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Should Burm areconsider its tourism

Subject: Should Burm areconsider its tourism policy? By U Khin Maung Kyi

Should Burma reconsider its tourism policy?

This article, which W(15 translated lrom ~urolese, was origirullly
subnlitted to rhe Economic Magazine, a ~iurrnese periodical to wlricll the
autll(7r had previously beerl a contributor. Though no direct or indirect
criticisr1l was leveled against tlle SLORC or the military as such, the
article was banned by the Burmese authorities from publication.

Since the 1970's, many underdeveloped coulltries have regarded tourism as a
substantial and rapid foreign exchange earner. Frequently, however, it has
a tallell far short of expectations. I his article examines whether tourism
tmly can be an engine for economic growth and what bellefits it can bring
to a country.  It also suggests a policy for Burma that will minimize
tourism's negative effects.

The SLORC has announced a "Visit Myanmar Year - 1996" with the aim of
attracting more visitors to Burma. In the last year, tourist arrivals have
increased, but the figure in 1994 was only 47,230, and current estimates
suggest it may be under 70,000 this year. Furthermore, tourist arrivals are

If the bulk of the targeted 500,000 visitors arrive in the
November-February cool season, there will be a shortage of accommodations
and other tyyes of infrastructure. A ten-fold increase in visitors is a
challenge in itselt; but one which this article will not address. Instead,
it will concentrate on the objectives, benefits and guidelines for a
tourism policy.

Earning foreign exchange is essential in the initial stages of economic
growth. Most underdeveloped countries thus hope that tourism will generate
substantial foreign exchange earnings. They mistakenly believe that
construction of hotels and tourism infrastructure, rather than development
of industry, will lead to an influx of dollars, that foreign companies will
transfer technology in the form of skills associated with tourism, that
local handicraft manufacturers will benefit by selling their goods to
tourists, and that tourism in general will generate economic growth.

These are the perceived benefits of tourism Burma, too, hopes to reap. Many
developing countries have trod thc same path, including those in the
Caribbean, Latin America and countries in Asia such as Hong Kong,
Singapore, Thailand and the Philippines. Hong Kong and Singapore have
benefited by producing consumer goods for tourists, selling themselves as
transit points, serving as hubs for tour and airline companies and as major
centers for shopping.

But others have not been so successful. The first fruits of tourism may
have appeared to increase incomes, however, the negative impact of tourism
predominated in the long run. Burma could learn from the experience of
these countries.


Many countries now realize that tourism is not the dollar milk-cow they
hoped it would be. Tourism is a capital-intensive industry. Hotels need
expensive fittings, equipment and air-conditioners. Modern roads and
comfortable salon cars cost money. Expatriate managers expect dollar
salaries. Even food and toilet tissue must be imported.

At this point, some might argue "Oh, but the foreign companies will pay."
They will also then offset their capital expenses against profits. When
calculating the net foreign currency income, money spent to promote and
support tourism must be taken into account. The World Tourism Organization
(WTO) estimates that for every dollar spent by a visitor, forty to
seventy-five cents leaves the country.

n general, developed countries, such as those in Western Europe, Japan, and
the United States, are the source of both travellers and travel agencies.
They also provide the aircraft or operate airlines that bring the visitors,
and the consumer goods that tourists make use of during their stay.
Consequently, the countries that benefit most in foreign currency terms
from tourism are the ones that send the tourists.
Public money needs to be spent to cater to tourists; namely, on building
and upgrading physical and social infrastructure, accommodations, parks and
observation towers. Spending that requires foreign currency and does not
benefit the country as a whole must be regarded as part of the costs of
tourism. On the other hand, the benefit side of the balance sheet is
augmented by purchases of local handicrafts and souvenirs. But the low cost
of these generally shoddy products means that the amount of money that
remains in the country is negligible in comparison to what goes out.

