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122 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA in hotel services it has offered almost the same commitments as requested by Sri Lanka. Sri Lanka has special interest in restaurant and catering services as there are some small Sri Lankan motels in India (Chennai) which mainly cater to Sri Lankan tourists, pilgrims, patients, businesspersons, etc. It has been suggested that there is significant scope for Sri Lankans to invest in motels in India in renowned hospitals in the Southern region and in Buddhist circuits such as Bodhgaya. Tourism is an important services industry in India. In recent years India has taken a number of initiatives to attract foreign tourists. Global and private agencies have been entrusted with the task of selling India to international visitors. The Ministry of Tourism has also made efforts notable among them being the ‘Incredible India’ spirituality campaign that won the PATA Gold Award. It has also been suggested that there has been a marked improvement in the Government of India’s approach to tourism (WTTC 2003–04). In the South Asian region unlike Sri Lanka, India does not provide visa-on-arrival. However, outbound travel from Sri Lanka to India has been facilitated since India has offered visa-free travel to groups travelling on pilgrimage (ESCAP 2005). During 2001–03 Sri Lanka was the third largest country in terms of sending tourists to India. Summary of Restrictions in the Indian Tourism Sector • No commitments in restaurant and catering services • In all three committed subsectors under Mode 3 FDI only though incorporation and in the case of foreign investors having prior collaboration in these two subsectors, FIPB approval is required • No sectoral Mode 4 commitments in hotel and lodging and travel agencies and tour oprerators services • No commitments under Mode 1 in tourist guides services • Unlike Sri Lanka, India does not offer visa-onarrival to tourists from SAARC counties though it offers visa-free travel to groups traveling on pilgrimage from Sri Lanka. Pakistan During the Uruguay Round Pakistan undertook commitments in two of the four subsectors of the tourism and travel related services sector – hotels and restaurants (including catering) (CPC 614–643) and travel agencies and tour operator services (CPC 7471). In these two sub-sectors Pakistan has proposed some improvements in its initial offer (for details see table B in chapter 6). While India’s commitments – as proposed in its revised offer – are wider covering three sub-sectors of the tourism sector, Pakistan’s commitments in the sub-sector – hotels and restaurants (including catering) cover more services than that of India because India has left restaurants (including catering) services. Pakistan’s sectoral commitments in tourism services are relatively liberal, as it has not put any limitations in Modes 1, 2, and 3 in the Market Access as well as National Treatment columns in both the subsectors that have been committed. However, Mode 4 in all cases is unbound and refers to the horizontal section where this mode is partially open for movement of natural persons. Though tourism companies will directly benefit from the easy entry provisions for the categories of employees like ICTs (managers, executives, specialists), they will also benefit from the liberal entry conditions given for business visitors (business persons and service sales persons). Further, as the entry of professionals and independent professionals is allowed they will facilitate supply of tourism services though entry of independent professionals seems to be limited to imparting training. However, the entry of persons having other skills seems to be the most important provision under Mode 4 because it specifically mentions about the delivery of tourism services albeit limited to imparting training. From the analysis of the Pakistani commitments in tourism services it is clear that though Modes 1, 2, and 3 have been made fully liberal Mode 4 remains relatively restrictive. This is important because all other countries from the South Asian region would be looking at Pakistan as a major market. In this regard, Pakistan should take more liberal commitments to allow various categories of persons working in the tourism industry. In addition, Pakistan should either remove (the condition of labour market test as given in its commitments for persons having other skills or it should make the criteria of the test fairly transparent. Pakistan and other South Asian countries both would gain from a liberal Mode 4 regime in Pakistan. In addition, Pakistan ought to include travel agencies and tour operators services (CPC 7471) in its commitments. This sub-sector seems to be quite important for other SAARC countries which are potential providers of these services. This will also help Pakistan in mobilising adequate resources to provide standard services in this sub-sector. The tourism industry has been relatively small compared with other industries, but its role in the
T OURISM AND TRAVEL RELATED SERVICES 123 economy is noteworthy (ESCAP 2005:2). Tourism declined for three years as Pakistan faced negative travel advisories in some source countries after 11 September 2001. By 2004, the number of arrivals had recovered and there were 648,000 visitors, an increase of 29.4% over 2003. The number of tourist arrivals further increased in 2005 and 2006 to 798,300 and 898,400, respectively (State Bank of Pakistan 2007A). Foreign exchange earnings were valued at $185.6 million in 2004, an annual increase of 36.9% which also saw an upward trend with Pakistan receiving $260 million in 2006. Tourism receipts accounted for about 0.2% of gross national product (GNP) in 2003–04 and it has remained so even in 2006. About 500,000 people were directly employed in tourism and about 1.5 million indirectly employed. The government of Pakistan has invested in tourism infrastructure in remote areas, which has attracted additional private sector investment. Incentives and concessions have been available to local and foreign investors for tourism infrastructure projects (ESCAP 2005:10). The Ministry of Tourism can issue a certificate for projects in the hotel sector, since tourism has been categorised under the national