AEC rocks travel boat

KRABI, 11 September 2012: AEC 2015 was off the tourism industry’s radar a year ago, but not now. Tourism experts scramble to dispense advice on how to deal with a free-trade-era at every opportunity.

Speaking at AEC 2015 seminar in Krabi, last week, Association of Thai Travel Agents president, Sisdivachr Cheewarattanaporn, said the industry lacked a defining strategy as it approaches ASEAN Economic Community 2015.

“The government has to have  clear measures and action plans to lead the country specifically the tourism industry.”

However, there are many indicators that travel industry executives are still grappling with the what AEC is and what the government has specifically agreed with the other nine ASEAN states on its implementation.

There are ambiguities at every turn with some officials saying the liberalisation of jobs in tourism will still be protected by labour laws, work permit requirements and a reserved occupation list that will prohibit the hiring of foreigners.

At the top of the private sector concerns is the backdoor option for global travel firms. If they register a company in Singapore, which allows 100% foreign equity, it would then give the Singapore subsidiary company the right to own outright companies in any of the other nine ASEAN nations.

It does away with the need for a foreign company to enter into a joint venture with a local travel agent in Thailand to set up a tour business with them holding a maximum stake of 49%.

As Thailand is the largest leisure travel destination in ASEAN for international tourists and second only to Malaysia when overland travel is taken into account, its inbound travel market is a prime target for international travel firms. If they can open a company and hold 100% equity it becomes an even more attractive objective.

This is the most crucial issue at stake for inbound travel agencies but rarely gets mentioned in seminars.

The ATTA president noted during the Krabi seminar: “ASEAN Economic Community will benefit some occupations, however for tourism we need to be careful.”

He did not elaborate on what the industry needs to watch carefully, but one area would be the expansion of Asian travel firms based in China and Korea that are looking to establish fully owned  travel firms to cover the ASEAN markets.

Singapore would offer them the backdoor and once they have a network of offices throughout ASEAN,  they can circulate revenue and profits without them ever touching the wallets of the local travel industry other than rates paid to hotels.

Even that area has been covered as Chinese companies invest in hotels in the region and in some cases bank roll the charter airlines that fly the tourists to ASEAN destinations.

The bottom line that was not addressed at the Krabi seminar is the lack of funds available to ASEAN travel firms to compete.

The Krabi seminar focused on the need to improve English communications skills in the Thai labour force. But nothing was said about the important role the Ministry of Education would have to play in improving language skills in the long-term.

The industry’s efforts to offer language courses are a band-aid repair job on a serious system failure in education that has existed for decades. It would require an investment on the scale of the government’s annual military budget to put it right with a complete overall of the education system.

The wider issues that go beyond the AEC were touched upon by Nation and Kom Chad Luek senior editor, Kavee Jongkitthaworn, one of the foremost experts on ASEAN affairs in the country.

He said: “We need to know that we are going to AC or ASEAN Community not just AEC or ASEAN Economic Community which is only a subset of AC.”

ASEAN Community comprises of three essential pillars that are being developed namely ASEAN Socio-Cultural Community (ASCC), ASEAN Security Community (ASC), and ASEAN Economic Community (AEC) with tourism included in the latter.

Mr Kavee warned that to be successful at AEC level, Thailand must develop all three pillars to raise the country competitiveness and status in ASEAN.

“Neighbouring countries know far more about AEC than Thailand due to their local media paying more attention to the issue, while our country’s local media pays more attention to entertainment news.”

For the tourism and services sector, Thailand will need to revise the Act of Tourism and Guide Registration 2008 and the Alien Business Act 1999, he explained. There are some very touchy issues in both these bills that the tourism industry needs to study in detail.

“Thailand needs to know what are the most essential factors to compete with neighbours and it is not just improving the use of English or other ASEAN languages.”

One of the risks when AEC kicks off in 2015 will be the issue of a one-stop visa for tourists. It is supposed to be launched officially at the ASEAN Tourism Forum in Vientiane, Laos January 2013.

“Neighbouring countries will allow nationalities that are on Thailand’s security watch list and this will be a problem for security agencies.”

Meanwhile, Tourism Authority of Thailand governor advisor level 11 Akapol Pruksawan said the Cabinet approved an ASEAN agreement to allow only six-star hotel for foreign investment at 70% as of next year.

“Besides, the Thai government will propose investment in terms of theme park, ports and international convention centres to the ASEAN leader for consideration.”

However, the flow of investment in each country will be different according to each country’s agreements.

“For instance, Vietnam will offer more shares for foreigners particularly 100% in the hotel industry.”

In addition, Mr Akapol said that Thailand location could still give it an advantage to be a gateway for overland travel to ASEAN neighbours, but it would depend on the expansion and upgrade of airports in Thailand to handle the increase in airline traffic.

Route R3A is part of the so-called North-South Economic Corridor linking Thailand with Laos and Xishuangbanna Prefecture in Yunnan province, Southern China. The Third Thai-Lao Friendship Bridge connects the northeastern Thai province of Nakhon Phanom with Khammouan province in central Lao PDR and offers business opportunities for Thailand tourism.

The fourth Friendship Bridge scheduled to complete next year will support the R3A route. The bridge is part of the Greater Mekong sub-region North-South economic corridor project. It will connect Donsavan village in Huay Xai district in Bokeo province with Ing village in Chiang Khong district of Thailand’s Chiang Rai province.

There are two other Lao-Thai Friendship Bridges across the Mekong. The first connects Nong Khai province in Thailand with Vientiane in Laos and the second connects Mukdahan province in Thailand with Savannakhet province in Laos  that have helped to boost transport and tourism free flow in the region.

“Krabi will take advantage of the growth in yachting as it has an abundance of natural resources for marine related tourism.”

However, Mr Akapol pointed out there are threats that can harm Thailand tourism industry. They are:

• Hoteliers mainly are SMEs that will lose out to foreigners who have high capital investment abilities. In 2010, there were around 9,800 hotels with 480,000 rooms across the country of which 60% to 70% were operated by SMEs.

• 90% of tour operators are also SMEs who will face difficulty competing with big companies;

• There are insufficient language skills, both English and ASEAN languages. Chinese, French, and Russian need to be improved.

Therefore, he encouraged tour operators, hoteliers and related tourism entrepreneurs to prepare for AEC 2015 by improving skills in language, maintaining quality of service and expanding with packages to neighbouring countries.

Sourced: ttrweekly