Report
Report
Report
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
128 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA<br />
natural assets such as Mount Everest – the top of the<br />
world – and seven other peaks of 8,000 meters and<br />
higher. There is also a rich cultural heritage and a great<br />
diversity of ethnic groups with distinctive traditions:<br />
Lumbini is the birthplace of the Buddha, while<br />
Bhaktapur is a perfectly preserved medieval town full<br />
of Hindu temples. Thus far the focus of investors has<br />
been mainly on the Kathmandu valley, with a few<br />
exceptions. Most of the potential for development lies<br />
outside the valley. Investors will also want to consider<br />
the potential for more specialised tourism, for example<br />
health tourism, adventure tourism, and convention and<br />
sports tourism. Nepal’s neutral status in the region<br />
might offer a real advantage here.<br />
The study further suggests that training schools for<br />
the hospitality industry, amusement parks, golf courses,<br />
cable-car complexes and resorts in non-traditional<br />
destinations such as the mid-western, far-western and<br />
eastern development regions are among the opportunities<br />
for foreign investment. The emergence of the<br />
People’s Republic of China as a source of tourists has opened<br />
up opportunities for specialty restaurants as well. Similarly,<br />
an opportunity exists for setting up the international<br />
airport planned for outside the Kathmandu<br />
valley. The possible site is a place near Lumbini.<br />
In view of the importance of the tourism sector in<br />
Nepal it could be suggested that it should expand the<br />
coverage of its commitments by including tourist guides<br />
services. The opening up of this sub-sector would enable<br />
Nepal accessing standard companies having better<br />
guides and conversant in various foreign languages.<br />
This will augur well for the growth of the tourism sector<br />
in Nepal. In addition, Nepal should rethink over its<br />
commitment to have foreign equity ceiling. In fact<br />
removal of this ceiling is likely to result in the increased<br />
inflows of FDI as foreign companies do not have the<br />
necessity to look for local partners. Finally, it should<br />
make its Mode 4 regime a bit more liberal which is<br />
currently open for limited categories of persons largely<br />
involved in the supply of services via Mode 3.<br />
Summary of Restrictions in the<br />
Tourism Sector of Nepal<br />
• In hotel and restaurant services commitment limited<br />
to star hotels and graded restaurants<br />
• Under Mode 3 maximum foreign equity ceiling of<br />
80% for hotel, lodging and graded restaurant<br />
services<br />
• Under Mode 3 maximum foreign equity ceiling of<br />
51% for travel agencies and tour operators services<br />
• No sectoral Mode 4 commitments in both the<br />
committed sub-sectors<br />
• Mode 4 horizontal commitments almost limited to<br />
ICTs<br />
• As per the horizontal commitments under Mode 1<br />
no national treatment with respect to foreign<br />
exchange provided to foreigners to pay for any<br />
cross-border services<br />
• No commitments in tourist guides services.<br />
The Maldives<br />
The Maldives had neither undertaken any commitments<br />
in the Uruguay Round nor has it offered any commitments<br />
during the ongoing services negotiations in the<br />
tourism and travel related services sector. This is<br />
surprising as it is a country whose economy, to a large<br />
extent, depends on tourism. Though it suffers from<br />
capacity constraints with regard to negotiating in the<br />
WTO and identifying sectors/sub sectors and drafting<br />
the schedule of commitments in services as it does not<br />
have a representative office in Geneva to interact with<br />
the WTO on a regular basis, this is also true that the<br />
Maldives will gain hugely from undertaking<br />
commitments because that is the only way to ensure<br />
that it gets desired market access from its trading<br />
partners for its exports. This will also help the country<br />
in articulating its import interests.<br />
The Maldives has been very successful in developing<br />
its tourism industry and enjoys an enviable image in<br />
the market place. The Maldivians’ entrepreneurial flair<br />
and the liberal investment climate seem to have resulted<br />
in 30 years of continuous growth (The World Bank<br />
2006). In 2004, the country hosted 618,000 tourists, a<br />
record number – double its population. Its hotel<br />
occupancy (more than 80%), average length of stay<br />
(more than 8 days), and daily expenditures (approaching<br />
$200/day) are all high by international standards.<br />
Over the last decade or so the Maldives has replaced<br />
the West Indies as the upper class British destination of<br />
choice and now the rich Japanese have joined them.<br />
Tourism in the Maldives grew at a rate of 11.6% between<br />
1972 and 2005. This is a rate well above regional<br />
or global growth rate. Although the contribution to<br />
GDP is estimated at 33%, the highest in the region, it<br />
is commonly believed that much of the activity in the<br />
islands – as much as 70% – is linked to tourism. The<br />
tourism sector in the Maldives covers six sub-sectors:<br />
guest houses, safari vessels, tour operators, travel agents,<br />
resorts and hotels. The majority of business enterprises<br />
in the Maldives are private limited liability companies<br />
and, in the case of tourism, that figure is about 81%,<br />
and the majority is owned by the Maldivians. In tourism