also the difficulty of the Government of Lao PDR to meet the requirements of counterpart fund that must be provided by the Government to match the loan coming from ADB for project implementation. The Lao government is now considering instituting a Tourism Development Fund although specifics of the fund including its funding source, collection, use, administration and operation need to be worked out and consensus to be reached among concerned agencies and stakeholders Promotion and Marketing (1) Current Situation In 2004, the Tourism Marketing and Promotion Department (TMPD) was established to strengthen LNTA's role in promoting Lao tourism in the international market. Figure 2-7 shows 11 In order to identify major issues in this regard, the Study Team plans to review, once it is finalized, the National Tourism Development Strategy for that is currently in the form of a draft awaiting government s official approval. 30

31 the structure of TMPD. It can be said that TMPD consists of minimum structure and staff size. LTNA doesn thave any official branches overseas. In Tokyo, there is a self-motivated honorary office that however doesn treceive any budgetary or personal support from the Lao government. Considering that only ten staffs are assigned to TMPD for promoting Lao PDR to the world, there does not seem to be many choices at present. In addition, although most of the TMPD staffs have taken post-graduate level of education, their knowledge, skills and experience in international marketing and promotion seem to be insufficient. Currently, tourism professionals dispatched by SNV are assisting LNTA, with one of them working on strengthening the capacity in marketing and promotion and developing a cooperative framework between the private and public sectors in collaboration with TMPD. However, there still seem to be a number of areas in marketing and promotion where capacity strengthening is needed. Moreover, the critical issue is a lack of budget for marketing and promotion, which should be addressed with utmost efforts; otherwise, any plans considered effective will simply be unimplemented. With the passage of the Tourism Law, the establishment of a National Tourism Marketing and Promotion Board (TMPB) has been officially approved, which is to consist of members from the public and private sectors. Discussion is now undergoing among LNTA and stakeholders regarding various issues such as its composition, responsibilities and functions. Acting Director General (1) Assistant (1) Source: LNTA <Division> Marketing Manager (1) Promotion Manager (1) <Section> Trade Fair/Exhibition (1) Event Promotion (1) Marketing Research (1) Publicity (1) PR (1) Internet (1) Figure 2-7 Structure of Tourism Marketing and Promotion Department in LNTA According to TMPD, the information on the budget and expenditures for marketing and promotion is not well tracked. At present, a survey is conducted on the budget of TMPD in the past few years with the assistance of SNV. Table 2-13 shows the budget proposal by TMPD for year 2005/06 with the total amount of US$434,996.8, although the actual amount allocated would probably be substantially lower. Due to the budgetary constraint, TMPD has not been able to actively undertake marketing and promotion. Major activities conducted by TMPD in year 2004/05 are as follows: Development of marketing and promotion strategy Training program for TMPD staff - Internal training program for English skill, report writing, tourism marketing, etc. - Training program overseas: cooperation programs (Laos-Singapore and Lao-India), internet training course, Mekong sub-regional training course at Khon Khen in 31

32 Thailand Meeting with tourism private sector Promotion activity - Website development of LNTA ( - Tourism fair in Luang Prabang/Vientiane - Advertising activity by national radio / national television Production of promotion material: Heritage document second edition printing, postcard of tourism sites, tourist guidebooks. Promotional campaign: Visit Asia campaign Participation in tourism trade fairs/exhibitions: ATSAS Holiday (Singapore), Asian Fashion and Goods Fair (Hanoi), Chinese Asian Fashion and Goods Fair (Nan Ming), Economic Strategy Cooperation Fair of 4 countries (Lao PDR, Vietnam, Myanmar, Thailand), ECS Trade Fair (Myanmar), TRAVEX and ATF 2005 Fair (Malaysia), ITB (Germany), Cooperation Trade Fair of 3 countries (Lao PDR, Vietnam, Thailand: Hanoi), World Trade Fair (Aichi, Japan), Tourism Fair TTM (Bangkok) Road shows/event participation: Indian caravan in Vientiane. Water festival in Myanmar Preparation of establishing LNTA overseas branches (research) Re-opening of the information center in Vientiane Table 2-13 TMPD Budget Proposal for Fiscal 2005/06 Item Total Amount Kip (US$) Contents 1 Printing of Promotion Material 562,968,000 (56,296.8$) Desk/wall calendar, postcard, map, brochure, poster (4 type), T-shirt, etc. 2 Internet and Website 54,920,000 ( 5,492.0$) Website address fee, internet rental fee, website fee. 3 Equipment for Publication 262,300,000 (26,230.0$) Digital camera and video, PC, LCD, overhead projector, etc. 4 Equipment for 248,040,000 (24,804.0$) Motorcycle, Promotion Activity 5 Advertisement 55,000,000 ( 5,500.0$) Publication by Radio/TV. 6 Data Collection 28,740,000 ( 2,874.0$) Travel expense, daily allowance. 7 Participate in Tourism Exhibition 2,616,000,000 (261,600.0$) 21 travel and trade fairs/exhibitions 8 Traditional Festival 135,000,000 (13,500.0$) 5 traditional festivals promotion. Promotion 9 Marketing Analysis 110,000,000 (11,000.0$) Satisfaction analysis, tourism service-level analysis 10 FAM Trip for Travel Agent/Media 277,000,000 (27,700.0$) Twice/year Total 4,349,968,000 (434,996.8US$) Source: LNTA-TMPD (2) Marketing Strategy TMPD has recently prepared Tourism Market Strategy in , which specifies target markets as well as activity plans as shown in the tables below. 32

33 Medium term ( ) Long term ( ) Table 2-14 Future Target Markets for LNTA Quantity market Quality market Developing market Thailand Thailand Vietnam China. Source: LNTA PMTD France, England, Germany, U.S.A, Canada, Japan, Australia. France, England, Germany, West- North Europe, America, Japan, South Korea, Taiwan, Malaysia, Singapore, Australia, New Zealand. Korea, China, Taiwan Singapore, Malaysia, Holland, Sweden, Switzerland, Italy, Holland, New Zealand. Asian countries, Russia, India. Thailand is considered to be among the most important markets in the short to medium term, which is plausible looking at its current position in total tourist arrivals as well as the recent surge of Thai visitors as shown earlier. TMPD is also putting great importance on developing quality market including France, UK, Germany, North America, Japan and Australia. This also is consistent with the recent trend of top ten markets in terms of tourist arrivals. (3) Summary of Major Issues Based on interviews with the tourism industry in Lao PDR and the market survey (5 countries) conducted in the Study as mentioned earlier, major issues on marketing and promotion activities for Lao tourism are summarized as follows (see also Appendix B for more details): Macro-level issues: Lack of image of Lao PDR as tourist destination in the international market, Need for developing attractive tourism products in order to extend the length of stay, which applies also to Luang Prabang. Issues on marketing and promotional measures: No system in place at LNTA for collecting updated tourism information, Internet and website are underutilized for tourism marketing at LNTA, Lack of essential marketing and promotion materials, including tourist brochures, maps, visual material such as posters, CD-ROM and DVD, and attractive photos that can be used for promotional activities, Shortage of office equipment for conducting basic marketing and promotion activities at LNTA, including internet connection, quality PCs, digital camera, and other basic office equipment, Lack of close cooperation for marketing and promotion activities among stakeholders including LNTA, airlines, travel agencies, hotels, restaurants, etc. Major bottlenecks: Absolute lack of budget and manpower at LNTA even for implementing basic marketing and promotion activities, Lack of relevant knowledge and skills in LNTA and the tourism industry, including: i) specialized knowledge and skills for planning and implementing tourism marketing and promotion activities, ii) qualified teaching skills on international marketing and promotion activities, and iii) basic office skills, such as PC and internet operation, website development, use of foreign languages, etc. 33

34 Table 2-15 LNTA Strategy and Marketing Activity Plan for Medium/Long-Term Markets Target Term Overall Strategy Activity Plan Medium-term tourism marketing and promotion activity ( ) 1) Keep attracting tourists from neighboring countries, especially from Thailand 2) Try to study and develop quality markets (because they are the main markets for future Lao tourism) < Neighboring countries: Thailand, China > Participate in tourism fair in Thailand, China, Singapore, and other Asian countries. Cooperate with other travel agencies, hotels and restaurants to arrange FAM trip for key travel agents. Work closely with airline companies Support Singapore and Malaysia re-operate direct flight to Vientiane again. Keep good cooperation with other nation s Tourism Authority in GMS, ASEAN to advertise Lao tourism, develop website and organize Caravan tours etc. Work together with Lao embassies located in target countries to promote Laos tourism. <European: France, UK, Germany> Participate in tourism fair such as ITB in Germany, SMT in France, WTM in England. Cooperate with Lao embassy of those countries to select representative for LNTA, to get information of major tour agencies in those countries. Promote to have direct flight from France/ charter flight from EU to Laos. Contact with newspaper agencies to make advertisement of Lao tourism. Cooperate with other tourism related industry, hotels and restaurants for arranging FAM trip for main travel agencies in target countries. <North American Countries: USA, Canada> Attract Lao-Americans by doing activities or promoting traditional festival such as: That Luang Festival, Lao New year in April, Boat racing, Hmong new year. Cooperate with Lao embassy in those countries to select Lao representative for LNTA and to get information about major travel agencies. Participate in North American Tourism fair (ASTA). <Southeast Asia : Japan, Korea, Taiwan, Australia, NZ> Work together with travel agencies, hotels and restaurants to study about Japanese, Korean, Taiwanese markets. Make a request for support from ASEAN-Japan Center for tourist guidebook publishing. Promote tourists visiting Thailand and Cambodia to extend their visit to Lao PDR. Cooperate with Taiwanese Airlines (EVA) to fly directly to Vientiane / to make tourism advertisement. Promote charter flight from Korea and Japan to Vientiane until creating direct flight. Participate in tourism fair in Japan (JATA) and Australia (ATX) Source: LNTA PMTD Long term tourism marketing and promotion activity ( ) 1) After basic tourism development is finished in Lao PDR, develop Chinese and Indian markets. Continuously arrange tourism advertisement Keep organizing marketing campaign, especially for the main tourist markets. Support activities and traditional festivals to use in tourism. Extend marketing cooperation with external government or private sectors, especially in the target markets. 34

35 CHAPTER 3 Target Area This chapter reviews existing situations and major issues on tourism sector development in Luang Prabang Province, the target area of this study. Following a brief review of major tourism resources and socio-economic conditions in Luang Prabang Province, the chapter summarizes existing undertakings and plans related to tourism, and then identifies major issues and needs in the important aspects of tourism sector development in Luang Prabang. 3.1 Tourism Resources Luang Prabang, an ancient capital located in northern Lao PDR, has become well-known as the World Heritage town with rich concentration of Buddhist temples as well as other historic buildings and monuments such as the Royal Palace currently used as a museum, Mount Phou Si and colonial-style buildings. At the same time, Luang Prabang is endowed with abundant nature due to its location in a mountainous area, providing rivers, streams, forests and beautiful sceneries. The most important natural resource as tourist attraction is Mekong River and its tributaries including Nam Khan, Nam Ou, Nam Soung, and Nam Xi. Luang Prabang town is situated between the Mekong and Nam Khan rivers. There are several beautiful waterfalls along these tributaries. Overall, the natural and scenic value in and around Luang Prabang is judged very high. Another important tourism resource in Luang Prabang is local culture, tradition and lives that are partly based on the diversity of ethnic minorities residing in the area, which offer great potential of cultural and village-based tourism. The Mekong and its tributaries, combined with various local villages, provide rich opportunities of boat trips visiting villages and nature attractions among the rivers as well as of soft adventure tourism, although these opportunities are apparently underutilized at present. Around Luang Prabang town, the following sites are of note (see also the figure below for their locations): 12 Kuang Si Waterfall: This waterfall with dramatic lime deposits is a tourist site visited by most visitors to Luang Prabang. It is located 35km to the south from Luang Prabang town, and is reached most often by road. Currently, the access road to the waterfall is improved as part of the ADB-financed Mekong Tourism Development Project (MTDP). There is another route to the waterfall by land, with travel to Ban Long Lao (with highland Lao group culture), followed by a walk through the water catchment to the falls. It is also accessible by boat on the Mekong. Tham Ting or Pak Ou Cave: This cave, located 25km north from Luang Prabang town by the Mekong, is a grotto with hundreds of devotional Buddha image inside it. There are several nearby villages tourists can visit, as well as a magnificent cliff-like mountain on the other side of the Mekong. Ban Pak Ou, a village facing the cave across the Mekong, is 12 The information on major tourism resources provided here is based partly on the tourism sites, attractions, and products in Luang Prabang described in SNV, Explorative study on the potential for ecotourism development in Luang Prabang province, issued in October

