Services Sector as Engine of Growth: Potential of Tourism Sector in Pakistan
Tourism as engine of growth
Development Economics, if we must classify it, is a part of normative economics. The branch of economics that does not explain the way things are but the way things should be.
It has been more than two centuries when Adam Smith, the father of economics, gave the theory of Comparative Advantage in his book “An enquiry into the nature and causes of wealth of Nations”. The comparative advantage of Pakistan, like many LDCs remain its natural and human resources. How to use this comparative advantage to the nation’s benefit in the arena of global competition remains the issue in question. The acute scarcity of capital markets, the role of natural resources in the nation’s development even more critical.
The natural resources of Pakistan are not only blessed with fertile plains and deposits of valuable minerals but are also crowned with a breath-taking scenic beauty which is readily marketable. From the remains of Indus Valley and Gandhara civilizations to the world’s highest peaks, form the wilderness of a desert to the sands at the beaches- not to mention the rich cultural heritage from traditional oriental cuisine to the colours in the costumes of Bulti women, Pakistan has to offer what any eye can not refuse.
All that is needed to make Pakistan one of the leaders in the growing global tourism industry is effective promotion and a meagre investment in infrastructure. That is why I have chosen what follows to be my project for Development Economics.
Potential of Tourism Sector in Pakistan: A Study
Tourism as engine of growth……………………………………………………………………. 4
Pakistan’s location:……………………………………………………………………………………… 6
History of Tourism in Pakistan:………………………………………………………………… 6
Tourist Product:…………………………………………………………………………………………….. 9
1- BASIC NEEDS………………………………………………………………………………………………….. 9
- ACCOMMODATION……………………………………………………………………………………….. 10
- TOURIST INFRASTRUCTURE…………………………………………………………………………. 10
- ACCESSIBILITY……………………………………………………………………………………………… 11
- ATTRACTION…………………………………………………………………………………………………. 11
Structural Characteristics of Foreign Tourism:………………………….. 12
Domestic Tourism and its Features:………………………………………………………. 16
Role and Contribution of Tourism in Pakistan’s economy:…………. 18
TOURISM AND ECONOMY: Facts & Figures………………………………………………… 20
Government Efforts to Boost Tourism:……………………………………………… 23
Potential of Tourism Industry:………………………………………………………………. 27
Problems / Hindrances in promotion of Tourism Industry:…………. 34
Suggestions for improving the Tourism Industry:…………………………. 35
Tourism Industry today ranks among the three fastest growing industries in the world and is a major source of foreign exchange earnings. It has become a powerful agent of economic development throughout the world. Tourism is a service-oriented industry; it creates various trades and businesses in every walk of life. This industry is on the way to becoming the world’s largest industry due mainly to the expansion of middle class, increase in leisure time, growth and diffusion of transport and communications, development of sophisticated marketing techniques, new tourist destinations and global coordination of Tourism Industry.
Tourism all over the world has become a multi billion dollar Industry, but in Pakistan this sector has not been accorded the importance it deserves. Pakistan has immense tourism potential bestowed upon this piece of land by God. But unfortunately the apathy and negligence displayed by the authorities concerned has not allowed the rich potential to be adequately tapped.
Tourism is a Capital-Intensive industry. It demands investments in the construction of hotels, motels, lodging houses, chalets, camping grounds, rest houses and youth hostels. The other type of infrastructure includes restaurants, athletic and health clubs, amusement parks and playgrounds and last but not the least an efficient and comfortable transport system.
The Islamic Republic of Pakistan lies in Southern Asia, bordered by India to the east and by Afghanistan and Iran to the west. It has a short frontier with the People’s Republic of China in the far north east Pakistan is a gateway to the historic silk route. The completion of Karakoram Highway into China led to a trickle of tourist travelling by road along the ancient Silk Route as well as the opening up of northern mountains, resulting in increased tourism. Also Pakistan is at the crossroads of West and Central Asia. With the independence of Soviet Central Asian Republics new vistas and horizons have been opened for Pakistan to attract potential tourists from these countries.
History of Tourism in Pakistan:
Now it is imperative to look at the historical facts and figures of tourism in Pakistan.
During 1996, Pakistan received 0.369 million foreign tourists indicating a decrease of 2.38 per cent over the previous year’s arrival of 0.378 million tourists. However, if non-revenue Indian tourists are excluded the fall in foreign tourist arrivals comes to 4.76 per cent.
Receipts – 1996:
Foreign exchange receipts from tourism during 1996 amounted US $ 145.9 million showing an increase of 27.87 per cent compared to US $ 114.1 million in 1995.
During 1996 tourist arrivals from Kenya, Behrain, Indonesia and Canada increased from 30 to 50 per cent. A table of countries from where tourist arrivals increased during 1996 over previous year is given below.
Factors attributable to declining trend during 1996 in arrivals were mainly:-
– The main reason being substantial decline in the arrivals from our major tourist-generating countries such as U.K. (16.6%), U.S.A. (11.2%), France (4.3%), and Iran (5.8%).
– Instability in political and social circles in the country.
– Continuous civil war in Afghanistan and closure of land routes of major tourist generating countries in Europe.
– Law & order situation has been bad.
– Poor publicity, promotion and marketing of Pakistani tourist products abroad.
– Aggressive marketing campaign of competitors in the Region.
– Higher air fares cost.
– Low priority of Government to tourism in the annual development plans.
– Religious taboos on freedom of tourism.
The main reasons for high foreign exchange earnings during the year 1996 were:-
– Continuous and heavy sliding down of the values of Pakistani currency in term of US $ could not able to have bad effects on tourism earnings because there is a very high increase in domestic prices.
– Liberalization of foreign exchange controls and establishment of Foreign Exchange Money changers encouraged tourists to convert their currencies through non-banking channels, as latter carries a premium of Rs.1.5 to 3.0 over official Dollar-Rupee parity rate.
– The average spending per foreign tourist during 1996 increased from a level of US Dollar 301.5 to US Dollar 395.7 indicating a significant increase of 31.2 per cent compared to year 1995.
Long Term Trends (1987-1996):
The indices of tourist arrivals with 1980 as base year came down to 123 in 1996. The highest watermark of tourist arrivals was in 1989 when indices nosed down from a level of 142 in 1987 to 123 in 1996. The index of foreign exchange earnings (1980 base year = 100) was 95 in 1996. The earnings indices were the highest in 1987 being 112.