investment policy. The priority in Pakistan has been to prepare more people to be trainers in order to produce trained staff to meet market demands (ESCAP 2005:2). There are four tourism training institutes in Pakistan, besides the hotels offering inhouse training. However, tourism training institutes have failed to achieve desired results because of lack of funds and trained staff (Daily Times, 4 February 2005). Thus, it has been suggested that Pakistan has tourism potential but has not been able to get its due share in world tourism market because of the lack of infrastructure and skilled professionals in its tourism industry (Ibid). Pakistan clearly has strong import interest in tourism services and it should welcome foreign companies in order to improve the level of its tourism products. A regional agreement will immensely help provide the necessary capital and skilled professionals. It can surely gain from the experience of India, Maldives and Sri Lanka. For Pakistan while India has been one of the top five tourist generating countries, South Asia has been one of the top three foreign tourist generating markets along with Europe and America (State Bank of Pakistan 2007). Further integration with the region will help generate huge tourism business in Pakistan. Summary of Restrictions in the Pakistan Tourism Sector • No commitments in tourist guides services • Foreign equity ceiling of 60% in the horizontal section • No sectoral Mode 4 commitments • No sectoral commitments for entry of professionals as the horizontal commitment is subject to sector specific commitment • Entry of independent professionals limited to imparting training • Entry of persons having other skills is limited to imparting training and subject to labour market test • Unlike Sri Lanka, Pakistan does not seem to offer visa-on-arrival to tourists from SAARC countries Bangladesh Like India and Pakistan, Bangladesh also undertook commitments in tourism services in the Uruguay Round. However, it has not proposed to improve its commitments during the ongoing services negotiations. Bangladesh has taken commitments in only one of the four sub-sectors of tourism services – five star hotels and lodging services (CPC 641) (for details see table D in Chapter 6). Even in the committed sub-sector the coverage is not full as it excludes hotels other than five star and restaurants (including catering). It has rightly been suggested that Bangladesh’s commitments are very narrow in coverage (Chanda 2005). Further, Modes 1 and 2 are unbound in both Market Access and National Treatment columns. Under Mode 3 in the Market Access column commercial presence requires that foreign service providers incorporate or establish the business locally in accordance with the relevant provisions of Bangladeshi laws, rules and regulations. There is no fixed ratio of equity between local and foreign investors and foreign equity to the extent of 100% is allowed. Under Mode 4 the commitment suggests that the entry and residence of foreign natural persons are subject to Bangladesh’s immigration and labour laws, regulations, guidelines and procedures. There is no restriction in issuing work permits to foreign nationals in Bangladesh. However, the employment of foreign natural persons for the implementation of the foreign investment shall be agreed upon by the government and such personnel shall be employed in higher management and specialised jobs only. Thus the provisions on Mode 4 indicate that it is largely the ICT category of persons that have been covered implying that the Mode 4 commitment is of little value to other South Asian countries. Modes 3 and 4 in the National Treatment column are without any limitations.
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QUANTIFICATION OF BENEFITS FROM ECO
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QUANTIFICATION OF BENEFITS FROM ECO
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Preface Our consultations with seni
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viii CONTENTS 7. Revenue and Welfar
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Executive Summary OBJECTIVE This st
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EXECUTIVE SUMMARY xiii Table 1 EAMA
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EXECUTIVE SUMMARY xv India A full S
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EXECUTIVE SUMMARY xvii indicates th
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EXECUTIVE SUMMARY xix ments on basi
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Part I BENEFITS FROM TRADE, INVESTM
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4 QUANTIFICATION OF BENEFITS FROM E
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10 QUANTIFICATION OF BENEFITS FROM
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2 Literature Review and Rationale f
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4 Effective Additional Market Acces
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6 Impact of SAFTA on Member Countri
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7 Revenue and Welfare Implications
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8 Impact of SAFTA on Inward and Out
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9 Quantification of Benefits from T
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APPENDICES
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Appendix 8 Intra SAARC FDI Collabor
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Appendix 11 Table A11.1 On an Emplo
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Appendix 12 Original Commitments/In
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Appendix 14 Table A14.1 Telecommuni
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Appendix 15 REFERENCE PAPER Scope T
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Bibliography Abelson, P. (1996),
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BIBLIOGRAPHY 241 Cuba (2002), Negot
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BIBLIOGRAPHY 243 (2004), Impacts of
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BIBLIOGRAPHY 245 Silva, Patricia an
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BIBLIOGRAPHY 247 (1998), Tourism Se
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