36 accessible by road, although the access road along the Mekong can hardly be used during rainy season. Tat Sae Waterfall: It is a stepped waterfall with lime deposits 15km east from Luang Prabang town, which can be visited by car together with a short boat trip from nearby villages. While the waterfall becomes dried up during dry season, it offers a grand view with abundant water resources during rainy season, which is often used for promotional photos for Luang Prabang tourism. Nearby villages (village: Ban in Lao): There are several villages near Luang Prabang town with special features that have been attracting tourists, including Ban Phanom, Ban Xang Kong, and Ban Xieng Leck that are well-known for local weaving and handicrafts, and Ban Chan that is producing local pottery. Ban Xanghai, though still not well-known to tourists, conserves its traditional culture relatively well, with potential to regenerate ancient kiln and distillation of rice whisky. There are other villages that are easily accessible and have potential to attract visitors through conservation, improvement and information provision. Pak Ou Cave Nam Ou Ban Pak Ou Nam Soung Ban Xanghai Luang Prabang Heritage Area Ban Chan Ban Xang Kong & Ban Xiang Leck Nam Khan Mekong River Kuang Si Waterfall Ban Longlao Ban Phanom Ban En Ban Xiang Ngeun Tat Sae Waterfall Cultural / Village Resource Natural Resource Historical Resource Gateway Village Figure 3-1 Locations of Major Tourism Resources in Luang Prabang In addition to the above-mentioned resources, there are many other resources, some of which would have good potential to attract international tourists. The Study Team reviewed the Luang Prabang tourism development master plan prepared in 1997 with assistance from the Tourism Authority of Thailand (available only in Thai language), even though this plan is seldom referred to by concerned agencies in Lao PDR and Luang Prabang. This master plan report provides fairly comprehensive assessment of tourism resources in Luang Prabang, and its result is presented in Appendix C with minor revisions made by the Study Team based on field surveys of many of these resources conducted by the team. Figures 3-2 and 3-3 provide more comprehensive view of tourism resources in Luang Prabang. 36

37 平田さん作成のリソースマップの No. 1( 横長の方 ) を挿入 図のタイトルは 下記のように変える Figure 3-2 Tourism Resources in and around Luang Prabang World Heritage Site 37

38 平田さん作成のリソースマップの No. 2 を挿入 図のタイトルは 下記のように変える Figure 3-3 Tourism Resources in Luang Prabang Province 38

39 3.2 Socio-Economic Structure Socio-Demographic Features (1) Socio-demographic features of Luang Prabang Province in the national context According to the national census of 2005, Luang Prabang Province has a population of 405,949 with the number of households being 69,802. The population of Luang Prabang is the largest among the 7 provinces in Northern Region, and is ranked 5 th among the nation s 17 provinces and Vientiane Municipality. Table 3-1 illustrates socio-demographic indicators for Luang Prabang Province, compared with the national average and those for urban and rural areas. All of these data were taken from Lao Expenditure and Consumption Survey 2002/2003 (LECS 3) issued by the National Statistical Center in March 2004, which provides recent statistics on households in Lao PDR. Luang Prabang Province is characterized in terms of socio-demographic features as follows: Number of Households and Household Size - In terms of the number of households, Luang Prabang Province accounts for 23% of total households in the Northern Region and 7% of the country s total. - The average household size in Luang Probang Province is 6.3 persons per family, slightly higher than the national average (6.1 persons per family). Distribution of Households in Urban and Rural Areas - The extent of urbanization in Luang Prabang Province is lower than the national average, with 20% of households residing in urban areas, compared with 28% for the whole country. This apparently reflects the geographic condition of the province, which is located in a mountainous area. - Among the households residing in rural areas, the proportion of those without access to roads in Luang Prabang Province is nearly 30%, which is higher than the national average, indicating that rural road access in the province is generally in a poor state. Access to Safe Water and Sanitation - Only 42% of the population in Luang Prabang Province have access to safe water, which is substantially lower than the national average (50%). - The proportion of those without toilet in the province is as high as 60%, which is substantially higher than the national average. - These figures indicate the backward state of the province in providing basic health and sanitation infrastructure. Access to Health Services in Villages - In villages of Luang Prabang Province, the proportion of those living within 10km from the nearest health care center is 63%, which is significantly lower than the national average (79%). This situation should be partly due to the lack of rural access road in the province. Educational Services - In the province, villages with own primary school account for 78% of all villages, which is comparable with the national average of 80%. 39

40 Table 3-1 Main Socio-Demographic Features of Luang Prabang Province Compared with Northern Region and Lao PDR 1. Number of Households and Household Size Number of Households Household Size 2002/2003 Luang Prabang 61, Northern Region 266, Lao PDR 867, Urban 240, Rural 627, Distribution of Households in the Urban and Rural Areas No. of Households in No. of Households in Rural Area in 000 (% in rural total) Urban Area in 000 (% in total) With Access to Roads Without Access to Roads Luang Prabang 12 (20%) 34 (71%) 14 (29%) Northern Region 47 (18%) 152 (69%) 67 (31%) Lao PDR 240 (28%) 470 (75%) 157 (25%) 3. Access to Safe Water and Sanitation % of Population with safe water in the village % of Population without Toilet Luang Prabang 42% 60% Northern Region 37% 47% Lao PDR 50% 49% Urban 82% 15% Rural with road 47% 54% Rural without road 24% 83% 4. Access to Health Services in Villages % of People by Distance to the Nearest Health Center Less than 10km 11-30km More than 31km Luang Prabang 63% 33% 4% Northern Region 66% 24% 10% Lao PDR 78% 17% 5% Urban 100% 0% 0% Rural with road 76% 21% 3% Rural without road 56% 27% 16% 5. Educational Services % of Village that has its own primary school % of Village that has its own lower secondary school Luang Prabang 78% 4% Northern Region 81% 7% Lao PDR 79% 8% Urban 80% 19% Rural with road 81% 11% Rural without road 76% 0% 6. Net School Enrollment of Children of Age 6-10 by Sex Children of Age 6-10 Girls Boys Total Luang Prabang 66% 73% 69% Northern Region 61% 67% 64% Lao PDR 70% 73% 72% Urban 91% 88% 89% Rural with road 72% 75% 74% Rural without road 50% 56% 53% Source: National Statistical Center, Lao Expenditure and Consumption Survey 2002/2003 (LECS 3), March

41 Net School Enrollment of Children of Age 6-10 by Sex - In Luang Prabang Province, net school enrollment of children aged 6-10 is 69% of all eligible children, which is comparable to the national average of 72%. - However, gender gap in the province in this aspect is more conspicuous than that for the whole country. (2) Incidence of Poverty in Northern Region According to the National Growth and Poverty Eradication Strategy (NGPES) of Lao PDR, the head count index of national poverty was 38.6% in 1997/98, compared with 45.0% in 1992/93. The Northern Region, comprising the provinces of Luang Prabang, Phongsaly, Luang Namtha, Oudomxay, Bokeo, Houa Phanh and Xaygnaboury, had the highest incidence of poverty (52.5% in 1997/98) among the three regions in the country. 13 Some 830,000 people in the Northern Region are below the poverty line, accounting for about 45% of the total number of the poor in Lao PDR. There were considerable variations in the rate of progress in poverty reduction. The Northern Region not only is the poorest region, but also it has experienced the slowest rate of reduction in poverty. (3) Socio-Demographic Features of Luang Prabang Province Luang Prabang Province has 11 administrative districts with 855 villages. 14 Various socio-economic statistics of the province are found in Main Activities and Implementation Plan, Department of Planning and Investment, Luang Prabang Province, 2006, including the following: Main sociodemographic features: Number of households engaged in major cultivation types: Types of land use in the province: - Number of households: 69,802 - Total population: 405,949 persons - Population density: 24 persons per sq. km - Ethnic composition: Lao Loum %, Lao Theung % and Lao Souang - 17% - Rice cultivation: 10,172 households - Mixed with paddy field and shifting cultivation: 4,739 households - Other occupation households - Productive land: 77,000 ha - Rain-fed paddy field: 12,105 ha, irrigated paddy field: 1,512ha - Shifting cultivation field: 21,160 ha - Agriculture plantation: 24,336 ha - Other land use 19,399 ha (including 4,800 ha of housing area) (4) Incidence of Poverty in Luang Prabang Province According to NGPES, 72 districts in the entire country have been identified as poor, of which 47 districts have been identified for priority intervention during The incidence of poverty in the Central and Southern Regions in 1997/98 was 34.9% and 38.4 respectively. 14 The number of the villages is based on Main Activities and Implementation Plan, Department of Planning and Investment, Luang Prabang Province,

42 Five criteria employed to identify Poor Districts in NGPES are as follow: - Districts where over 51% of the villages are poor. - Districts where over 40% of the villages do not have local or nearby schools. - Districts where over 40% of the villages do not have a dispensary or pharmacy. - Districts where over 60% of the villages without an access road. - Districts where over 40% of the villages do not have safe water. Using the above criteria, four districts out of 11 districts in Luang Prabang Province have been identified as poor that requires priority investment during These include Districts of Phonxay, Viengkham, Phoukhoune, and Pak xeng Main Economic Activities The gross regional domestic product (GRDP) of Luang Prabang Province 15 was Kip 1,643 Billion in Fiscal 2004/2005, composed of the following: - Agriculture and forestry: Kip 789 Billion (48%) - Industry / handicraft: Kip 279 Billion (17%) - Services: Kip 575 Billion (35%); (1) Overview of Industries in Luang Prabang Province In Luang Prabang Province, there are no activities by heavy manufacturing industries. The industries in the province are mostly small-scale, with the majority based on business run by households as described below. In terms of the number of registered business enterprises, service and commercial (sales and wholesale) business accounts for the majority, while manufacturing (lumbering, food manufacturing, paper manufacturing and so on) and agro-based businesses are less. Regarding agriculture and forestry that produces 48% of the provincial GRDP, major crops cultivated include: rice, fruit, beans, and cash crops. In addition, Luang Prabang Province produces a large amount of lumber, which is used for the production of wood chips, fuel wood, furniture and handicraft. (2) Economic Activities by Households In Lao PDR, economic activities conducted by households tend to account for a considerable portion in the entire economy due partly to relatively less formal employment prevailing in the country and also to a lack or absence of large-scale enterprises in remote areas in the country including the Northern Region. As such, households have been playing a major role in the economic sector, generating a substantial amount of value added in the economy. Lao Expenditure and Consumption Survey 2002/2003 (LECS 3) issued by the National Statistical Center in March 2004 provides recent statistics on economic activities by households. Based on LECS 3, economic indicators by households of Luang Prabang Province are compared with the national average and those for urban and rural areas in Table 3-2. Main points are as follows: 15 Source: Main Activities and Implementation Plan, Department of Planning and Investment, Luang Prabang Province,

43 Percentage of population working at age above 10 - There seems to be no substantial difference in terms of the proportion of working household members (at the age above 10) among Luang Prabang Province, the Northern Region and the national average. Table 3-2 Main Economic Activities by Households in Luang Prabang Province Compared with Northern Region and Lao PDR 1. Percentage of population working at age above 10 Female Male Total Luang Prabang 78% 82% 80% Northern Region 82% 84% 83% Lao PDR 81% 83% 82% Urban 73% 76% 75% Rural with road 83% 86% 85% Rural without road 86% 87% 87% 2. Main economic activities of population working at age above 10 (Percentage of total hours worked during the last 7 days) Paid Self-employed Employment Non-farm Activities Own Operated Farm Total Luang Prabang 5% 12% 84% 100% Northern Region 3% 13% 84% 100% Lao PDR 6% 24% 71% 100% Urban 17% 49% 34% 100% Rural with road 3% 16% 81% 100% Rural without road 1% 11% 88% 100% 3. Percentage of time spent for income generation by household members at age above 10 (for Lao PDR) Types of Activity Hours per Day Percent Share Work as employed % Own business work % Agricultural work % Collecting firewood/fetching water 0.3 7% Hunting/fishing % Construction 0.1 1% Handicraft 0.3 7% Total hours spent by household members % 4. Business by household % of Household with Business Operation (Including unregistered business) Lao PDR 46% Urban 68% Rural 38% Northern Region 46% Source: National Statistical Center, Lao Expenditure and Consumption Survey 2002/2003 (LECS 3), March Main economic activities of population working at age above 10 - In Luang Prabang Province, household members are engaged in: i) self-employed, own farming (83%), ii) self-employed, other than own farming (12%), and iii) employed by others (5%). - This work pattern is similar to the national average of those in rural area with road access. Percentage of time spent for income generation by household members at age above 10 - The national average shows that aggregate household labor is spent for own farming 43