World Tourism recorded 594 million tourists arrivals in 1996, registering an increase of 5.3 percent over 1995, compared to it, tourists arrivals in Pakistan during 1996 registered a decrease of 2.6 percent. The share of Pakistan in world tourist arrivals in Pakistan during 1996 registered a decrease of 2.6 percent. The share of Pakistan in world tourist arrivals during the year under report remained less than one per cent declining from 0.067 per cent in 1995 to 0.062 per cent in 1996. International receipts from tourism in current US Dollar were 423 billion (excluding airfares) for the world as a whole registering a growth of 5.96 per cent over 1995. However, the share of Pakistan in world tourism receipts increased from 0.029 per cent in 1995 to 0.035 per cent in 1996.
South Asian Region Share:
The South Asian Region received 4.49 million tourists in 1996 registering a growth of 4.39 per cent over 1995. The share of Pakistan in the tourist arrivals in the Region declined from 8.8 per cent in 1995 to 8.1 per cent in 1996, showing a per decrease of 8.0 per cent over the previous year’s figures. The total receipts from international tourism in the region during 1996 were estimated at US Dollar 3997 million indicating an increase of 9.6 per cent over 1995. According the share of Pakistan in regional receipts also slightly went up from 3.1 per cent in 1995 to 3.7 per cent in 1996.
The tourist product consists of two main groups of elements:
- Basic needs, such as transportation, food, accommodation, safety etc.
- Attractions that may vary from archaeological sites, via nature, to culture.
1- BASIC NEEDS
- Travel Connections:
Without an acceptable air connection there is no tourism. The quality of air transportation depends on:
Connection: preferably on-line, if off-line there should be connecting flights at well-equipped airports without too much delay.
Airfare: acceptable rates with special fares for groups and inclusive tours.
Frequency: at least once a week, preferably during the weekend. Poor travel connections may be compensated by:
– Aiming at special interest groups that are not bothered by low quality of the connections.
– Composing a combined product e.g. a tour with another country in the area that has good air connections.
The following points are important to foreign tourists.
– services and facilities
– rates, offering good value for money.
– council for classification and handling of complaints (i.e. poor service or over bookings).
Aiming at special interest groups that do not bother about low standard accommodation might compensate shortfalls in this field. The increasing interest in medium class and local style accommodation requires new, well trained staff and management. Substantial numbers of clients on tours will make it feasible to organise study tours for hoteliers to the countries of origin in order to contact the travel trade and to become familiar with everyday life. These experiences facilitate a hotelier or an inc]\=74oming tour operator to prevent a lot of problems.
3. TOURIST INFRASTRUCTURE
Important elements in a tourist infrastructure:
– local or incoming operators.
– factual and promotional documents.
– public communication and transport.
– information service.
When tourism is to be developed, it is beneficial to ensure:
– acceptable customs regulations with friendly officers.
– adequate health service and public safety.
– acceptable knowledge of a “world language” in tourist areas.
– fair price levels for tourists.
– Existing attractions, requiring only minor improvements for use in the tourist product.
– leisure sports.
– fascinating cities.
– natural scenery/wildlife.
Attractions, purpose-made for (special groups of) tourists:
– special events
– leisure and special activities centres, entertainment parks.
Tourists are mainly looking for attractions such as culture (history, modern culture folklore, interesting cities and every day life), nature (wildlife, flora, scenery), special events etc.
Structural Characteristics of Foreign Tourism:
The analysis of tourist arrivals data shows that despite a drastic decline of 16.6 per cent in tourist arrivals from U.K. it topped the list of tourist generating countries for Pakistan generating 74.0 thousand tourists in 1996. However, its share in total tourist arrivals in Pakistan came down from 23.4 per cent in 1995 to 20.1 per cent in 1996. U.S.A. followed it from where 44.4 thousand tourists visited Pakistan. The other main tourist generating markets (excluding non-revenue tourists generating countries via; India, Afghanistan & Bangladesh) for Pakistan during 1996 in terms of number of tourist arrivals were Japan, Germany, Iran, China and Russia.
During the year under review a decrease of 11.2 per cent was recorded in tourist arrivals from U.S.A. compared to 1995 and it occupied second position among the top tourist generating countries in 1996. India has retained third position indicating an increase of 21.5 per cent over 1995. During 1996 the fourth position in arrivals was taken by Afghanistan generating 23.5 thousand tourists showing a decrease of 6.0 per cent over the previous year’s arrival level. Iran came down from 5th to 7th position, Japan jumped up from 7th to 5th position, China and Canada climbed up to 8th position from 9th and 11th position, respectively, Germany retain the same 6th position, Russia slipped down to 9th position and Netherlands climbed up to 10th position from 13th position.
Despite 2.38 per cent decrease in tourist arrivals the most important tourism market for Pakistan during 1996 was Europe generating 41.5 per cent. Slightly less than half of the tourist arrivals originated from European market. A sizeable percentage of these tourists, nevertheless were ethnic Pakistanis visiting Pakistan on foreign passports for V.F.R. purposes. It was followed by South Asian market 23.7 per cent, American market 14.7 per cent, Pacific and East Asia market 11.9 per cent, Middle Eastern region 5.5 per cent and African Countries 2.7 per cent. The year 1996 was not so good for tourism indicating the receipt of 5.2 per cent less tourist from Europe and 3.9 per cent from American markets (Table 2.2 Appendix). The long-term market arrivals trends are shown in the following table:-
As indicated above, all markets have shown increasing trend in 1996 compared to 1987 with the exception of South Asia, Middle East and Africa Regions.
Tourism all over the world is subject to Seasonality and Pakistan is no exception to it. During 1996 the highest arrivals months were December and November index being 122 and 121 respectively. The lowest arrival months were September and February with index being 71 and 85. December remained the peak arrival month closely followed by November, March, May and April. The seasonal ratio is obtained by relating the highest monthly arrival figures with the average arrivals during the year. It was 1.2 in 1996 came down from 1.3 during 1995, indicating a lesser seasonal disturbance. A better measure of Seasonality is the one that would take into account all variations between particular month’s arrival and average arrivals of the year. The smaller the co-efficient, the greater evenness occurs in monthly arrivals. During 1996, co-efficient of seasonal variations was 14.0 per cent. The analysis of Seasonality in arrivals from main generating countries shows that during 1996 tourist arrivals from U.K. and USA peaked in March and December while bottomed in June and September respectively. Again in case of Netherlands, Germany, Japan, Afghanistan, Iran, Canada, Russia and China the peak arrival months were July, January, August, April, November, December, October and May respectively. The Indian arrivals peaked in November. The Seasonality of tourist flows to Pakistan id determined by a number of factors such as the period of closure of educational institutions in the main generating countries, climatic conditions in Pakistan and seasonal pattern in the main generating countries.
Port of Entry:
During 1996, maximum tourist arrivals of 217.0 thousand were recorded at Quaid-e-Azam International Airport, Karachi followed by Lahore International Airport 49.3 thousand, Islamabad International Airport 47.6 thousand, Lahore Railway Station 25.2 thousand, Taftan Border 9.8 thousand, Wagah Border 7.1 thousand and Chaman Border 5.3 thousand.
It can be sent that over the years air tourism has grown rapidly compared to over-land arrivals, indices of the former increasing from 155 in 1987 to 186 in 1996. Nationality-wise, air tourism generated from long haul destinations of U.K., U.S.A., Germany and Japan was the highest followed by France and Canada. The rail and road tourists mostly originated from India, Afghanistan and China.
The study of motivational analysis shows that more than half of foreign tourist arrivals to Pakistan were of V.F.R. (visiting friends and relatives) (60.0 per cent) followed by business (18.3 per cent), holiday (13.4 per cent) and religion (2.5 per cent). These four motivations combined account for 94.2 per cent of the total arrivals. Very few tourists came to Pakistan for other motivations, including meetings/conference, sports, study and health.
Based on information supplied by 479 hotilers, having ten or more lettable rooms, the average length of stay of foreign tourist using hotel accommodation declined by 6.8 per cent from 1.18 nights a year earlier to 1.10 nights in 1996 as indicated in the following table:-
Age and Sex:
Tourism in Pakistan is pre-dominantly male oriented. During 1996, it was observed that out of 0.330 million non-Indian tourists, 80.2 per cent tourists were males stating differently, eight out of ten tourists were males. Among Indian tourists the ratio of males was comparatively lower being 64 per cent. The higher female ratio in Indian tourists is on account of their V.F.R. motivation for visits to Pakistan.
About 103.9 thousand or 31.5 per cent of non-Indian tourists were in the age group of 31-40 years followed by 86.1 thousand or 26.1 per cent in the age group of 16-30 years. 75. thousand or 22.7 per cent in the age group of 41-50 years and 65.2 thousand or 19.7 per cent were in the age group of 51 and above years. The age distribution of Indian tourists differs very sharply compared to arrivals from other nations, 11.9 thousand or 31.0 per cent of Indian tourist belonged to age group of 41 40 year followed by 11.0 thousand or 28.6 per cent in the age group of 31-40 years, 7.9 thousand or 20.6 per cent in the age group of 51 and above years. Tourists under 40 years were 57.6 per cent and 49.0 per cent respectively in case of Indian and non-Indian arrivals.
During 1996, 82.6 thousand or 25 per cent Non-Indian tourists were professionals followed by 12.2 per cent executives. 10.1 per cent students, 9.5 per cent businessmen, 8.1 per cent housewives and 43.2 per cent of other categories combined.
According to International Tourism Survey conducted in 1992, 37.9 per cent foreign tourists visited Karachi followed by 19.5 per cent Lahore, 16.0 per cent Islamabad/Rawalpindi and 4.3 per cent Peshawar. These four cities account for about 77.7 per cent of total visitors. The high concentration of arrivals in these places is mainly on account of the nature of foreign tourism to Pakistan that is dominated by V.F.R. and business factors. All other cities and places combined accounted for only 22.3 per cent of the total arrivals.
Domestic Tourism and its Features:
During 1996-97, 43.99 million tourists were estimated to have travelled within the country indicating an increase of 2.8 per cent. This increase follows the growth rate of national population growth of 2.8 per cent. This increase is attributable to factors such as increase in disposable income, urbanisation and industrialization. The increase in tourism growth is estimated on the basis of growth rate of population because Domestic Tourism Survey was carried out only once during 1983-84 through which its growth rate cannot be developed.
About 63.3 per cent domestic tourists travelled by road, 32.1 per cent by rail and balance 4.6 per cent by air.
– It is a male dominated activity concentrated mostly among those below 40 years.
– Most domestic tourists prefer to travel alone and family travel is more popular among road and rail tourists, while group tourism with friends and acquaintances is more popular among air travellers.
– For over half of the domestic tourists, main motivations for tourism was social calls followed by religion, business and sightseeing. These four segments combined together explained 82.2 per cent motivation for travel.
– Domestic tourists usually use three types of accommodation; relative’s house, hotels and own house which combined together for more than 88 per cent of the total accommodation used. About 52 per cent of them stayed with their relatives while the use of hotel accommodation is limited to 13.8 per cent. Those domestic tourists who stayed in guesthouses are not covered in this study.
Most Domestic tourists vis-à-vis 38.6 per cent fall in the age group of 31-40 years followed by 29.2 per cent in 16-30 years, 16.6 per cent in 41-50 years, 10.9 per cent under 15 years, and 4.7 per cent in the age group of above 50 years
Role and Contribution of Tourism in Pakistan’s economy:
Tourism today cannot be viewed as peripheral or luxury oriented activity. The ramifications of tourism related activities reach and effect many sectors of the economy. The phenomenon is of special significance for developing countries because it not only leads to favourable balance of payments but also results in faster economic growth, more equitable distribution of income, addition to GNP, generation of more employment, more effective resource mobilization and contribution to government revenues. Hence it is recommended that tourism should be treated as a major plank in the country’s overall economic development and be awarded its due status.
Status of Industry:
The importance of tourism can be realized from the fact that it has been given the status of Industry. Hotels, tour operators, tourism and recreation related project/facilities are allowed, accelerated depreciation allowance and their foreign exchange earnings are entitled to same rebate in income tax as available to exporters.
In spite of having given the status of industry to tourism, no government has ever given any incentives for tourism ventures. Ironically they do exist on papers but practically there isn’t any.
