PIF Statement on Tourism to PFD Partners Plenary

Delivered by:
Honourable Tuilaepa Sailele Malielegaoi, MP
Prime Minister of Samoa and Minister for
Foreign Affairs

Tourism is one of the significant industry sectors contributing to the economy of the region, generating substantial foreign exchange inflows to the region, creating employment and makes large contributions to government revenue. It is a sector where Pacific Island Countries have a comparative advantage and can compete internationally. Tourism therefore has an important role to play in achieving the goals of Pillar 1 of the Pacific Plan; “Economic Growth”.

A study commissioned in 2005 by (formerly known as South Pacific Tourism Organisation) estimated a total of US$1,750 million that tourists spent across its 13 Pacific Island member countries. The study identified that in 2004, departure tax generated well over US$ 20 million in member countries. It is estimated that government revenue from direct expenditure in 2004 in’s Pacific Island member countries was US$ 453 million.

Tourism expenditure flows through the economies of the Pacific and benefits a diverse range of supportive sectors. In 2004, it is estimated that the tourism sector resulted in $US 375 million worth of purchases of materials and supplies from within the local economies with a further $US 274 million in other costs including areas such as financial services and insurance. Therefore, every $US1 million of visitor expenditure generates around $660,000 in local wages/salary payments and other purchases that are made from local economies in the region. Tourism therefore contributes significantly to the improvement of livelihoods in the Pacific.

At the same time, the lack of retention (or “leakage”) of the tourism dollar within Pacific economies has received much attention recently. The value of tourism, as claimed by some, is eroded by leakage of tourism earnings out of Pacific Island Countries. This point of view is highly debatable. Experts from the UK based Overseas Development Institute argue that calculations of tourism leakage are flawed due to their inclusion of international transport and distribution costs, a factor which impacts each and every export oriented sector, not only tourism.

While the benefits of tourism have been significant to our Pacific Island Countries, the levels of support for tourism by our governments have been relatively low. It is generally accepted that government intervention is necessary if a destination is to be successfully marketed and developed for tourism. Destination marketing is inherently cooperative and no single private sector operator, or group of operators, will be able to market a destination to the satisfaction of all stakeholders. Destinations must compete internationally for the tourism dollar, and competition is fierce.

Pacific destinations have performed well in developing the Australian and New Zealand markets which provide 50% o visitors to the region. There is significant latent demand however in large markets of North America, North Asia and Europe for the small scale, high value visitor experience in which the Pacific excels. However, destinations competing with the Pacific typically work with much larger Government budgets for their international marketing. Investment in regional marketing to open up these opportunities is therefore essential.

The Internet and new media has dramatically impacted the tourism sector. The Pacific has much to gain by effective use of technology but is hampered by its remoteness, lack of capacity and the inaccessibility of cost-effective telecommunications.

Further challenges for the industry include the limited capacity to produce effective statistical data for improved planning. Improved market research is also required to effectively penetrate new emerging markets. Capacity must also be developed so that effective national tourism strategies can be developed and integrated into a meaningful and effective regional strategy. This is essential to ensure the sustainable development of the sector is in harmony with the cultural and natural values of the Pacific.

Foreign investment is vital if growth is to be secured. The Pacific needs to develop a greater and more holistic approach to attracting tourism investment. A wide variety of issues impact the ability of the region to attract investors, including land and legal issues. Support by Government is essential to help create an investment environment conducive for investors to assist in the expansion of the tourism industry.

As well known, Climate Change poses serious threats to the industry where significant tourism related infrastructure is often located in the most vulnerable areas to increased frequency and intensity of natural disasters. Adaptation measures must be explored for the long term sustainability of the sector for which the support of our partners is critical.

Tourism can also be a demanding industry for the Small/Medium size entrepreneur (SME)e. All too often the capacity to effectively start small to medium sized tourism enterprises is lacking within the Pacific, although many potential opportunities abound. Support for Human Resources Development (HRD) training and provision of professional advice to the SME tourism operator are needed to ensure a vibrant tourism economy.

It is important to note that Tourism and Aviation are inextricably linked and that any difficulties experienced by the tourism industry directly impact the aviation industry and vice versa. Development of Aviation and Maritime infrastructure is required to enable visitors to access the region. There is significant demand for Cruise Shipping in the region that can only be realized with attention to infrastructure needs.

In conclusion, the benefits of Tourism to the region are significant. It is a key driver of economic growth in the Pacific therefore a major contributor to the goal of economic growth couched in the pillars of the Pacific Plan. Our Governments with the support of our partners must assess and reconsider the current levels of support for tourism and consider increasing these levels where appropriate, taking into account the need to remain competitive internationally. Development of infrastructure and transport links (eg roads, ports, airports, aviation and shipping) must be prioritised. Governments and partners need to encourage the development of regional and sub-regional marketing strategies and brands for major international markets. We must also ensure that our efforts to develop tourism need to be sustainable both environmentally and culturally. We therefore continue to encourage the support of the region’s developmental partners to assist in the individual and collective efforts of Pacific Forum countries in developing tourism.

Thank you