44 (49%), own business (14%), employment (11%), hunting and fishing (11%), handicraft making (7%) and others (8%). Business by Household - Besides own farming work, 46% of all households in Lao PDR are engaged in household business including trade, production and other services Role of Tourism Sector Development for Poverty Alleviation According to the industrial composition of the provincial GRDP indicated earlier, the services sector including tourism and other sub-sectors accounts for more than a third of the economy of Luang Prabang Province, which apparently reflects the benefit of tourism that has grown rapidly over the past decade in Luang Prabang. At the same time, Luang Prabang Province is below the national average in terms of various kinds of socio-economic indicators as shown previously, and it can reasonably be judged that overall the province is poorer in socio-economic terms than the average level of the country. From the viewpoint of poverty alleviation, it is desirable that the growth framework proposed by NGPES will be followed, i.e., the main sectors including agriculture/forestry, education, health and infrastructure, especially rural roads, should grow in synergy with the supporting sectors that include rural electrification, tourism, industry and trade. In addition, cross-sector priorities should be placed on environmental management, gender equality and capacity building. NGPES also mentions that for tourism to benefit poor people, priority investments should be directed especially toward eco-tourism and encouragement of handicraft production. This basic framework would also be effective, at least to some extent, for Luang Prabang Province that has an advantage of possessing a strong engine for growth, which is tourism. On the other hand, it would be a challenge to address the poverty issue by utilizing tourism in the four districts with higher incidence of poverty among the 11 districts of the province, including Phonsay, Viengkham, Phounkhoune, and Pak Xeng as they are located in the east of the province, not very close to tourism resources that have potential to attract tourists. It is considered that a desirable tourism development approach for poverty alleviation in Luang Prabang would be as follows: Improvement of access roads will be an important element for tourism development in Luang Prabang, linking the urban center with tourist sites and targeted villages in remote areas. This is seriously needed for Luang Prabang, and will not only contribute to diversifying tourism products and to reducing concentration of tourists in the town, but it will also enable villagers to access market, basic health and educational services, thereby enhancing their standard of living. It is considered that access road improvement will greatly facilitate distribution of benefits to people in rural areas as tourism grows at a rapid pace in Luang Prabang. In Luang Prabang Province there are a number of rural villages that are unique and have potential to conserve their unique culture and improve or develop artisan skills in a way attractive to tourists. In fact, the existence of various ethnic minorities residing in the province is a strongpoint of Luang Prabang Province from the perspective of tourism. Potential areas for conservation, improvement and/or development include handicraft, weaving of ornamental clothes with silk or cotton fabrics, costumes with unique ethnicity, 44

45 wood carving, unique village landscape, architecture, Buddhist monasteries, and lifestyle. Many villages are also located at attractive nature-based tourist sites. It is important that community people themselves will be able to conserve and improve the attractions they possess, including cultural, historical, ethnic / traditional and scenic attractions. This way, more of the potential benefits of tourism development will go directly to rural communities. 3.3 Existing Tourism-Related Undertakings This section reviews past and current undertakings related to tourism development in Luang Prabang as well as implantation capacity of related agencies. Several donor agencies have been assisting tourism-related undertakings in Luang Prabang including UNESCO, ADB, AFD (French Agency for Development), and SNV (Netherlands Development Organization). The areas for their assistances extend from conservation and improvement of the World Heritage site, development of urban and transport infrastructure and community-based tourism development, to capacity building in various fields and conservation of intangible cultural heritage. Major projects implemented in recent years are described below, with additional information provided in Appendix D Donor-Assisted Projects (1) Mekong Tourism Development Project (MTDP) This ADB-financed project aims at tourism development in Cambodia, Lao PDR and Vietnam. The project is currently in progress and expected to be completed by The components of the project related to tourism development in Luang Prabang include the following: i) Access Road to Kuang Si Waterfall This component improves access to Kuang Si waterfall. Although the waterfall is one of the major tourist destinations in this area, the access road has been graveled, giving some difficulty with driving during rainy season in which the waterfall offers the best view to tourists. According to ADB, the length of the road section is around 24km with the estimated cost being US$ 1,355,646. ii) Community Based Tourism in Muang Ngoy area MTDP assists community-based tourism development in Muang Ngoy area, including improvement of boat landing facilities in Nong Khiaw and Muang Ngoy Nua (Old Muang Ngoy) such as stairs, waiting spaces, and toilets. They are also constructing graveled pavement and drainage on a main road in Muang Ngoy Nua. iii) Human Resource Development Program MTDP is assisting HRD programs with the concept of 1) preparing and implementing national tourism HRD plan, 2) capacity building of middle-level public officials, 3) training of trainers in hospitality skills in vocational institution, and 4) upgrading the management and teaching capacities of academic institutions with tourism program. iv) Marketing and Product Development Programs MTDP is assisting tourism marketing as part of GMS- Marketing and Products Development Program. Several joint marketing and promotion activities among the GMS countries is implementing under the strategy of Promoting the sub-regions as a single destination and Developing a sub-regional marketing institution. 45

46 v) Pro-Poor Community-Based Tourism (CBT) MTDP is also providing several training programs for developing Pro-Poor Community-Based Tourism in Lao PDR. In Luang Prabang province, training programs for tourism sector have already been given and some future training such as training of heritage guides in Luang Prabang and hospitality management training in target villages has been planed. Assistance to tourism promotion and marketing activities is also included in the GMS Pro-Poor Community Based Tourism Component. The current and future assistance programs related to promotion and marketing are reportedly as follows: Past Programs - Production of promotion materials for CBT programs (e.g. map and brochures of national and project area, promotion CD and VIDEO for CBT projects and GMS project,) - Advertising of CBT products and activity in local magazine (4 times) - Support of opening LNTA-GMS Tourist Information Center - Study on handicraft production and marketing Current and Future Programs - Updating and maintenance of Ecotourism Laos website - Advertising of new CBT products & website in 4 travel magazines - Production of promotion materials for CBT programs (e.g. Do s and Don t cartoon posters / Lao national map & information brochure / maps & brochures of CBT project sites / Guidebooks) - Development of display place on tourism (e.g. Hmon Handicrafts, culture and events of Luang Prabang) - Exhibition activity (e.g. CBT products and handicraft exhibit in Nakhom Panhom) - Filed survey for developing CBT tour with private sector (e.g Xieng Ngeum CBT tour with Tiger Trails Tour Co.) (2) Luang Prabang Community-Based Sustainable Tourism Programme SNV (Netherlands Development Organization) is assisting capacity building of the Luang Prabang Provincial Tourism Office as well as LNTA. Two advisors have worked with the PTO of Luang Prabang since January 2004, providing support for tourism planning, surveys, product development, staff training, organizational development, team building, and upgrading of information services. So far they have assisted, or are assisting, the following activities in the Luang Prabang Provincial Tourism Office: Selection of two ecotourism products for development under the ADB-financed MTDP; Baseline data collection carried out in villages for the above products; Organizational analysis exercise carried out with the entire staff of the Provincial Tourism Office (PTO); Opening of a new Tourist Information Centre; Production of an Official Tourist Map of Luang Prabang. (3) Luang Prabang Urban Development Program (PAU-LP) The PAU-LP was financed by the AFD (French Agency for Development) and implemented by MDP. The program was implemented in with an amount of 1,800,000 Euro. 46

47 The project included the following components: To establish and implement a heritage master plan (PSMV) to protect and develop the site, in order to control the city s future development; To study and settle the standards of both heritage restoration and infrastructure development through implementation of pilot operations (training work sites and demonstrative work sites). The demonstrative work sites established that infrastructure could be improved without spoiling the site s heritage atmosphere. One cannot expect to protect a site without the active collaboration of its inhabitants; and To involve the population in the conservation process. To explore this possibility special intervention funds were created, allowing compensation to the population in return for the respect of the strict regulations protecting the town s heritage. These intervention funds and the demonstration work sites fostered the production of baked clay materials in Luang Prabang. (4) Luang Prabang Heritage Protection Area Program (PASS-LP) As the next project of PAU-LP, PASS-LP, financed by the AFD, has been launched in June 2001 and will be implemented until the end of 2006 for the amount of 5,500,000 Euro by the AFD. Implementation agencies are MDP and UDAA. This project s goal was to implement the development policy already established through the groundwork of PAU-LP and to set out the principles of the territorial development in the heritage site. This program raises four main components: Small infrastructure development in three villages neighbour of the heritage area Rehabilitation and improvement of buildings open to the public such as city markets and other remarkable sites Integrated improvement of the drainage and sanitation, of the electricity and public lighting networks and of the road, alley and traffic system to enhance a link between the different neighbourhoods Study on territorial development More detailed description of these components is provided in Appendix D. (5) Nam Khan Eco-Valley Project The Development of Nam Khan Eco-valley project, financed by French Région Centre and UNESCO, is implemented by MDP and UDAA since 2006 to The project stresses resource preservation and enhancement, while creating socioeconomic development opportunities for local communities. The key objective is to reconcile the need for sustainable preservation of cultural and bio diversity with community development and poverty alleviation. The Project includes the following four components: Definition and implementation of the Nam Khan valley resource management plan; Protection and environmental development of the aquatic and terrestrial river-side; 47

48 Supporting income-generating activities; and Training, Communication, environment awareness. More detailed description of these components is provided in Appendix D. (6) National Luang Prabang University The Government of South Korea is assisting the establishment of National Luang Prabang University to be located in the north of Luang Prabang town. The university is currently under construction, and is expected to open in (7) Northern Area Rural Power Distribution Project EDL (Lao Electricity Company) are now implementing the following components in Luang Prabang Province under the project funded by ADB in cooperation with the Nordic countries: Extension of the transmission line from Luang Prabang to Pakmong, Udomxai and Luang Namtha, and distribution lines from the Luang Prabang municipality to Kouan Si, Pak Xeng and Phonxai by Construction of new substations in the north and south of Luang Prabang district. (8) Secondary Towns Urban Development Project This project, funded by ADB, aimed at urban development in the four largest secondary towns in the country, Luang Prabang, Pakse, Savannakhet, and Thakhek, including physical infrastructure work, community participation, and institutional development. The project was implemented from 1997 to Major components conducted in Luang Prabang are as follows: Urban Development Administration Agency (UDAA) with operation and maintenance responsibilities for urban infrastructure and services was newly established and trained. Infrastructure of sanitary landfill sites including access roads, retention ponds, clay lining and drainage systems, and fencing were constructed and various types of equipment and facilities for solid waste management were provided. Bridge, paved roads, drainage, and riverbank were constructed. Lined or piped drains were constructed for sanitary improvement. Community Awareness and Education Program (CAEP) was designed to promote community awareness, participation, and education on the benefits of good health and hygiene, as well as to facilitate beneficiary involvement. More detailed description of these components is provided in Appendix D Other Projects (1) Improvement of Luang Prabang Airport 48

49 In 1990s, improvement was made at the airport of Luang Prabang with assistance from the Government of Thailand, including runway extension and improvement of the terminal building. An additional facility for shops and restaurants was also built on the opposite side of the terminal building across the rotary, reportedly with private sector investment. Recently, the Department of Civil Aviation (DCA) has installed automatic navigation system for the airport, enabling safe landing and takeoff without visual flight operation. It also contributes to reducing flight delays, which is one of the major issues on air transport in Lao PDR. After a trial period, it will be put in operation, expectedly within (2) Introduction of New Aircrafts and New Routes of Lao Airlines In response to a serious need for increasing the capacity of air transport in Lao PDR, Lao Airlines has recently purchased two new turbo-prop aircrafts (MD-60) with seat capacity of 56 passengers from PRC that are equipped with Canadian-made engine. They are expected to start servicing in October 2006, and as of May 2006, Lao pilots were being trained in PRC for operation of this type of aircrafts. At the same time, they plan to introduce new routes including Luang Prabang-Pakse and Pakse-Bangkok, among others. (3) Scholarship Tourism Training by International Donors LNTA has received scholarship training on tourism from neighboring countries including Thailand and Singapore based on cooperation agreement with these countries, sending their staffs for OJT training in these countries for 1 to 3 weeks. In addition, they occasionally receive scholarships from EU, Japan, Thailand, New Zealand, etc. to study tourism overseas. (4) Website Development by Luang Prabang Heritage Office Luang Prabang Heritage Office is now developing a website introducing heritage in Luang Prabang with assistance from Tokyo Institute of Technology of Japan. The main concept of this website is to provide information on the World Heritage site, while they also plan to include basic tourist information about Luang Prabang Implementation Capacity (1) Luang Prabang Provincial Government The organization of Luang Prabang Provincial Government is shown in Figure 3-4. The departments expected to play a major role in tourism development in Luang Prabang are positioned under the vice governor responsible for economic departments. The departments related most closely to tourism development include: Luang Prabang Provincial Tourism Office (PTO), which is also a provincial branch of Lao National Tourism Administration (LNTA); the Department of Communication, Transport, Post and Construction (DCTPC), which is also under the Ministry of Communication, Transport, Post and Construction (MCTPC); Luang Prabang Heritage Office or Maison du Patrimoine (MDP); Luang Prabang Urban Development Administration Authority (UDAA), which is currently positioned under Luang Prabang District although the management of UDAA also reports directly to the governor and the vice governor; and the Department of Information and Culture (DIC) under the Ministry of Information and Culture (MIC). Other related departments include: the Department of Planning and Investment (DPI); the Department of Agriculture and Forestry 49