Comparison of tourism in other countries vis-à-vis Pak:
Some countries have made huge investments in the tourism industry and successfully made it one of to major foreign exchange earning sectors. Countries like Nepal, Thailand, Sri Lanka, Spain and Greece have based their economies only on tourism.
Pakistan falls behind not only by India but much smaller countries in our own region in the domain of tourism development. Thailand, Malaysia, Philippine, Singapore and even Sri Lanka are doing extremely good business in tourism and achieving better results. Countries like Bhutan, Nepal, and Maldives are ahead of Pakistan in foreign exchange earnings through tourist arrivals.
Current Position of Tourism Industry:
Unfortunately, tourism in Pakistan did not receive the desired level of attention. The public sector neither had the capacity nor the resources to develop the vast potential of tourist industry in Pakistan. The tourism sector has now been opened to the private sector that would find investment in development, construction and maintenance of hotels and tourist spots in Pakistan.
- According to the Joint Secretary, Ministry of Culture, Sports, Tourism and Youth Affairs, in 1994 only 4 international airlines operated through Johannesburg but as of June 1997 they increased to 70 and the income through incoming tourists to South Africa rose to 3.5 billion dollars.
- Tourism generated over $600 billion all over the world but Pakistan got a share of less than $120 million last year despite the fact that Pakistan has great potential to develop tourist traffic by opening its frontiers, liberalising policies and outlook and develop tourism culture in the country.
- – Ministry of Culture, Sports, Tourism Affairs held 11th Pakistan Tourism Convention 1997 from 1st to 3rd November, 1997 in connection with Golden Jubilee Year in the heart of Pakistan i.e. Lahore, the culture cradle of Pakistan. The convention’s purpose was two fold:
- To conduct an exercise in self-analysis of what we have done and achieved.
- To invite suggestions from the distinguished delegates/experts for augmenting the tourist traffic in a manner compatible with Pakistan’s rich tourism potential.
- The TDCP (Tourism Development Corporation of Punjab) with the collaboration of the Private Sector will launch new projects to develop tourism facilitates in the Province. These projects include chairlift at River Ravi, Lahore from Pardah bagh to Kamran Baradari, construction of 3 star hotel at Murree, adventure/play land at Murree Water Sports at Shahpurdam, Water Sports at Balloki head works, road-side restaurant cum-hotel at chowk Bahaderpur, district Rahimyar Khan.
- A Spanish Company intends to make an investment to the tune of $10 million in Pakistan’s tourism industry. The company would construct hotels and resorts and work to promote tourism in the country. The company’s investment in Pakistan would be scattered over next three years. The company is a subsidiary of Club La Costa that is an international resort development company. The company’s investment will create job in Pakistan as well as luring in foreign exchange.
TOURISM AND ECONOMY: Facts & Figures
The economic impact of tourism especially of its international position is discussed below:-
Average Spending Level:
The average spending per foreign tourist during 1996 went up from US Dollar 301.5 to US Dollar 395.7 showing an increase of 31.2 per cent compared to 1995. The average per day spending per tourist also improved to US Dollar 13.2 compared to US Dollar 10.1 in 1995.
Exporters & Tourism Earnings:
Export earnings of Pakistan during 1995-96 were Rs.294741 million compared to Rs.251173 million in 1994-95 indicating an increase of 17.3 per cent. Foreign exchange earnings from Tourism during the same period were Rest. 3914.3 million in 1995-96 compared to Rest. 3899.1 million in 1994-95 (Table No. 4.2 Appendix) showing an increase of 0.39 per cent. The over-all export receipts during 1995-96 were more than 4 times higher than their level in 1986-87. The export receipts grew by an annual rate of 18.6 per cent while earnings from tourism increased at an annual rate of 2.6 per cent over the period of 1986-87. The place of tourism in exchange was 11th in 1995-96 on monthly basis during 1996 only in March, April, May, September, October and December exchange receipts were higher compared to 1995 (Table 4.3 Appendix).
Tourism & Balance of Payment:
The travel balance during 1995-96 was negative to the extent of Rest. 20217.7 million compared to Rest. 8308.1 million a year earlier. The higher negative travel balance in 1995-96 was contributed to higher amount of foreign exchange consumed by Pakistani nationals on religious travel-Hajj (Table No. 4.5 Appendix). International travel receipts as percentage of earnings from exports were 1.3 per cent in 1995-96, showing a decrease of 18.8 per cent over the previous year. Their share as a percentage of combined receipts of merchandise and services items was 1.1 per cent indicating a decrease of 8.3 per cent over 1994.95 (Table 4.6 Appendix).
Tourism and G.N.P.:
During 1995-96, the G.N.P. of the country (in current prices) was Rest. 623870 million. During the same period foreign exchange earnings from tourism amounted to Rest. 3914.3 million. Tourism receipts as percentage of G.N.P. stood at 0.63 per cent. The year 1996 has witnessed a little decline in foreign tourist arrivals. This is mainly on account of adverse publicity due to law & order situation in Karachi and Hyderabad. However, the average spending rate per tourist went up in 1996 compared to 1995 indicating a significant increase of 31.2 per cent. The long-term trends over the last 10 years indicate a positive situation. The characteristics of tourism on an over-all basis indicate that foreign tourism in Pakistan is mainly V.F.R. oriented. During 1996 a major decline in tourist arrivals has been recorded from U.K. and U.S.A. compared to 1995. Domestic tourism is estimated to have increased by 2.8 per cent during 1996. The travel balance during 1995-96 was negative to the extent of Rest. 20217.7 million. It is due to higher amount of foreign exchange consumed by Pakistan Nationals on religious travel – Hajj. Tourism receipts as percentage of G.N.P. stood at 0.63 per cent.
Government Efforts to Boost Tourism:
The government has extended all incentives and facilities to foreign and local investors to set up tourism projects wherever they desire in any part of the country. However, the successive governments could not achieve the tourist receipt target of US $1,000 million per year, envisaged in the National Tourism Policy in 1990, due to non-availability of facilities to travel trade in Pakistan.
The National Tourism Policy of 1990 encompassing wide ranging measures to promote and develop tourism should be reactivated by undertaking short, medium and long term measures. Taking aggressive marketing measures to bring large number of tourists to Pakistan to acquire a reasonable share in world tourism within shortest possible time can reverse the downward trend witnessed in the past. For this purpose the Government of Pakistan has already declared the year 2001 as “Visit Pakistan Year”.