The WTO has studied the costs and benefits of tourism in several countries
and found that in almost half of them, the foreign currency balance sheet
showed zero or negative balance. Successful tourism, like other industries,
depends on ensuring value-added within the country. In developed countries
such as Singapore, value-added is high because goods for tourists, such as
electrical items, food and drink, are manufactured domestically, whether
directly or ullder license. The less the domestic production, the greater
the need to import items to meet the needs of tourists. This is what
prevents countries like Burma and Sri Lanka from enjoyillg the benefits of


The second common misconception is that tourism creates local jobs. I
mentioned earlier that tourism is a capital-intensive industry. A world
class hotel at the cost of approximately 12.7 million USI~, will create 200
local jobs, mostly in unskilled occupations such as housekeepers, waiters
and bell-boys. But if this capital were invested in an electronics plant or
a garment factory, the capitalemployment ratio would be much more
favorable. A survey of tourism in Sri Lanka found that the creation of a
single local job in tourism required an investment of $5,050. Comparable
figures for heavy industry and labor-intensive industries were $3,25() and
$160 respectively.
Furthermore, unlike manufacturing, most jobs created by tourism are
unskilled and seasonal. Rather than concentrating on tourism, countries
should encourage the establishment of export-oriented manufacturing
industries; thus providing year-round employment for a greater number of

Another myth is that foreign investment in L~ tourism brings with it
technology transfer. New hotels do require skilled labor in the form of
managers, qualified cooks and professional tour organizers. But unless
investment agreements contain clauses stipulating the provision of training
for local staff and undertakings to promote local managers within a certain
timeframe, few skills will be transferred. Tourism is fundamentally a
service industry performed by unskilled and seasonal labor. And the skills
it involves are not particularly transferable to other activities.


There is also the mistaken belief that tourism will boost sales and support
the local handicraft industry. Tourists may indeed buy local goods. But
prices reflect quality. To cater to the demand for cheap souvenirs, host
countries may even sell mass-produced imitations of local art, probably
imported from outside.

If local handicraft industries are left to fend for themselves and struggle
on with outdated equipment and lack of technical know-how, they will not be
in place to take advantage of tourism. For example, Burmese lacquerware is
of poor quality, both in terms of durability and design, in comparison to
the lapanese or Chinese products. Hand-woven Burmese textiles could be
exported, but only if their quality and design are improved. Training is
needed in both technology and marketing. The producers should be sent
abroad to familiarize themselves with the market and should have access to
loans to moderllize their equipment.


Some hope that tourism will shore up the rest of the country's economy.
Industrial development generally involves the establishment of related
upstream and downstream industries. For example, the mining of iron ore,
foundries and casting are upstream industries that support the downstream
manufacturing of steel bars and cars. The same is true of the electronics
industry. Upstream processes include production of microchips and monitors;
downstream are the programmers and software developers. The processes are
interrelated and the development of each depends upon the other.

Tourism, on the other hand, has very few industries which depend on, or are
related to it. The tour operators, who are generally found in the countries
where the tourists originate, represent upstream activity. And the
downstream function of tourism ends with the provision of a service to the
visitor. So there are few related businesses.
To conclude, while it may generate foreign exchange and create jobs,
tourism is a stand-alone activity, unlikely to generate spin-off
development of other industries.


A genuine analysis of the benefits of tourism requires study of all the
costs, financial, social, cultural and environmental. When these are taken
into account, the benefits of tourism may well be minimal or even


Tourism has no beneficial impact on social val-
ues. Pleasure or sex tourism is a common occurrence in Southeast Asia and
male tourists flock to T hailand and the Philippines, drawn by the promise
of sex with Asian girls. Tourism has bolstered the illegal sex industry in
these and many other destinations.

The complacent response that: "The sex industry is a by-product of economic
underdevelopment. It will disappear once the economy improves," ignores the
unforgiving devastation wreaked by AIDS through the vector of the illegal
sex industry. Once HIV infection is established in that segment of the
population, its eradication and cure may never be achieved. AIDS kills
thousands. The costs of lost economic contribution and medical treatment
will stunt the economic growth of the countries most affected. Entire
African countries already have been crippled by the disease.