50 (DAF) under the Ministry of Agriculture and Forestry (MAF); the Department of Industry and Handicraft (DIH) under the Ministry of Industry and Handicraft (MIH); and Science, Technology and Environment Office under Science, Technology and Environment Agency (STEA). Provincial Governor Vice Governor Vice Governor Vice Governor Party & Personnel Sector Departments (Law, Socio-Cultural) Departments (Economic) 11 Districts Cabinet Lao Front *1 Provincial Assembly Finance CTPC Luang Prabang *3 Nambak Personnel Youth Union Court Education Banks Agriculture & Forestry Chomphet Ngoy Monitoring & Evaluation Training & Information Trade Union Women s Union Justice Judge Office Information & Culture Health Commerce Planning & Investment Industry & Handicraft Tourism Nan Xiang Ngeun Pak Beng Phon Xai GPAR *2 Veteran School of Politics & Administratio Sports Drug Control Notes *1: Lao Front for National Construction Red Cross Social Welfare *2: GPAR stands for Governance and Public Administration Reform Project. *3: Organizationally, UDAA (Urban Development Administration Authority) of Luang Prabang Province currently is placed under Luang Prabang District, while the management of UDAA reports also to the Governor / Vice Governor directly. Figure 3-4 Organization of Luang Prabang Provincial Government A brief introduction of the major departments closely related to tourism development and their implementation capacities are described below. (2) LNTA and Luang Prabang PTO Foreign Affairs Heritage Office Science, Technology & Environment Phou Khoun As described in section 2.4, LNTA suffers from shortage of both human and financial resources, and its strengthening is highly necessary for effective implementation of the activities under its responsibility. Viang Kham Pak Ou 50

51 As for project implementation, LNTA is now working on managing, and coordinating for, the ADB-financed MTDP, with the Project Coordination Unit (PCU) established within LNTA. Although LNTA is lacking in human resources to work on the project, its implementation is said to be going relatively well (except for the difficulty to secure the budget for the counterpart fund necessary for the project) due to the assistance from the consultants working on the project. As mentioned earlier in Chapter 2, strengthening the capacity of Luang Prabang PTO that seriously lacks the budget and manpower is also an important issue. Tourism development is a multi-sectoral undertaking, requiring coordination and cooperation among concerned agencies and departments. It is also essential to collaborate with the private sector for carrying out the development to meet the market demand. Line agencies at the central level as well as their departments in provinces have their own mandates and responsibilities, and thus can hardly become an entity to undertake active inter-agency or inter-departmental coordination for tourism development. LNTA and its branches in provinces (PTOs) should play this coordinating role under the guidance of the Prime Minister s Office at the central level and of the governor and vice governors at the provincial level. Currently, however, PTOs suffer from server shortage of staff and capacity, unable to play this role in an effective manner. (3) Department of Communication, Transport, Post and Construction (DCTPC) The responsibilities of DCTPC related to tourism development range widely from transport infrastructure development and maintenance to implementation of transport-related regulations and urban planning in the provinces. The organization of Luang Prabang DCTPC is shown in Figure 3-5. Obviously, DCTPC has the most substantial manpower among all of the departments in Luang Prabang, and has experiences in a number of infrastructure development projects including those related to tourism development. Director Deputy Deputy Administration Office (12 staffs) Vehicle Regulation Unit (5 staffs) Housing & Urban Cadastral Plan Office (5 staffs) Transport Office (5 staffs) Road & Bridge Office (18 staffs) 11 District CTPC Offices Luang Prabang Chomphet Nan Xiang Ngeun Phou Khoun Nambak Ngoy Pak Beng Phon Xai Viang Kham Pak Ou Figure 3-5 Organization of Luang Prabang DCTPC 51

52 (4) Luang Prabang Heritage Office (Maison du Patrimoine (MDP)) In accordance with the terms of the convention signed with UNESCO, the Lao authorities decided to establish an organization to be in charge of the protection and the improvement of Luang Prabang World Heritage site. Accordinly, Luang Prabang Heritage Office (the Maison du Patrimoine: MDP) was founded with the help of the city of Chinon in France, within the framework of a joint decentralized cooperation program signed by both towns. MDP began its activities, as a project body, thanks to multiple financial backing especially from UNESCO, the French Ministry of Foreign Affairs, the European Union and the French Région Centre. In 1999 the program was extended due to the support of two main donors: the European Union and the French Agency for Development (AFD), and the Lao authorities decided to upgrade MDP as an official body in Since 2002 several new projects have been or are still implemented by MDP: a second project funded by the French Agency for Development (AFD), and two Asia-Urbs projects financed by the European Union, one funded by French Région Centre and the other by UNESCO. Implementation Capacity of Heritage Office or MDP This office has been experienced in implementing various kinds of projects, with different scales, and has been set up to create a synergy between different stakeholders. In addition, MDP is working in close collaboration with UNESCO, and could legitimately intervene in the Luang Prabang protected area, SCOT area and in Nam Khan basin (UNESCO Eco-valley). Implementation of a project by MDP may also contribute to capacity building. In many cases, local people trained during project implementation stayed in MDP or at least in Luang Prabang. When MDP implements a new project, it can be a new occasion to upgrade the level of relevant human resources. It may be a viable option to put MDP as an implementing body especially for projects related to infrastructure development in the World Heritage site or conservation of cultural heritage and its use for tourism development in and around Luang Prabang town. It is however judged necessary to receive foreign technical support in order for MDP to successfully implement such projects, as has been the case in the past. (5) Urban Development Administration Authority (UDAA) Urban Development Administration Authority is an official body that has been founded in accordance with the terms of the loan agreement between Asian Development Bank (ADB) and the Lao Government for a Project of road and drainage infrastructures improvement in secondary towns in Lao PDR and in Vientiane. Lao authorities intend UDAA to be the municipality of the secondary towns. In the urban part of the secondary town s districts, the responsibility for construction, transportation and urban management that used to be assumed by DCTPC has been officially transferred to UDAA. The staffs of UDAA are now partly composed of former DCTPC officials. Implementation Capacity of Luang Prabang UDAA The Luang Prabang part of ADB-financed Secondary Town Project was officially implemented by Luang Prabang UDAA, but the project was actually implemented by Vientiane UDAA staff with support of foreign experts. It is considered that the capacity of human resources at Luang 52