Presently, there is no thinking behind the objective that as to what is the purpose of observing “Visit Pakistan Year”. Whether the purpose is to promote domestic tourism or attract foreign tourists or it is to generate foreign exchange. It still remains an enigma that as to what are the targets set to be achieved before the year 1999 because there is no tangible strategy to work on.
Package of Incentives & Concessions to Investors in Tourism:
The Government of Pakistan has announced a package of incentives for both foreign and local investors for development of Tourism projects. Adoption of National Tourism Policy and the declaration of Tourism as an industry by the Government of Pakistan has opened new vistas for those entrepreneurs who hesitated in the past to venture in the tourism field.
- – Government permission is no longer required for establishing industries in the private sector.
– Customs Duty has been reduced on the import of machinery meant for installation of various industries.
– Equity participation ratio has been increased to 80:20 for loans meant for establishment of industrial units.
– With the exception of specified areas, prior permission of Provincial Governments will not be required for location of industries.
- The procedure of obtaining prior permission of the Government of Pakistan for setting up industries has been done away for foreigners as well as overseas Pakistanis.
- The policy of negotiating loans with foreign companies has been made easier.
- Permission of the State Bank of Pakistan is no longer necessary for repatriation of share profits and dis-investment process.
- Foreign Exchange without any limit can now be brought into the country and taken out.
- No questions will be asked about the sources of availability of the foreign exchange.
- Any citizen can now purchase Foreign Exchange Bearer Certificates and Bonds.
- The Government has given the status of industry to all the tourism projects. This means that all tourism projects would enjoy the same facilities, concessions and incentives that are given generally to other industrial projects.
- The government has waived off the work permit restrictions on the employment of foreign nationals in the category of General Managers and Technical Personnel. They can be hired without the permission of the Government.
- All foreign exchange controls have been abolished. Now the investor can bring capital, issue shares, remit dividends or interest and transfer capital out of Pakistan without any restriction. The investor can retain funds in foreign currency accounts in Pakistan and if required use them as collateral for local currency loans.
- Ceilings on payment of royalties have been dispensed with. Now the investors can enter into contracts for transfer of technology and use of patent rights without the approval of any Government agency. Foreign companies are allowed to bring in the technical personnel in areas where there is shortage of manpower in Pakistan. In addition, certain key posts are allowed to be held permanently by foreigners to safeguard the companies’ interest. Double taxation relief agreements have been concluded with many countries. Several others countries have expressed their interest to conclude similar agreements.
– Concessionary loans will be available to all tourism projects established in the following areas:-
– Muree Tehsil
– Northern Areas
– Coastal Areas of Pakistan (excluding Karachi)
– Chitral District
- 8-year tax holiday will be allowed to the projects that are established before June 1995 in the following areas:-
– Northern Areas
– North West Frontier Province (NWFP)
– Federally Administered Tribal Areas (FATA)
– Baluchistan (except Hub Chowki)
– Dera Ghazi Khan Division
– Bahawalpur Division
– Azad Jammu and Kashmir
- If hotel accommodation is established for pilgrims, the project will be entitled to Concessionary loans in the following areas:-
– Sehwan Sharif (Sindh)
These hotels should be established before June 1995 and should have the prior approval of Tourism Division.
- For accommodation projects in all National Parks and Lakes which have been designated will be given 5-years tax holiday if established before 1995.
- Tourism related projects are entitled to all those facilities that are generally given to the exporters because of their foreign exchange earning capability. Following are some of the facilities given to the exporters:-
- i) 75% of the income earned in foreign exchange by the owners of the Tourism Projects to be exempted from income tax.
- ii) Permission to charter special cargo flights.
iii) Owners of Tourism projects to be allowed to retain 5% of their foreign exchange earnings for publicity and establishment of their agency abroad.
- Certain vehicles (15-20 seaters and 4-wheer drive) imported by the registered tour operators can claim payment of duty in half yearly five equal installments.
- Equipment and machinery not manufactured in Pakistan can be imported duty free and without sales tax by the investors of tourism projects. The equipment for adventure tourism can be imported likewise.
- Centrally air-conditioning equipment and apparatus of general utility in the premises of Hotels and Restaurants are charged industrial tariff for electricity.
- For the first time, charter flights to Islamabad Lahore and Karachi have been permitted on point-to-point basis.
- Punjab Aviation (Pvt.) Limited have commenced helicopter charter operation from Lahore for any destination in Pakistan.
- Excursion trains are available on concessional rates for the foreign tourists/domestic tourists. The private tour operator can arrange special excursions by prior arrangements with the Railways.
Potential of Tourism Industry:
Pakistan is a land of contrast and scenic beauty. It is land of diverse geographic, linguistic, ethnic and cultural characteristics. There is a variety of landscape that Pakistan offers. High mountain ranges separating Pakistan from China and Afghanistan, which in the words of a great mountaineer are “the longest and richest mountains and glaciers” is a treat to see. The landscape travels through the western low mountain in the south. Outside the article zone, Pakistan offers one of the coldest spots in the world. Of the fourteen main peaks that are above 8000 meters in the world, five are located in Pakistan and the second highest peak K-2 crowns the beauty of Pakistan. Pakistan has more than 375 virgin and unnamed peaks, towering mountains, five of the 10 highest peaks in the world. It has such fascinating mountain ranges that have attracted thousands of mountaineers. We have K-2, Nanga Parbat, etc, which have several times defied a number of valiant mountaineers. Pakistan has also a number of passes, traversing through high mountains that saw numerous kings and generals, including Alexander the Great, passing through them. The legendary Khyber Pass is 56 kilometres long and connects Pakistan with Afghanistan. In short the country has immense potential to develop tourism.
Pakistan’s history can be traced back to at least 2,500 B.C when a highly advanced civilisation flourished in the Indus Valley — one of the oldest civilisations known to man that is contemporary with the early civilisations of Egypt, Mesopotamia and China. The excavation of the ancient ditties like Moenjodaro, Harappa and Kot Diji is a living proof that advanced civilisations existed even before Babylon was built. The other old civilisations that existed in Pakistan pertain to Gandhara that was very rich in art and culture.