There are those who believe that the sex industry is an inevitable,
necessary-and thus acceptable-by-product of tourism. However, the social
disruption caused by a growing illegal sex trade is very damaging for a
country, as well as for the young girls who, through poverty or naivete,
find themselves its victims.
The illegal sex industry has spread to tourist destinations beyond Thailand
and the Philippines. A recent survey of sex tourism by the British magazine
Charity found that sex tourism now takes place in Sri Lanka and the poor
countries of Latin America. As a result, the fear of AIDS has boosted child
prostitution, as tourists look to younger and younger children for sex. It
is estimated that 200,000 Nepalese girls have been sold into prostitution
in India and girls as young as six years old have been forced into the sex
tourism industry in Sri Lanka where there are an estimated 15,000 child
prostitutes. Meanwhile, nearly 200,000 teenagers participate in the Thai
sex industry. According to Charity, sex tourists no longer come from a
single Asian country, but from America and across Europe. Sex tourism can
only be to the detriment of Burma and the Burmese people.

Of the tourist destinations in Southeast Asia, only Malaysia proscribes its
sex industry. Malaysia does not regard tourism as a development priority.
It bases its economic development on industry and agriculture. Tourism is
seen as an industry that merely supports other sectors.


It was once hoped that tourism would stimulate mutual understanding between
nations and cultures. Instead, tourists arrive and undertake a short
program of sight-seeing and recreation in which inter-cultural
understanding takes a back seat. Rather, on experiencing the poverty of the
host country, the tourist may well return home with an attitude of
Foreigners on brief visits may actually contribute to the decay of the
country's social fabric. Local young people, ignorant of the world outside,
may be enticed to copy the visitors' behavior. Where the visitors behave
appropriately, this is not a problem. But the customs and behaviour of the
visitors may be very different from a country's own. Or worse, tourists may
behave in ways in which they would hesitate to behave at home, perhaps
because they perceive that they are among inferiors. For example, I have
seen European women walking naked on the beach at Phuket. Local youth may
be tempted to mimic the behavior of such tourists.
Tourism can destroy national culture in other ways. Burma should certainly
encourage tourists to visit historical attractions such as Pagan. But we
need to ensure that historical sites are maintained. Floods of visitors
will quickly damage the Thatbinnyu and Ananda Pagodas. Egypt, for example,
has found that the humid breath of thousands of tourists is causing the
tombs of the Pharaohs to discolor and crack. Our pagodas could suffer the
same fate, particularly as they were not built to be as solid as the
pyramids. A recent conference in Thailand focused on how to prevent and
remedy such occurrences. Burma should quickly review ways to handle these
problems, to look at the capacity of the buildings and discuss how damage
can be repaired.

People in Burma already know that tourists like to buy antiques. Many
ancient pagodas and monasteries have been destroyed in the pursuit of such
treasures and antiques are being carted over to Thailand in ~rowin~ numbers
to meet the demands of tourists.

We can expect this to continue if tourism takes off in Burma. Indonesia,
India and Thailand have lost many treasures in this way. Burma must
consider how to prevent further losses.
Some people believe that selling local works of art to tourists helps
promote our artistic culture. I disagree. Such is the gap between the views
of East and West that foreigners, particularly if they lack knowledge of
our culture, are rarely able to appreciate the value of local art. They may
critique it by the norms of their own cultures, with the result that the
local artist may even succumb to producing the sort of garbage that
tourists want to buy. Thus our national culture is damaged. In Bali, the
dollarcrazed locals have gone so far as to sell out their religion to
tourism. Despite their beliefs, they now hold religious ceremonies out of
season when this earns them money-a lesson in the bastardisation of culture
by international tourism.


Gambling and prostitution are controlled in many countries. Where these are
officially sanctioned in order to earn foreign exchange, the authorities
tend to get sucked into corruption and lawlessness. Bribery and drugs
attract organised crime. Criminal tentacles may extend to encircle
political life until the whole of government and the bureaucracy is
corrupted. Such a situation can be seen with the drug cartels in Colombia,
and in the booming sex industry in the Philippines under Marcos.


I may appear unduly pessimistic, and seem to imply that tourism can only
damage and not benefit the country. But it should be clear that pursuing
tourism solely as a foreign exchange earner is a non-starter.
A free market economy was introduced in Burma five years ago. Since then,
only a small proportion of the people have benefited. But the majority
should also benefit. Burma should encourage labor-intensive and small
industries. Indonesia has raised the living standard of its people over the
past decade, not through oil, but through light industry and the
manufacture of garments, electronics and shoes.

Burma, too, should establish labor-intensive industries that will both
assist the majority and add value within the country. To do this, it needs
a management environment and basic infrastructure that will persuade
foreign companies to invest. This is the only option. Beyond that, Burma
needs to broaden her skills base.

