Investment in tourism: Malaysian model

Until now, the countries, which have already witnessed a spectacular double-digit growth and appeared as internationally acclaimed tourism destinations, had to first attract foreign investment. If we mention some Asian countries like Maldives, Malaysia, Sri Lanka, and even Nepal, they had to and were able to successfully attract foreign investments just by making some laws, and with holistic initiatives.
 If foreign investment takes place, the foreign investors themselves would go for various marketing activities at home and abroad for their own profits. These marketing activities will help domestic tourism as well as enhance  country's image abroad. This image will also help in attracting investment in the other sectors of the country as well.
Like the other countries, the government of Bangladesh has many other priority areas for self-investment and it may make intensive drives to attract foreign investment to the tourism sector. We need foreign investment in all segments of tourism - from tour and travel agencies to 5-star hotels and resorts and other international tourism facilities. Then there will be a competition in the country, and thus the quality of service of local hotels and motels will improve.
Maldives has developed its tourism as a world-class destination not solely with its own money. It did not have that much capacity for self-investment. But it could attract foreign investment. It is only the foreign investments that have helped the Maldives tourism reach such a spectacular height. Malaysia also could attract huge foreign investment in tourism. Some SAARC member-countries attract foreign investment every year to their tourism sector.
 Post-civil war Sri Lanka's booming tourism investments boosted the island-nation's 2011 first-quarter foreign direct investment (FDI) to a record $236 million, according to the state-run investment promotion bureau.
In Nepal, foreign direct investment in tourism swelled more than four-fold in 2012-13, reflecting rising investor-interest in the industry due to higher arrivals following the end of the country's conflict. According to Nepal Department of Industry (DoI), investments soared to Rs 3.89 billion from Rs 837 million in the previous year. Tourism is the third-highest recipient of FDI after the services and manufacturing sectors in Nepal.
 According to the World Travel & Tourism Council (WTTC), Travel & Tourism investment in Malaysia in 2012 was US$ 764.7bn, or 4.7 per cent of total investment. It would rise by 4.2 per cent in 2013, and by 5.3 per cent over the next ten years to US$ 1,341.4 bn in 2023 (4.9 per cent of total).
Bangladesh government may launch a 'tourism investment forum' to attract foreign investment and set a time-line to exclusively accomplish these goals. Foreign investment can be attracted to at least some specific sectors like resorts, big hotels and tour operations and MICE (Meetings, incentives, conferences, and exhibitions). With it Bangladesh will be able to attract more leisure as well as business tourists. Tourism comprises four basic elements - accommodation, transport, food and beverage, and attractions. We need foreign investment to develop our tourist attractions, to improve our communication and infrastructure including installation of world-class transports for river, railway, road and air transportations. Besides, we need international-standard tourist accommodation facilities.
 At the present stage, Bangladesh has an investment climate in tourism sector like in the other South Asian economies. Bangladesh offers lucrative and competitive opportunities for foreign investors to create multi-faceted tourist facilities around the tourist sites. Private investment in this sector is gradually increasing due to the government's pro-private sector tourism-friendly policy. Foreign investment in the tourism sector of Bangladesh is always welcome. But the country is yet to attract big chunks of investment to tourism. Here, we need to make a massive drive through FBCCI (Federation of Bangladesh Chambers of Commerce and Industry) and the Bangladesh missions abroad for attracting investors to tourism. The economic councillors, who work at the Bangladesh missions abroad, may meet foreign chambers of commerce and federations and convince them of investment in the tourism sector of Bangladesh. A high-level committee may go for organising road shows, and meetings with the foreign chambers. Moreover, when the high-level delegations of Bangladesh go abroad, tourism representatives may be included there.  
 Though we could not attract much foreign investments for the tourism sector, we have some rays of hope.  Of late, Bangladesh has witnessed a considerable size of domestic investments in the tourism sector by the private sector in the form of hotels, motels, resorts, theme parks, amusement parks and cruise vessels etc. Some mega tourism projects under the PPP (Public-Private Partnership) are also being considered to be implemented soon in the country. This will encourage foreign direct investment in the tourism sector of Bangladesh.