The Buddhist ruins of stupas, monasteries and some hilly areas of Swat are of great interest to Buddhists all over the world. The area, known as ‘Gandhara Art’, is the product of the influence of Greek and Roman sculpture on the local Buddhist traditions. The Buddhism was firmly planted in the area and flourished under the rule of King Asoka and Kanishka.
The places of attraction for the tourists, who are particularly interested to know the history of Buddhist art and culture, would like to visit Buddhist sites, such as Taxila, Peshawar, Swat and places like Charsadda, Takht-i-Bai and Shahbaz Garhi, in Mardan District. As these places are exclusively of Buddhist interest, the visitors from the countries of Buddhist origin like Japan, Sri Lanka and Thailand are keenly interested to see these places. The other places of tourist interest in Pakistan are as under:
Pakistan is an ideal country for mountaineering, hiking and trekking. Three mightiest mountain ranges in the world, i.e., Himalayas, Hindukush and Karakoram are located here. Out of 14 highest peaks on earth (8,000 metres and above from sea level) 5 lie in Pakistan, i.e., K-2 (8611 metres) which is the second highest peak after Mount Everest, Nanga Parbat (8,125 metres), Broad Peak 8047 metres), Gasherum-I (8,068 metres) and Gasherum-II (8035 meters).
A number of mountaineering expeditions from all over the world particularly from Japan, Spain, Italy, U.K., Germany, South Korea and U.S.A., visit Pakistan.
- Trekking and hiking:
Kaghan, Swat, Gilgit, Hunza and Chitral valleys are renowned for trekking and hiking. A number of teams for trekking and hiking visit the northern area. Most popular trek is ‘Baltoro Concordia’ trek. This year 93 permits were issued to 488 persons for the restricted zones. In all, 697 foreigners were allowed to trek in the restricted zone of Chitral and northern area. Besides, a large number of foreign and Pakistani trekkers and hikers visited the open zone. (Their number is not known, as no permit for open zone is required).
- Karakoram Highway:
An all-weather road built by Pakistan Army Engineers and Chinese experts and which is 500 miles long, starts from Havelian and ends at the Chinese frontier and goes as high as 15,100 ft to Khunjerab pass, can be attributed as a marvel of the civil engineering work and can be called the Eighth Wonder of the world. This road was completed within 10 years and built in the toughest terrain. On one side of the road, River Indus flows with gushing water. The breath-taking panorama of beauty can match very few places.
It is an unforgettable experience to travel by this road as the passage goes along one of the largest glaciers of the world, ‘Batura’, and one can see some of the highest peaks of the mountains that are snow-capped. The superb beauty of the landscape enthrals and enchants the visitor. The Khunjerab pass which highway crosses has almost the same silk road where history’s most famous tourist ‘Macro Polo’ had travelled and from where the trade between Europe and Asia was conducted by land route.
The ancient Silk Road not only served as the thoroughfare connecting China with its Western regions but also helped to promote political, economic and cultural exchange between China and countries in the west. The Silk Road used to be an international trade route through which the Chinese silk was exported. Famous Arab historian and tourist, ‘Al Beruni’, also travelled by this Silk Road and he was fascinated by the charm of the beautiful surrounding. Karakoram highway is now opened to tourists and one can travel from Islamabad to Gilgit and Gilgit to Karimabad (Hunza) and Karimabad to Khunjerab Pass (4,709 metres) near the China border. The distance between Islamabad and Khunjerab is 900 kms and journey without any break takes 15 hours.
- Khyber Pass:
Khyber pass is the prime attraction of the area for those who are visiting Peshawar. Khyber Pass, the historic gate way through which Aryans, Persian hordes, white Huns, Scythians and Parthians and Mughals passed and the famous conquerors of the world like Alexander the Great, Chengiz Khan crossed this historic pass.
The Khyber Pass starts from Jamrud, 11 miles from Peshawar and ends at Torkham, Pakistan and Afghanistan border. A railway line built in 1920 passes through the zigzags of the Khyber Pass and a train with old steam engines still puffs through the hills in which most of the tourists like to travel and enjoy the trip.
- Northern areas of Pakistan:
Northern area of Pakistan comprises Gilgit, Hunza, Skardu, Chitral, Swat and Kaghan Valley. The area is surrounded by high mountains of Karakoram and Hindukush with snow covered majestic peaks. Few places in the world can match the spectacular scenic beauty of the valleys, lakes, gushing rivers and waterfalls.
Hunza attracts a large number of German tourists as the people of Hunza are known for their longevity (80 to 100 years is average age). This is due to plenty of fruits like apricots, apples, plums, cherries, peaches and grapes that grow in the valley and, of course, Hunza’s cold glacier water that contains iron and other minerals with traces of gold. The simple and carefree living, keep them cheerful and healthy which is the secret of long age.
- Historical monuments:
Lahore, which is the second largest city of Pakistan, is famous for culture and art. There are many historical monuments like Lahore fort with its massive walls, towering gates, marble pavilions and hall of mirrors dates back to the time of Mughal Emperor Akbar.
The Badshahi Mosque, built by Emperor Aurangzeb in 1670 is one of the largest mosques in the world made with red stone and marble, presents architectural beauty. The ‘Shalamar Gardens’ are example of Mughal love of beauty and elegance. It has three-terraced garden with pavilions, lawns, pools fountains with spreading shady trees. The other historical monuments in and around the city are Jehangir’s mausoleum and his beautiful wife Nur Jehan’s mausoleum, Wazir Khan mosque lavishly decorated with the finest mosaic tile work and painted cut plaster.
‘Minar-e-Pakistan’ 195 feet high tower in Iqbal Park which was built to let the people remember the historic Lahore resolution passed on 23rd March 1940, demanding a separate homeland for Muslims of the Subcontinent called Pakistan.
The historical monuments near Karachi are located at Thatta and Makli Hills. The glorious example of Mughal architecture is Shah Jehan mosque. It is a massive brick building with 93 domes and contains most elaborate display of blue and white tile work. At Makli, one of the largest necropolis, about a million graves of kings, queens, saints, philosophers, poets, and military commanders are spread over an area of 6 square miles. Similarly, 17 miles out of Karachi there is Chaukundi tombs where the graves of warriors and rulers have superb carving and engraving of sand stone slabs with floral motifs and designs.
