The South Asia office of the Friedrich Naumann Foundation for Freedom organised an online panel discussion on “Restart Asian Economies ” September 21, 2020. Restart Asian Economies, is a unique initiative under its “Online Business Dialogue” series. With Dr Mariyam Shakeela, former Cabinet Minister and CEO, SIMDI Group from Maldives and Mrs Bhawani Rana, President, Federation of Nepalese Chamber of Commerce and Industry (FNCCI) from Nepal, the discussion on reviving tourism sector after the COVID-19 pandemic in Asia.
Both the Maldives and Nepal are prominent tourist destinations in South Asia. With their economies heavily relying on tourist arrivals, the Covid-19 pandemic had led to an unprecedented contraction of the economy. Upon this background, the discussion focused on the revival tourism industry, including hotel businesses, in both the Maldives and Nepal and the strategic plans undertaken by both the government of two countries and the private sector. Here are the brief notes from the conversation with Dr Shakeela and Mrs Rana:
Mrs Bhawani Rana
With restricted travel across the world, 47.7 million hotel and hospitality businesses are affected in South Asia. The reduced number of tourist arrivals has a chain effect on other businesses, such as trekking agencies, and the local handicraft industry, etc., which rely on tourists. For a small economy like Nepal, tourism also brought in significant foreign exchange. As the government of Nepal had also prioritized tourism with the announcement of the Visit Nepal 2020 campaign. In anticipation of high numbers of tourist footfall, the private sector had also made huge investments in hotels. These investments are now at risk. The whole of South Asia is affected by the pandemic. It will take another two or three years to revive tourism, for which we are working with the government to prepare a recovery plan. As we share an open border with India, our current plans should focus on encouraging cross border travel and domestic travelling.
We had been expecting a high number of tourist arrivals in 2020, but the pandemic has proved to be a big setback for the private sector. We are discussing revival plans with the government. The new monetary policy also has provisions for the private sector, such as refinancing loans for hoteliers and restaurants. The government has been sensitive to the pandemic’s effects on the sector. We have gradually started to reopen and have prepared short, medium, and long term recovery plans with the government. These plans are not only to help businesses but also for employees associated with the sector. The government has been very supportive. Last week the Prime Minister invited the representatives of the private sector to discuss the revival of the economy.
For the welfare of employees working with us, we have tripartite agreements with the government and employees. The government is providing marginal interest loans. As we do not want to lose employees, we are also offering part-time employment. This is one of the biggest challenges we face in the hospitality industry.
In the short-term, we now need to focus on cross-border travel and domestic travel. The pandemic has also given us the opportunity to explore the areas not travelled to before, and different packages such as meditation resorts, lifestyle tourism, along with a safety protocol.
Dr Mariyam Shakeela
The Maldives reported the first case of coronavirus on 7 March. Since then, the economy has contracted drastically. With most of our businesses linked directly and indirectly to tourism, the lower occupancy rate and closure of resorts has a huge effect on the economy. Currently, the occupancy rate in resorts are 30% and below. As occupancy rates decrease, the suppliers to resort are affected. Note that 80 percent of Maldivian businesses are related to tourism, 47% of resort employees are locals. Amidst this job uncertainty and contraction in spending, we are hopeful. The government is taking great steps to revive the tourism sector. Although we expect the tourism sector to return to pre-COVID times only in 2024, we have already taken steps to revive the economy. We reported 708 tourist arrivals on 18 September 2020, the highest since the Covid-19.
Most of our businesses will not survive if tourism is not revived. Since the beginning of the pandemic, our government has been trying to create strategic marketing campaigns, such as ‘Sun will shine again’ to let tourists know that we have opened our doors. We are also promoting ‘One island, one resort’ to make tourists feel safe in the Maldives. Guidelines have been developed to assist local governments, resorts, tourist vessels, and other tourism stakeholders to safely reopen and entertain tourists.
The private sector is retaining the employees with half pay, while some are on no-pay leave. In fact, only 16 percent of employees lost their jobs. With the rise in arrivals, the hotels are retaking the staff as and when the need arises. The businesses that had shut down are strategizing and have shifted to agriculture and the production of consumer goods.
We have a fragile economic model, with heavy dependence on tourism. Now, we are looking at the agriculture sector as well for diversification. We also need to invest in a safety net to deal with emergencies and think towards a sustainable tourism economy. Our strategy is to focus on safety and hygiene and increase investment in health. We are also exploring technological developments in other parts of the world, such as the QR code payment system, that can help reduce the risk of corona transmission. We are also focusing on training human resources in the entire supply chain of the tourism sector. We now need to rebrand the Maldives and design a tourism experience, which prioritizes safety.