 The country possesses other geo-political advantages for foreign investment. Broader connectivity raises the competitiveness of a potential destination. Bangladesh is connected with all the major destinations of the world. Many luxurious and low-cost airlines operate their flight in Bangladesh.
 Besides Biman, some promising private airlines of the country operate domestic, regional and a few international flights. The international airlines operating in Bangladesh are Dragon Air, Druk Air, Emirates, Gulf Air, Indian Airlines, Jet Airways, Kuwait Airways, Malaysia Airlines, Pakistan International Airlines, Qatar Airways, Saudi Arabian Airlines, Singapore Airlines, Thai Airways, Bangkok Airways, Turkish Airways, Mehin Lanka Airlines, etc. Some more are in the pipeline to link Bangladesh with other countries.
 Over the years, the infrastructure and facilities have been developed. At present, aviation activities are being carried out from three international and five domestic airports. About 21 airlines are now operating in and out of the country; nearly 50 countries have signed bilateral agreements with Bangladesh.
 Why foreign investment in Bangladesh tourism industry? What will be the foreigners' benefit and how is the investment-friendly climate here?
 Bangladesh still being a less-trodden destination with diverse tourism products, foreign tourists can easily be attracted. The country is blessed with some unique tourist attractions that can be life-time experience for foreign tourists. Those destinations are worth of frequent visits. Therefore, investment will have a good return.
 Apart from these, Bangladesh is a largely homogenous society with no major internal or external tensions and a population with great resilience in the face of adversity (e.g. natural calamities). Bangladesh is a liberal democracy. The people of this country, irrespective of race or beliefs, has been living in harmony and understanding for thousands of years.
The country has a broad non-partisan political support for market-oriented reform and the most investor-friendly regulatory regime in south Asia. Besides, it has a trainable, enthusiastic, hard-working and low-cost (even by regional standards) labour force suitable for any labour-intensive industry.
 Geographical location of the country is ideal for global trade with very convenient access to international sea and air routes. Bangladesh is endowed with abundant supply of natural gas, water, and its soil is very fertile. Although Bengali is the official language, English is generally used as the second language. Majority of the people, even the moderately educated ones, can read, write and speak in English.
 As economic growth picks up, the purchasing power of the people of Bangladesh is also growing substantially. And in a country of more than 150 million people, even a small middle class may constitute a significant market. Furthermore, Bangladesh products enjoy duty-free and quota-free access to almost all the developed countries. This access to the global market is further helped by the fact that policy regime of Bangladesh for foreign direct investment is by far the best in South Asia.
Most Bangladeshi products enjoy complete duty- and quota-free access to EU, Japan, USA, Australia and most of the developed countries. However, for apparel export to the USA, we have certain quota regime, which is 'generally favourable' to Bangladesh.
What are the incentives Bangladesh can offer to foreign investors?
First of all, we may open up all the sub-sectors of tourism industry under the World Trade Organisation (WTO) rules for foreign investment. We may follow the Malaysian model for investment in the tourism industry. We can offer incentives to those potential sub-sectors of tourism industry that are capable of creating more employments in the country. We may waive tax and VAT for mega projects of the tourism and hospitality industry -- like establishment of exclusive tourist zones (ETZs), launch of mega cruise-ships for international sea-cursing, launch of hovercrafts, establishment of  tall hotels, creation of chain hotels, exclusive resorts, bay-hotels, exclusive casinos, etc. and ventures that are innovative.  Bangladesh needs to clearly define the incentives as per size and time-period. The BoI (Board of Investment) may open a separate wing in this regard. Bangladesh Parjatan Corporation (BPC), Bangladesh Tourism Board (BTB) and the Ministry of Civil Aviation and Tourism may open a one-stop service cell at Hazrat Shahjalal International Airport in Dhaka to facilitate the potential tourism investors.
Bangladesh badly needs foreign investment through any legal means in its tourism sector. If it requires new laws, these may be framed and/or existing laws and regulations may be simplified. We may form a Bangladesh Tourism Investment Forum for attracting foreign investment.
 The writer is a tourism analyst,               who works at Bangladesh                  Parjatan Corporation (BPC). [email protected]