- Archaeological sites:
Pakistan is rich in archaeological sites like Taxila, Moenjodaro, Harrappa, Kot Diji, Banbhore and Mansura. The archaeological site of Moenjodaro was excavated in 1922. The Indus Valley Civilisation flourished here 4,500 years ago. Moenjodaro was the most spectacular ancient city with the concept of modern town planning, especially covered drainage system with soak pits for disposal of waste and it appears that the people of Moenjodaro were very much concerned and aware of the health and hygiene problems.
Another major city of the Indus Valley civilisation was Harrappa, whose ruins lie 17 miles from Sahiwal. The site is bigger than Moenjodaro but local populations destroyed much of the remains.
At Banbhore, 40 miles from Karachi have been discovered the remains of an ancient city dating back to 1st century B.C. It is also said that it was the site of the historical ancient city ‘Daibul’, where Mohammad Bin Qasim, Arab conqueror invaded Sindh.
Mansura was the earliest capital of Muslims situated about 10 miles from Shahdadpur (Sindh).
Taxila, 22 miles north of Rawalpindi was the centre of Buddhism, the cradle of the world famous Gandhara sculpture and centre of learning and culture. One can find there, lots of interesting things of the period of Alexander the great, King Asoka and Emperor Kanishka.
- Mausoleums of Muslim Sufis and Saints:
A large number of Sufis and Muslim saints who were also scholars and poets came in the sub-continent with the advent of Islam and some of them settled in the area which is now known as Punjab and Sindh and they were the main source of introducing Islam in this country. Foremost among them is Hazrat Data Ganj Bakhsh whose mausoleum is in Lahore and Baba Farid Ganj who was buried in Pak Pattan near Multan. There are other shrines, located in Multan and Sindh, of famous saints like Shahbaz Qalandar at Sehwan. About 175 miles from Karachi. At the time of annual urs (Fair), his devotees perform ‘dhamal’ (dance) in ecstasy with the beat of large drums like whirling of large drums like whirling Dervishes of Turkey.
There is a mausoleum of Shah Abdul Latif at Bhit Shah, 35 miles from Hyderabad, who was not only a Sufi and mystic but also the greatest poet of Sindhi.
- Flora and fauna:
Pakistan has a very diverse flora and roughly has 6,000 plant species of flowering plants. This is due to varied climate, topography and soil in the country. Similarly, all habitats where species of animals could flourish such as high mountains, forests, plains, arid lands, deserts, mighty rivers, lakes and coasts are available in Pakistan for representation of all kinds of fauna. We have more than 400 species of fish, 28 species of shrimps and lobster in Karachi and Makran coast. Trout fish is available in the rivers and lakes of northern area, particularly in Kaghan and Gilgit. Blind Dolphin is available in Indus River. Reptiles, like lizards and snakes, are plenty in deserts of Sindh and in Balochistan arid zone.
Bird life is very interesting and fascinating in Pakistan to watch. We have all kinds of birds, including 600 species of avian fauna. Migrating birds from Russia and Central Asia during winter come in water reservoirs and lakes located in Sindh.
At least 190 mammals are found in Pakistan. We have plenty of wildlife in northern area, e.g. snow leopard, markhor (Ibex). Similarly, in Sindh and Cholistan desert we have deer, hogdeer and chinkara.
Problems / Hindrances in promotion of Tourism Industry:
The factors that adversely affect tourism are:
- Poorly developed infrastructure.
There is lack of highly developed communication system and transportation. Transportation plays an important role in the development of Tourism. Pakistan is lagging for behind in this sector also. The areas which are likely to become tourist attractions have no access at all by either roads, railways or otherwise. This in-adequacy results in a poor turn out as far as tourists are concerned.
- Adverse political climate.
- Generally poor law and order situation.
- Ineffective marketing campaign.
The projection of our image abroad is the weakest area in our marketing plan. The negative perception of law and order, tribal rejection of outside influences are all products of either inimical media campaigns with political motivation or the absence of information outlets in foreign countries which are the only means for dispelling and allaying the fears in the minds of potential tourists.
It was therefore decided to fix a target of observing the year 1999 as “Visit Pakistan Year” so that the bottle necks could be removed on priority basis in view of the fact that while expansion in international travel continued to achieved spectacular gains, tourism in Pakistan had never been accorded the importance this sector of service economy should have been given.
Suggestions for improving the Tourism Industry:
In tourism there are no mathematical formulae to attract tourists but proper projector of a country’s tourism potential and efficient utilization of resources could promote tourism. In order to improve the declining trend in tourist arrivals to Pakistan and to increase its foreign exchange earnings through tourism, a lot more remains to be done. Hence it is suggested that
- Tourism Ministry, the federal and provincial Tourism Development Corporation, PIA and private sector should make joint efforts to promote tourism.
- The Ministry of tourism should hold a series of conferences and should be engaged in consultation with both public and private sector agencies.
- The Government on its part should extend all possible assistance to the private sector and travel organisations that truly want to expand the tourists’ traffic.
- The role of provincial governments in the field of tourism and their relationship with federal government should be properly defined.
- The provincial governments should allow concession in respect of fares for trains, buses, rest houses etc to domestic travellers. In case where such concessions are available the amount of percentage should be increased to attract more people to undertake visits.
- The Government should give proper incentives and concessions to the private sector. It is very important because due to lack of incentives and concessions the private sector, investment envisaged in the 6th and 7th five-year plans had not materialized.
- A working group should be formed to concentrate over the planning for the next 10 years with particular reference to the period 1998-2003 and suggest the mode of financing and incentives needed.
- Very low priority was accorded to the sector in the country’s sixth and seventh five-year plans and the actual releases of funds during the plan period fell short of the plan allocation. Hence it is suggested that high priority should be given to Tourism in the ninth five-year plan.
- Tourist resorts will not attract tourists, foreign or local, if the infrastructure in and around these areas is in a dilapidated shape. It’s true that tourists main concern is to visit places worth seeing but it matters a great deal to them what sort of comforts are available there. Good hotels, smooth roads trained guides and presenters, and a minimum standard of cleanliness are a few necessary pre-requisites for luring tourists.
The existing infrastructure should be reviewed and the gaps between requirements and availability should be identified. Tourism needs to have a structural infrastructure to support its growth and expansion, for it is one such Industry that cannot flourish in isolation.