I am not arguing for a halt to the incipient tourism industry in Burma,
merely that we should inject a sense of proportion into the debate, and
consider what controls may be necessary.
We should begin with a cost-benefit analysis, and accept that tourism will
never be a dollar milk-cow. Secondly, we should examine the social impact
of every tourism project, taking into account both private and public costs
and benefits. If public costs exceed private benefits, we need to calculate
how to make tourism pay the balance. Our motto should be: "Make tourism
pay." The government has already rightly taken a step in this direction by
demanding that every tourist change $300 on entry.' In addition, fees
should be levied on tourists for the use, upgrading and maintenance of
public utilities, cultural and environmental assets (such as forest
reserves), and social and physical infrastructure, particularly where the
state incurs costs in making them available to tourists.
Thirdly, a policy should be developed that clearly identifies the types of
tourism and tourists to be encouraged. There are five basic categories:
     1. Business tourists
     2. Pleasure, or sex tourists
     3. Recreational tourists
     4. Ecotourists
     5. Culture tourists
Business tourism will depend on economic development in Burma. It should be
encouraged and efforts made to provide business visitors with services such
as secretarial support and office systems. On the other hand, a policy
decision should be taken to discourage pleasure/sex tourism and appropriate
laws should be enacted. The problem with recreational tourism is that the
distinction between it and pleasure tourism can be very slim. Furthermore,
it requires substantial injections of capital to create the necessary
beaches, luxury hotels and parks. Apart from Sandoway (Ngapali) and
Maungmagan (Tenasserim Division), Burma lacks the wide shallow beaches of
Bali and Phuket, which can quickly be developed. And unless such facilities
are accessible to locals as well, their development will not be
economically viable.

On the other hand, eco-tourism and cultural tourism should be encouraged,
as they stand strong chances for success. Control needs to be exerted to
ensure that resources, whether tigers or pagodas, are not damaged, and
costs are fully taken into account in assessing overall cost-benefit.

Such analyses should always take into account the benefits which accrue to
the majority and to the country as a whole. I have already mentioned that
the countries that demonstrate greatest benefit and enjoy value-added are
those that send visitors. This suggests that Burma should plan how best to
maximize its share of foreign exchange. I suggest that one way to do this
is to establish tour operators overseas and deal directly with those
wanting to visit Burma as ecotourists or culture tourists.
Finally, after discussions with tourism practitioners within and outside
the country, Burma needs to adopt a national policy for tourism which takes
the above issues into account and incorporates a set of objectives and
'do's and don'ts.'


The impact of international tourism can be found from the Caribbean to the
Pacific. Tourism has been promoted in many, many countries with great
fanfare, but without thoughtful preparation. It can turn sour-skyscraper
hotels sitting next to squatter camps. We should not recreate the same
mistakes in Burma.
I hope this article will help Burma pursue tourism for maximum benefit and
minimum cost, and ensure that she does not mistake a mirage for an oasls.

Khin Maung Kyi, educated in Business Administration at Harvard and Cornell
Universities, is a business consultant residing in Singapore. He
wasformerly a professor at Rangoon Institute of Economics, the University
Pertanian, Malaysia, and the National University of Singapore.

TRANSLATION UY: Sein Kyaw Hlaing.


1. All foreigll visitors are required to transfer US$30 or the equivalent
into Foreign Exchange Certificates.  These FECs can be used to pay for
transport and accommodations or exchanged on the open market for kyats at a
rate of approxi
mately $1= 6 kyats). Private citi~ens can deposit FECs into dollar bank
acounts hl Burma. The goverllment changes 1()% of the deposit hlto kyats at
the official rate and therefore effectively bellefits at the rate of at
least $300 per visitor.

1. Wood, Robert F.., "Tourism and Under-development in Southeast Asia",
Journal of Contenlrorary Asia, vol.9 no.3, 1979. P.281

2. ibid, P279

3. Melldis, E.l).L., 71~e Ecor701rtie, Svciul and Cultllr(ll Impa~t oJ
Ivl~rism fi1 Sri Lanka, CWF, Columbo, 1981.

BURMA DEBATE    11      NOV/DEC 1995