[Analytics] Travel and tourism competitiveness of Pakistan

The PM routinely mentions about the potential of tourism in Pakistan, given its diverse topology, immense cultural depth, and rich visual history. Having said that, multiple factors, mainly with regard to level of security and economic development, have contributed to the low level of tourism that the country has seen for many years now; not to mention that the tourism sector has historically as well performed well below the country’s potential. Omer Javed specially for the Pakistan Today.

It is, therefore, important for policy-makers to understand as to where the country currently stands, with regard to the competitiveness of the travel and tourism (T&T) sector, not only in terms of its various dimensions, but also in the comparative sense with regard to other countries. Here, one important resource to gain this perspective is in the shape of the ‘Travel and Tourism Competitiveness Index’ (TTCI) produced by the World Economic Forum (WEF) in its biennial report ‘Travel and Tourism Competitiveness Report’; with the most recent one published in September 2019, covering 140 economies, including Pakistan.

This Report should serve as a wake-up call for the policy makers with regard to the poor state of affairs in an important sector of the economy; especially also since the country is the lowest ranked in the countries covered in the Asia-Pacific region

According to the Report, it ‘…provides a strategic benchmarking tool for business and governments to develop the T&T sector. By allowing cross-country comparison and benchmarking countries’ progress on the drivers of T&T competitiveness, it informs policies and investment decisions related to T&T business and industry development. The report provides unique insight into the strengths and areas for development of each country to enhance its industry competitiveness, and a platform for multistakeholder dialogue at the country-level to formulate appropriate policies and actions.’

Here, TTCI is composed of four sub-indexes, 14 pillars, and 90 individual indicators– a) enabling environment, and within it, i) business environment, ii) safety and security, iii) health and hygiene, iv) human resources and labour market, v) ICT (information and communications technology) readiness; b) T&T policy and enabling conditions, which include, i) prioritization of travel and tourism, ii) international openness, iii) price competitiveness, iv) environmental sustainability; c) infrastructure, and which include the following pillars, i) air transport infrastructure, ii) ground and port infrastructure, and iii) tourist service infrastructure; and d) natural and cultural resources, and within it, i) natural resources, and ii) cultural resources and business travel.

This is indeed a very comprehensive way to measure the strength of a country to attract and sustain travel and tourism, and focuses on the performance of involved institutions, governance structures, and performance of markets. Sadly, the situation of Pakistan’s T&T sector is very weak as per the TTCI 2019, which ranks the country at 121, out of a total of 140; although a thin silver line is that the country’s rank improved by three positions from that of TTCI 2017, when it was 124th.

The Report indicates that Pakistan with regard to its T&T sector falls in the bottom 25% (or quartile) of countries, most of which belong to ‘…low to lower-middle income economies, with 26 coming from Sub-Saharan Africa. Lower levels of economic development do translate into particularly poor competitive conditions for T&T. Even compared to the third-lowest quartile, the bottom 35 countries score significantly lower on most pillars– in particular, overall infrastructure, international openness, ICT readiness and health and hygiene. Also similar to the third-lowest quartile, nations in this group score below average for natural and cultural resources. As a result, the bottom 35 economies account for just 1.8% of T&T GDP and 2.5% of tourist arrivals of the economies ranked in this report.’

In the Asia-Pacific region, Pakistan is the lowest ranked country overall at 121 as per TTCI 2019; whereas among other countries in the region, India is 34th among the 140 countries, Vietnam 63rd, Sri Lanka 77th, Nepal 102nd, and Bangladesh 120th. In this regard, the Report indicates that ‘Pakistan… remains the least competitive country in South Asia when it comes to T&T, including the region’s least favourable safety and security (134th) conditions.’

In terms of four sub-indexes, Pakistan’s performance is overall quite poor as per the TTCI 2019, where for a) enabling environment, it is ranked at 119th position, b) travel & tourism policy and enabling conditions, it holds the 122nd position, c) infrastructure, it is at the 99th position, and d) natural and cultural resources, it is ranked 87th; hence its position in all sub-index, is either close to 100th rank, or above it.

Gauging the performance of the T&T sector of Pakistan, ia deeper examination of the level of pillars within each of the four sub-indexes, reveals very useful detailed information. Here, with regard to the first sub-index of enabling environment, the position of Pakistan, in terms of the involved pillars, as per the TTCI 2019, is as follows: business environment (93rd), safety and security (134th), health and hygiene (101st), human resources and labour market (135th), and ICT readiness (123rd). Hence, clearly the enabling environment lacks tremendously, in turn, identifying the institutions as a very weak link in the overall performance of T&T sector.

The second sub-index, T&T policy and enabling conditions, the ranking on the involved pillars for Pakistan is as follows: prioritization of travel & tourism (119th), international openness (122nd), price competitiveness (37th), in which the country performs relatively a lot higher than other pillars, and is based on the following indicators, i) ticket taxes and airport charges, ii) hotel price index, iii) purchasing power parity, and iv) fuel price levels, and environmental sustainability (129th), indicates a very weak state of affairs by related government authorities and the private sector in this regard, and also points to a high level of environment-related vulnerability in which the country finds itself, and is based on the following indicators, i) stringency of environmental regulations, ii) enforcement of environmental regulations, iii) sustainability of travel and tourism industry development, iv) particulate matter concentration, v) number of environmental treaty ratifications, vi) baseline water stress, vii) threatened species, viii) forest cover change, ix) wastewater treatment, and x) fish stock status.

With regard to the third sub-index, infrastructure, the rankings on the involved pillars is as follows: air transport infrastructure (96th), ground and port infrastructure (73rd), and tourist service infrastructure (112th), and which includes the following indicators, i) hotel rooms, ii) quality of tourism infrastructure, iii) presence of major car rental companies, and iv) automated teller machines per adult population.

The ranking on the pillar included in the fourth sub-index, natural and cultural resources, is as follows: natural resources (110th), and cultural resources and business travel (56th).

Omer Javed holds PhD in Economics degree from the University of Barcelona, and previously worked at International Monetary Fund.

Tags: Pakistan