The proper development of tourism infrastructure such as motels, resorts, recreational areas, management of motels and hotels, production of tourist literature and publicity material, running and managing tourist information centres, operation of transport, tour operation and ground handling for tour groups etc.
Proper hospital and health facilities are not available. Similarly good bookshops are not there to help the tourists to calmly enjoy his leisure. Standard hotels are not available at tourist resorts to enable the travellers to properly lodge themselves and feel at home in Pakistan. The voyagers from Pakistan and other countries have to spend their time in Gilgit, Skardu and other northern regions in saw dust hotels and huts of Pakistan Tourism Development Corporation.
- The promotion of tourism is not possible without improving the standards of hospitality for which several plans and packages have been prepared to import hospitality skills to the allied industries like airlines, hostels etc. In short no effort should be spared to make the tourists feel at home during their stay in the country so that they take happy memories of their visit to Pakistan.
- Inexpensive and clean accommodation should be provided to the tourists.
- There should be safety of the person and property of both domestic and foreign tourists.
7a. Effective and vigorous international publicity is needed to create an awareness about Pakistan as a wonderful tourist destination having rich cultural backgrounds, scenic beauty, paradise for trekkers and mountaineers offering greatest number of peaks in the world many of them still virgin. The Private Sector Tourism and Travel Organisations must undertake this task with greater enthusiasm.
- Foreign tourists need to be told about our rich cultural heritage, us being the descendants of great civilization, the proud inheritors of Muslim customs. It is also essential that we allay any fears foreign tourists may have of our being a Muslim fundamentalist state and thus an unsafe place to visit.
- A programme for effective projection of Pakistan through the modern means of publicity and sales promotion likes publications, slides, seminar and international exchanges for tourism promotion should be formulated.
- Publicity material should be produced in under and made available at Tourist Information Centres, which should be opened in all major tours of Pakistan and at information windows at all major airports, railway stations, bus stands, universities and colleges.
- Conventions should be held twice a year so that feasible and practical suggestions are available.
- Due to lack of investment in advertising and marketing. Pakistan’s tourists’ products and potential remained unknown to the tourist generating countries. Hence a substantial amount of investment should be made in advertising and marketing.
- We should identify areas for priority attention in tourism industry both in the long and short run.
- We should exploit the existing historical sites for attracting the world tourists and contributing significantly to the national exchequer. Northern areas and Mohenjodaro deserve special attention. A number of other places should be explored like Gowader where we can have good beaches also.
- Like other untapped sources for the promotion of tourism, the deserts which have special fascinations for foreign tourists can be used to multiply the numbers of tourists per annum-Fascination of deserts among the tourist of the world is increasing day by day and the trend of Safari tours through the forests, deserts and naturally conserved areas has set in but we can only have the advantage of this trend if we succeed in developing our deserts, providing boarding and lodging facilities, transportation, tenting places exhibition and promotion of culture of deserts etc.
- Helicopter service for tourist sites like fairy meadows lake Saiful Muluk and Green Lalazar etc should be considered.
- Today’s tourists are vastly different from those of the earlier times. Their vast majority belong to the middle class who have cultivated a taste for the new and foreign but can’t afford the luxury of extravagant spending. They budget their tour economically. It is therefore imperative that our tourism industry should promote package tours in the country for foreign and domestic tourists well within the reach of the both. This would go a long way in boosting tourism industry in Pakistan.
- Guided tours should be arranged by the Tourism Department to enable the honoured visitors to have on-the-spot information on the monuments and places they wish to visit.
- Tourism Promotion Centres should be set up in North America, Europe and Japan to carry out a vigorous campaign for this purpose and also to familiarise them with Pakistan through print and electronic media, seminars etc. Regulatory promotional set up offering package tours, seasonal trips for special entertainments and educational tourism should be promoted through authorised local agents.
- Our embassies abroad should have travel counsellors to provide a travel package to international citizens. This will help boost our international image.
- The government should revamp the tourist centres abroad as the few existing centres have not been too successful in bringing the foreign tourists to enjoy the scenic beauty of the country.
- The airfares should be drastically cut. All travel resorts should have quality airports so that a visitor could travel and see the maximum of places, in the minimum of time.
- The practice of issuance of entry passes to tour operators was discontinued in 1996 due to unknown reasons, creating problems for the tour operators while receiving tourists at the airports. On the other hand, the Asean and the Saarc Countries have no such restrictions to discourage tourists. This factor not only created an unnecessary hurdle for the tour operators in receiving the tourists but also discouraged the tourists coming to Pakistan as they were maltreated by several agencies working at the airports. Hence the practice of issuance of entry passes to tour operators should be started.
- In the Northern Areas, where four-wheel drive powerful vehicles are required, old model vehicles are used. Foreign tourists prefer modern, reliable and powerful vehicles that are not available in the Northern Areas. The government should launch a scheme for Northern Areas for financing of four-wheel drive vehicles.
- In Pakistan the service structure that is in reality the lack hone of the industry has suffered since the inception of the country. It was never awarded its right status and a dearth of qualified staff, proper construction of hotels and motels etc restrained its growth and flourishment.
Special emphasis should be given on the human resource development, which should specially include training and awareness among the staff related to tourism. There is still need to train and develop staff and executives at all levels in the human resource development in the hospitalities. The training facility for the hospitality disciplines is a highly significant factor to promote the tourism industry.
- Proper and accurate tourist related statistics should be available. Suggestions should be made for improvement in their coverage and applicability.
The importance of tourism industry cannot be denied. Tourism would become one of the three serviced industries of the 21st century including telecommunication and information technology. The tourism industry ranks third as a foreign exchange earner after oil and armament industries. In this it is important that the PIA, the TDCP and the Ministry of Tourism should jointly evolve a strategy to attract the maximum number of tourists both from home and abroad. It is the need of the hour that entrepreneurs, experts and enthusiastic businessmen should come forward and make daring development in this sector. In short it can be said that tourism industry in Pakistan has very big scope of development. A substantial improvement in the promotion of tourism in Pakistan, which has tremendous potential due to its spectacular attraction, can easily be achieved. The day is not far when we will have both “Quality Staff and Quality Tourists” and we will be hosting one million tourists in Pakistan.