53 Prabang UDAA is still weak, although it is extremely important for sustainable conservation and development of Luang Prabang to improve its capacity through project implementation with a capacity building component. (6) Department of Information and Culture (DIC) The Department of Information and Culture of Luang Prabang Province has been involved in the implementation of several projects in recent years. The most important one was Cultural survival and revival in Buddhist Sangha with UNESCO Bangkok. The Quiet in the Land Luang Prabang is also implemented under the Provincial Department of Information and Culture. Implementation Capacity of Information and Culture provincial department It is considered that implementation capacity of Luang Prabang DIC is still weak, and implementing projects under the supervision of DIC including those concerning intangible cultural conservation would require strong external support. For sustainable conservation and development of Luang Prabang, it is important to improve the level of the department s human resources through project implementation having a capacity building component. 53

54 3.4 Existing Plans The Study Team identified various existing plans that may partly become the basis for a project to be eventually proposed in the Study. Major ones are described below Provincial Tourism Development Strategy Luang Prabang Provincial Government approved a provincial tourism development strategy in 2002, which consists of 7 basic strategies summarized as follows (for more details, see an English translation of the strategy provided in Appendix E): Strategy I Develop Luang Prabang as a Cultural, Natural and Historical Sites, including establishment of culture protection law, restoration of heritages, improvement of quality of tourism resources, development of nature tourism, and support of minority villages. Strategy II Promote Luang Prabang as Linked Land and Holiday Town, including improvement of tourist services at hotels, guesthouses and restaurants, tourism development in rural villages, international/regional road development, and promotion of international travel routes. Strategy III Make Luang Prabang as a Tourism Centre, including promotion of commercial activities, international conferences, sports, and infrastructure development. Strategy IV Promote Long-Term Agriculture and Forestry Development to Support Tourism, including implementing promotion activities for nature conservation as well as for agriculture and agro tourism/eco-tourism. Strategy V Make Luang Prabang as a Peaceful, Convenient, Clean and Beautiful Town, including development of urban infrastructure, facilities and regulation for conservation of cultural heritage. Strategy VI Promote Education in Private and Public Sectors, including promotion of education for young people and improvement of health conditions through construction of schools/colleges and hospitals. Strategy VII Improvement of Financial Condition in Luang Prabang, aiming to promote investment in Luang Prabang through advertisement and promotional activities. As shown in Appendix E, the strategy also provides specific measures for implementing these strategies. These measures were taken into account in formulating the development packages proposed in the chapter that follows Related Development Plans (1) The Scheme for Territorial Coherence (SCOT) Through the preservation and enhancement of its outstanding heritage value, Luang Prabang has become, over the years, the center of tourism and economic development. The challenge for the city today is to achieve a balanced and sustainable development. To meet this necessity, MDP laid out the outline of Luang Prabang development through the 54

55 Scheme for Territorial Coherence (SCOT) study. Local Authorities approved the broad lines of the SCOT on January 11, 2005, followed by a decision of the governor made in March 2005 on urban development plan based on SCOT. Relevant materials are provided in Appendix E. SCOT proposed the strategy, priorities and territorial development guidelines with regard to the city s identity and of its cultural landscape resulting from significant interactions between Lao people and the natural environment (peri-urban agricultural areas: paddy field, riverside vegetable garden) as well as the guidelines of the Heritage Safeguarding and Enhancement Plan (PSMV). This urban development tool addresses the following paradox: How can heritage managers balance the need to preserve the city s unique cultural ambiance and traditional way of life under the increasing pressures of a tourist economy threatening that way of life? SCOT extends beyond the historic city limits and its immediate surroundings. The zone targeted by SCOT includes a town extension area which covers a 375 km2 area (15-kilometer wide and 25-kilometer long). The study also targets major tourist sites that are located within a one hour distance from Luang Prabang town and are likely to be eligible for heritage, environmental or cultural development activities. Based on the outcomes of the study and as compared with other similar South-East Asian cities (Siem Reap in Cambodia and Chiang Mai in Thailand), population growth was projected to reach 5 %, which is equivalent to the rates. According to these figures, Luang Prabang s total population would reach 90,000 inhabitants by 2013, compared with 55,000 in The number of the expected foreign tourist arrivals is estimated at 200,000 per year by Housing Rettlement New Economic Activities Area Paddy Fields Tourist and Cultural Activities Area Centre of Tourist Development Proposed Port- Existing Road Proposed Road Proposed Bridge Source: SCOT Figure 3-6 Land Use Plan and Infrastructure Development Plan Proposed by SCOT 55

56 1 - Pak Ou 2 - Pak Xuang 3 - Xieng Lome 4 - Xieng Ngeun 5 - Pak Lung / Saluan 6 - Houey Si Source: SCOT Figure 3-7 Tourism Center Development Plan Proposed by SCOT This forecast could only be realized through carefully implementing a policy to develop tourism and economic activities gradually, involving Lao authorities to carry out and oversee the migration policy and conservation programs, as well as to control tourism in some way. As mentioned above, based on SCOT strategy, the Governor made a decision on urban development plan in March 2005 as shown in the following figure and Appendix E. One of the basic concepts of the strategy is to extend the urban area to the surrounding areas of Luang Prabang town. It includes the following measures: Construction of bypass of National Road 13 Extension of the airport and construction of a new terminal building Construction of the new Kok Chong cargo port and improvement of the Xieng Keo cargo port. Preservation of the natural resources such as: Phu Pung hill, PhuSuang hill and Phu nang hill to Moung Kham village Construction of a new Mekong bridge between Ban Soun in Luang Prabang district and Moung Kham in Chomphet district. Conservation of rice field in the Southwestern area of Luang Prabang district. 56