Liberation of tourism and travel-related (T&T) services in Thailand and Its impact

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Liberation of tourism and travel-related (T&T) services in Thailand and Its impact BY WA L A I L A K N OY PAYA K, P H D E X E C U T I V E D I R E C TO R, A S E A N, S O U T H A S I A, A N D O C E A N I A D E PA R T M E N T TO U R I S M AU T H O R I T Y O F T H A I L A N D

Thailand is a major tourist destination Thailand, with a total of 513 thousand square kilometres in area and more than 67 million populations, with rich natural resources and cultural heritage. World s top-10 tourist destinations in terms of arrivals and/or receipts in recent years 336,000 foreign tourist arrivals in 1967 to 29.9 million in 2015. About 59% of tourists came from East Asia that includes 27% from ASEAN and the rest from China, Hong Kong, Japan, Korea, and Taiwan. China is the largest source market and Chinese visitors currently account for nearly 20% of total visitor arrivals.

Thailand tourism profile Best Leisure Destination in Asia A great number of recreation and leisure options for families to engage Top golf destinations in Asia with more than 200 world-class golf courses Top Medical Tourist Destination in Asia One of the top medical tourist destinations in Asia 2.5 million foreign patients treated in Thailand annually

TAT played the key role Tourism Authority of Thailand or TAT, established in 1959, have played crucial role in tourism development, promotion and marketing activities. The Ministry of Tourism and Sports was established in 2002 for coordinating efforts to develop, support and promote tourism, sports and recreation. Tourism policy in Thailand has been developed simultaneously by several organizations, government departments, organizations and Institutes.

Emphasis shifted towards higher valueadded tourism The tourism policy has evolved over the years and priorities seem to have changed and relatively more emphasis is now being placed on mega projects and higher value-added tourism activities in order to make the industry more competitive. National Tourism Development Plan (2012-2016) has explicitly stated in its vision : to make Thailand a quality tourism destination with tourism competitiveness at the international level, thus enabling the country to generate more income and distribute wealth on a sustainable basis.

Liberalization promoted Tourism &Travel-related (T&T)* Tourism in Thailand is a success story due to open-market policies of the government, liberalization of tourism and travelrelated (T&T) services under GATS and AFAS frameworks. Liberalization measures adopted since 1995 has greatly helped Thailand in drawing more visitors from all regions including ASEAN, earning more tourism revenues, and creating more jobs. *Based on the Case Study on the Benefits of Services Liberalization (2016) by Tonzon, Khan and Cheong

Thailand s Tourism success came from efficient planning* The government placed due importance in its development right from the beginning It took regulatory measures to ensure that the entire tourist system encompassing tourist markets, bridging components (like transportation and travel intermediaries), and supply of tourist products develops in a systematic manner. *Based on the Case Study on the Benefits of Services Liberalization (2016) by Tonzon, Khan and Cheong

Huge surge in arrivals due to liberalization

Receipts (millions) Uptrend in receipts Receipts (US$) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Tourism expanded due to liberalization* Both GATS and AFAS initiatives started in 1995 and the results clearly demonstrate that tourism industry in Thailand expanded significantly in this period. The international arrivals grew at an average rate of 7.3% and the accompanying tourism receipts increased on an average by 10.2% within the period 1995-2014 *Based on the Case Study on the Benefits of Services Liberalization (2016) by Tonzon, Khan and Cheong

Huge economic impact** Direct contribution of T&T to GDP was 8.6% in 2014, and is forecast to rise by 3.4% in 2015, and to rise by 6.7% annually from 2015-2025 to 11.7% of total GDP in 2025. Wider impact from supply chain and induced income effects, to GDP was 19.3% in 2014, and is forecast to rise by 3.2% in 2015, and to rise by 6.4% per year to 25.8% of GDP in 2025. In 2014, the industry directly employed 2,210,000 persons, accounting for 5.8% of total employment in Thailand It is expected that the sector will continue to create more jobs in future and in 2025, it will provide more than 8 million jobs, accounting for roughly 20% of total employment in Thailand. **Based on World Travel and Tourism Council, 2015

Growth of labor productivity* Average labour productivity in Thailand grew by 0.4%, 2.9%, and 2.2% during the periods 1995-2000, 2000-2005, 2005-2012 respectively. Though the contribution of travel and tourism is not singled out, the productivity of whole sale, retail trade, hotels and restaurant sector grew by 1.4% during 2000-2012 in Thailand. The productivity in another industry, Transport, storage and communications, associated closely with travel and tourism sector, grew on an average by 6.1% in the same period. *Based on the Case Study on the Benefits of Services Liberalization (2016) by Tonzon, Khan and Cheong

Value Surge in labor productivity (direct) 16000 Labor Productivity (Direct) 14000 12000 10000 8000 6000 4000 2000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year

Challenges faced by Thailand T&T Insufficient information, knowledge and understanding about tourism. Lack of readiness and competitiveness of Thai tourism SMEs that account for 70% of total tourism business. Lack of skilled tourism manpower due to poor language and communication skills, and negative attitudes of Thai graduates towards tourism services. Lack of quality tourism education, lack of quality control and certification of tourism institutions Inefficiency on the part of government and lack of coordination between different agencies. Lack of initiatives to improve the quality of tourist destinations and deterioration of security and safety standards in popular tourist resorts.

Lesson from Thailand Liberal open-market policies aimed to make the country a preferred tourist destination with emphasis on community or rural tourism Tourism significantly contributes to the economy job creation foreign exchange earnings highly productive and efficient

Thailand Schedule of specific commitments under AFAS (7 th Package) Tourism and Travel Related Services Hotel Lodging Services CPC64110 Motel Lodging Services CPC64120 Holiday Centre and Holiday Home Services CPC64192 Camping and Caravan Sites CPC64195 Meal Serving Services with Full Restaurant Services CPC64210 Catering Services CPC64230 Beverage Services without Education CPC64310

Thailand Schedule of specific commitments under AFAS(7 th Package) Tourism and Travel Related Services Travel Agency and Operator Services CPC74710 Hotel Management Services Recreational, Cultural and Sporting Services Theme Park and Amusement Park CPC96194 Sporting and Other Recreational Services Other : Marina Facilities Convention Centre over 2,000 Participants

Thailand Schedule of specific commitments under AFAS (7 th Package) Other Services not Included Elsewhere Skill Training Services ( not classified under education services incl. educational institute)

New Incentives for Tourism from Board of Investment Yacht Marinas Theme Parks Cultural Centre Aquariums Open Zoos Convention Halls and International Exhibition Centers

Thailand s Investment Opportunities Cinema Complexes Hospitals Hotels Long-term Accommodation for Foreign Retirees Short-haul Air Transport