Thinking about tourism

The packed roads in Murree, Naran, and Swat during summer testify to the immense potential of our tourism industry. Tourism is a matter of inter-state commerce and should ideally be included in the federal legislative list. A major downside of devolving this department to the provinces is that Pakistan has lost out on the synergistic benefits that could have been achieved.

Although it remains a provincial subject, tourism has still been included in the federal government’s 100-day agenda. The agenda promises to identify four new tourism sites within the government’s first 100 days, and open up government rest houses for tourists.

The Khyber Pakhtunkhwa government has asked for the UNDP’s help in developing these new tourism sites. But some aspects of the strategy raise a few questions. Under the programme, camping pods have been imported from Estonia and are now being installed at these sites. These are to be rented to tourists at market-competitive rates. By managing camping sites and engaging in cut-throat pricing, the government is, in effect, competing with the private sector and risks driving them out of business.

The job of any government is to create an enabling environment for business. The government has no business being in business itself. The staggering losses of state-owned enterprises in Pakistan are welcome proof that state-run corporations are far more cost-ineffective as compared to the private sector.

The boom in our tourism sector is not due to the increased availability of government rest houses or the availability of state-run camping sites rented at below-market rates. Pakistan has experienced this resurgence due to an improved security situation and communication infrastructure. The job of the government is to ensure the provision of public goods.

While the federal government is mulling the possibility of imposing regulatory duties on cheese imports to curb the import of luxury goods, the provincial government is busy importing top-of-the-line camping pods. These imports are free of any import duties since camping pods are being sourced via a multilateral humanitarian organisation. The right strategy would be to source the camping pods locally. If Pakistan cannot produce prefabricated containers, the government should enable the transfer of technology. This will serve the purpose of not only import substitution but will also fuel export promotion.

We must also strategically carry out market segmentation. There are two main segments: high-tourist, volume-low profit margin and low-tourist volume-high profit margin. Places like Murree and Naran belong to the first segment as profit margins are low but a high tourist influx drives up profitability.

Scenic spots such as Kumrat Valley that are now being opened up by the PTI government come under the latter category. These sites receive a low volume of tourists who pay for its exclusivity. This will generate greater profits with limited damage to nature.

By opening up such sites to the hoi polloi for a pittance, the government will end up tapping on the region’s natural beauty. We are already aware of the cringe-worthy disfiguration of tourist spots in the country. Would this unchecked sprawl in tourist spots have been possible had the government been diligently performing its duties of regulation?

If local governments had involved themselves in managing (instead of regulating) the hospitality industry, we might have given them some leeway. But for the federal and provincial governments, there are far more important issues to address with regard to promoting tourism issues. These include the requirement of NoCs for foreigners to be able to travel to Azad Jammu and Kashmir and Gilgit-Baltistan, and NAB taking notice of a travel blogger who performed the ‘Kiki challenge’.

It is difficult to fathom why in 2018 the main national highway from Naran to Chilas in KP remains closed due to the threat of highway robberies when normalcy has been restored, even in the once terror-stricken city of Swat. This isn’t happening in a tribal agency that is being administered by a political agent. This happens every single day in a district that has a DC and DPO – just like any other part of the country. The PM’s taskforce on should address such structural matters that hinder the expansion of tourism in Pakistan. Once this body starts deciding strategic issues, the private sector will begin taking care of operational matters.

The writer is associated with the Policy Research Institute of Market Economy.

Email: shehryar@primeinstitute.org