10 million tourists by 2016: Can we do it?

To borrow a quote from David Leechiu in his statement on the country's outlook for the property market, "We are optimistic but not yet bullish."

Don't get me wrong, there is plenty of good news to celebrate around Secretary Jimenez's "It's-more-fun-in-the-Philippines" campaign. This has resulted to a steady rise of tourist arrivals year on year. Since 2011, tourism in the country has grown considerably from 3.9 million to 4.68 million in 2013.  This is a 20% increase since the secretary has taken office. Tourism has generated $4.4 billion in revenues in the same year (up 15.1% from 2012). Although, just 320,000 shy from the five million mark, this is understandable given the recent string of calamities that struck the Philippines. Despite this, all hands on deck on efforts to push tourist arrivals closer to 6 million in 2014.

Ten million tourists may seem like a big number, but if you compare it to Malaysia's 25 million and Thailand's 22 million, these are much smaller countries with five times the tourist population compared to us.

One would argue that the Philippines have much more to offer. Aside from being more fun over here, we have 7,107 islands with hundreds of beaches, adventure trails, eco-tourism activities and so on and so forth. We've all heard the pitch and we all agree that our country is one of the most beautiful nature destinations in the world (not to mention being a fraction of the cost compared to most, should add to the overall appeal). So why don't the numbers stack up? For years, many have recognized the potential and none have realized the results.

This boils down to fundamentals. In any company, fundamentals are the key driver for growth and success. We can create PowerPoint slides and marketing campaigns to build the hype for a particular product, but the management needs to ensure that the proper box economics would result to the right fundamentals in order to deliver successful results. Otherwise, the hype has a tendency to wither very quickly. It's like biting into a cotton candy then you realize its original size was all fluff and air (and what you end up with is only a fraction of what you expected to get).

Good fundamentals yield good results. Thailand is five times our tourist population because it has over 180,000 hotels compared to less than 23,000 hotels in the Philippines. Thailand has over six international airports and Philippines has three major ones (Wikipedia will count you 13 classified international ones but how many are actually really running as such?). Lack of roads, power and basic infrastructure does not translate to any real growth in tourists. If we want to invite the rest of the world to come and enjoy our country, we need to accommodate that rest of the world.

Which is why this administration has been so obsessive about delivering results; a 7.2 GDP growth last year (second only to China); investment grade ratings from three major ratings agency (Philippines has obtained the highest credit rating in history); $13 billion BPO sector (no. 1 in voice in the world); $25 billion in overseas Filipino workers remittances; all this contributing to the country's housing boom and continuous growth in the country's personal consumption.

Going back to tourism, Secretary Jimenez's dedication to delivering results has led to the focus on empowering TIEZA. Granted not a lot of people really know what TIEZA is. It spells out as Tourism Infrastructure and Enterprise Zone Authority. The website will tell you TIEZA, formerly Philippine Tourism Authority, is an attached agency to the Department of Tourism, mandated to designate, regulate and supervise the TEZs established under Republic Act 9593, as well as develop, manage and supervise tourism infrastructure projects in the country. It shall supervise and regulate the cultural, economic and environmentally sustainable development of TEZs toward the primary objective of encouraging investments therein.

TIEZA is a national policy for tourism as an engine of investment, employment, growth and national development, and strengthening the Department of Tourism and its attached agencies to effectively and efficiently implement that policy, and appropriating fund thereof.

The Act supports the establishment of Tourism Enterprise Zones (TEZs) which will contribute to the accelerated creation of employment opportunities by encouraging and supporting investments in the development and operation of these zones.

In other words, TIEZA is the business side of DOT that aims to build, develop or facilitate all infrastructure projects relating to tourism-related projects. This includes roads, brick and mortar facilities and other utilities needed to develop tourist destinations. Unfortunately, this does not include airports and seaports which are under the jurisdiction of the Department of Transportation and Communication.

On top of this, TIEZA is able to appoint private Tourism Enterprise Zones similar to BOI's PEZA where resort operators are able to get a number of tax incentives including a tax holiday of 5% for 6 years of operations. TIEZA has recently started accepting applicants for TEZ last May 12 and is set to announce to two major approved TEZs in the coming weeks.

What is most exciting is TIEZA's mandate to appoint six flagship TEZs. Taking inspiration from tourism estate models such as Bali, Nusa Dua and Jeju Island, these flagship TEZs are large tourist areas (minimum 50 hectares) where TIEZA will jumpstart development by investing in roads and infrastructure (power lines, water lines, etc) and creating a master plan for zoning and development including overall administration of the area.

This includes seeking and facilitating investments from resort, hotels and real estate developers to convert these areas into tourist destination.

In other words, TIEZA is mandated to create new Boracays all over the Philippines using taxpayer's money to attract investment, increase foreign tourists, pump prime the economy and most of all, create jobs for the local community.

In 2013, Boracay recorded 1.3 million tourists (Over 600,000 foreign tourists or 13% of the country's total tourist arrivals). And generated over P25 billion in revenues (this is receipted revenues which may be closer to 30 billion if you included the unreceipted spending).

TIEZA's rough cost estimate for 6 flagship TIEZA is close to P54 billion. The fearless forecast is to create 10,000 rooms, accommodate 1.7 million additional tourists and deliver 280,000 additional jobs (20% unskilled and 60% women).

Two of six flagship TEZs have already been identified.

The first flagship TEZ is in San Vicente, Palawan. TIEZA has identified 165,000 hectares of land to develop into the next Boracay. With over 14.7 Km stretch of white sand beach, this is 3.6x larger than Boracay's 4-kilometer beach.

We are awaiting the master plan of this massive resort destination in the coming months and we hope to see more news on flagship and private TEZs as we push forward in delivering results and our achieving our goals into making the Philippines one of the top economies in the region.

We encourage all tourism-related businesses to go to TIEZA.com.ph to find out more about the private and flagship TEZs or email me directly to explore business opportunities.

Bringing you good news that's Marked Lapid. For comments and clarifications, please do not hesitate to contact me at [email protected]