Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S201013) TourismBackgroundTourism is a major foreign exchange earner for Nepal and its revenues significantly exceed the revenue of eachsingle merchandise export product. With estimated revenue of US$352 million in 2008 and 500,000 visitors,tourism revenue is 37 per cent of all merchandise export and three times higher than revenue from carpets--the major export product of Nepal. This makes tourism by far the largest export industry of Nepal, except forthe even higher revenues generated by the Nepalese migrant workers. Nepal has quite obviously a comparativeadvantage for certain tourism sectors due to its cultural and natural heritage. However, developments in 1999-2002 have shown that the sector is particularly vulnerable to political instability. Though tourist arrivals haverecovered in recent years, numbers would certainly fall again if the political situation deteriorated. Apart frompolitical instability and conflicts between employers and workers--major problems for any sector in Nepal--thetourism industry suffers from insufficient transport infrastructure (road, air, and electricity).The Ministry of Tourism and Civil Aviation (MoTCA) is the main tourism regulator 92 and the Civil AviationAuthority of Nepal (CAAN) 93 acts as the regulator in civil aviation. Nepal Tourism Board (NTB) has beenacting as the national tourism organization since December 1998 to address the pressing need of the tourismindustry by designing specific brand image and supporting promotional campaigns.In 2011, Nepal is celebrating Nepal Tourism Year, with the aim of increasing the number of arrivals to onemillion, which would require doubling of the current number of arrivals.Index 1: Export PerformanceTable 2.44Export Value of Tourism, 2004-2008 (US$1,000)2004 2005 2006 2007 2008180,000 148,000 163,000 231,000 352,000Source: MOTCA (2008).Although the measurement of export revenue accruing from tourism is problematic 94 , the numbers of arrivalscan be used as a proxy. MoTCA also provides statistics on the average length of stay, which has been prettystable since 1980 (10-12 days per visitor, with a temporary decline to 8 days in 2002). Tourist arrivals grewsteadily from almost zero in the 1960s to 500,000 in the late 1990s, but then dropped to almost half of itspeak between 1999 and 2002 due to the political situation in Nepal. They have since steadily increased to justabove their pre-crisis level.92MoTCA, as tourism regulator, deals with registration, licensing, categorization of star hotels, providing facilities and incentives, and monitoringand evaluation.93CAAN came into existence in December 1998 and acts as the regulator in civil aviation. It provides Air Operator Certificate (AOC) and entersinto air service agreements with different countries. At present, the GoN has entered into AOC agreements with 35 countries, but only 18airlines have schedule flights so far. Prior to liberalization in 1993, the civil aviation department used to perform the activities of CAAN.94The government’s accounting system captures only the contribution of hotels and restaurants rather than the total contribution of the traveland tourism sector, which is expected to be much higher than this figure. This implies the need to introduce Tourism Satellite Accountingadopted already by a large number of developed and developing countries.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT89