Establishment of a powerful “Board of Investment (BOI)” is vital to market Nepal’s tourism potential and attract foreign investment and expertise to transform the tourism industry

By Ramesh Hamal

Popular optimism is that the Janandolan II has changed Nepal’s political landscape for good. For the first time in Nepal’s history, the entire population including the previously fragmented political forces appear to be thinking along the same lines. Now the question is: If this momentum can be sustained and this energy be channeled to achieve economic development that has eluded this nation for so long.

Political reforms and restoration of permanent peace are one of the foremost priorities, and people will not blame the political forces for largely investing on this front. However, it is equally important to focus on economic development. The bottom-line is whether the country moves forward to economic prosperity -providing a vibrant job market, education and health care for all. If the nation misses out on the economic front, the Janandolan II may still be viewed as a failure. Some may argue that it is a catch-22 situation; whether the focus should be on the political or the economic front. The truth, and the necessity, is both should be pursued in parallel.

Lessons can be learnt from experiences of Thailand, which was the first country in South East Asia to treat tourism as a strategic industry in the early 1990s. Today, the country attracts more than 12 million foreign tourists annually, which generates revenue in excess of 11 billion US Dollars.
The political leadership now needs to formulate a comprehensive economic strategy to transform Nepal into a modern welfare state. The epicenter of this strategy should be the development of the tourism industry. Nepal’s huge tourism potential is not a hidden fact, but it means nothing if we do not support this with a sound investment plan and marketing strategies. Substantial investments in tourism infrastructure are, undoubtedly, essential for this industry to evolve and grow, and ultimately achieve its potential.

Our current state of the economy means the government and financial institutions do not have financial clout to match huge investment required for developing tourism infrastructure. We all know that grants and international assistance to most third world countries, at best, have paralyzed nations. Such grants and economic packages seldom lead to economic growth. But the foreign investment does. Consequently, the only option we have is to attract foreign direct investment.

Establishment of a powerful “Board of Investment (BOI)” is vital to market Nepal’s’ tourism potential and attract foreign investment and expertise to transform the tourism industry. BOI will need to work on the legislation, and incentive strategies to make the country attractive to foreign investors. While BOI focuses on creating an investment- friendly environment and marketing Nepal as the country to invest in, Nepal Tourism Board can start preparing groundwork and expertise to market Nepal’s destination to attract international tourists.

It is essential for the policy makers to understand the importance of inspired marketing in the growth of the tourism industry. Marketing has always been, and will remain, a key determinant of growth in this industry. As they say, any idiot can produce but it needs a genius to sell. Lessons can be learnt from experiences of Thailand, which was the first country in South East Asia to treat tourism as a strategic industry in the early 1990s. Today, the country attracts more than 12 million foreign tourists annually, which generates revenue in excess of 11 billion US Dollars.

Thailand’s tourism industry contributes about 10% to its GDP and is the largest export sector of the economy. The Thai government forecasts international arrivals to Thailand will grow from 12 million currently to 20 million by 2010. However, an academic paper out of a UK University implies this forecast may be too conservative! Their forecast is that this number could be as high as 26 million. In other words, international arrivals to Thailand should double over the next five years. All this would not have been possible, if the country did not create a conducive environment for foreign investment and local tourism industries to grow. In addition to its huge investment in tourism infrastructure, Thailand also heavily invests on marketing and promotions.

It is essential for the policy makers to understand the importance of inspired marketing in the growth of the tourism industry. Marketing has always been, and will remain, a key determinant of growth in this industry. As they say, any idiot can produce but it needs a genius to sell.
The World Tourism Organization (WTO) has forecast that by 2020 the total number of international arrivals will increase to 1.56 billion people per year, compared to 760 million today. According to WTO, international arrivals will rise to just over one billion by 2010. Of this, 10.6 million international arrivals will be in South Asia, which will almost double to 19 million by 2020.

India, with the largest tourism industry in South Asia, currently attracts international arrivals of just over 3.5 million per year. These figures demonstrate there is a significant room for Nepal’s tourism industry to grow and establish itself as the leading tourist destinations in South Asia. To realize this, we need to act fast. First, by establishing a powerful Board of Investment. Otherwise, we will be left behind as has been the sad case of our history.

In view of the post Janandolan II optimism, Nepal cannot afford to retrogress! Now is the time to act, and act decisively! Let us not waste this historic opportunity to transform Nepal’s economic landscape for good!!

Hamal is a real estate consultant based in Bangkok, Thailand and can be reached at [email protected]

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