A fact-driven plan to reopen tourism and save lives

What our country and indeed many other countries are doing in regard to COVID-19 is the equivalent of amputating an arm because we found a pimple on our cheek. Dealing with COVID-19 is not a matter of trading lives for money. It is a matter of coming to our senses.

Fact: The only major infection hotspots in our country are Greater Manila and nearby provinces, Cebu City, and Davao City.

Fact: The Philippines is an archipelago with many unconnected and easily isolated locations.

Fact: Several of the country’s premier international tourist destinations, and an award-winning international airport, are in areas which are substantially COVID-19 free.

Western Visayas (which includes Boracay but not Palawan) has had less than 70 cases in a population of 7.5 million. Bohol Province (which includes Panglao) has had two cases in a population of 1.3 million. Mactan Island (which has the international airport plus numerous resorts), has had 50 cases in a population of 460,000. Total deaths from all three areas: one.

Taken singly or together, these three locations have registered lower coronavirus infection and mortality per-million than New Zealand, Iceland, Norway, Hong Kong, Singapore, Taiwan, South Korea, Japan, Denmark, Switzerland, and just about any other country you can think of.

Based on these facts, one could formulate a Plan, a Plan to benefit not just Western Visayas, Mactan, and Bohol, but ALL Filipinos, and the entire economy. Before going any further, it should be explained why the entire country should welcome this Plan, and why there is no other plausible course of action.

Directly or indirectly, tourism accounts for over 25 percent of the Philippine economy. In addition to hotels, restaurants, and the other obvious participants, tourism is a prime customer or contributor to many other sectors: small farmers and fishermen, meat producers, malls and retailers, meat processors, beverages, household products, garments, apartments and dormitories,  for-profit colleges, printed materials. Suppliers from all over the country rely on the tourism industry for business. Without tourism, all of these will face major reductions in income, leading to widespread unemployment, bankruptcies, reduction of public services, and personal suffering.

If this 25 percent collapses, by a domino effect it will impact many other sectors – banking, housing, and local governments, for a start.

Triggered by a collapse in tourism, a major economic disaster is unfolding, yet so far only three alternative strategies (if you could call them that) have been waved around. All of them are unworkable or based on unrealistic premises. They are:

The P43 billion Department of Tourism Stimulus Package is flawed from start to finish. Whoever named it doesn’t even understand what the word “stimulus” means. Stimulus means putting money in the hands of consumers, in the hope that this will induce them to buy, stimulating business, which will in turn re-invest profits, etc., etc., further stimulating the economy.

There is no significant element in the P43 billion that could in any way be considered stimulus. Most of the money, P36 billion, is for “soft working capital loans,” aka bailouts. This means making loans to hotels, restaurants, etc., which have run out of money – in other words, those which were least well-managed, and least prudent with their finances.

That’s one issue. The other is that the Department of Tourism has no expertise in lending – no one there has the slightest idea how to make a loan, how to document a loan, who deserves a loan, or how to get a loan repaid. Without the slightest doubt, this money will disappear into unknown companies whose owners will promptly siphon the money out (some of it winding up with lucky DOT officials as “loan processing facilitation fees”), and the P36 billion will never be seen again.

The Second Alternative Strategy is to promote Domestic Tourism. One big problem with our government officials is almost none of them can do simple arithmetic. Here’s the arithmetic:

There are wild inaccuracies in our government’s official estimates of Domestic Tourism. One source claims that our Domestic Tourism in 2019 constituted 25 percent of household consumption, therefore about $32 billion out of $128 billion. If you start with that number, it sounds plausible that Domestic Tourism, properly promoted,  could make up for some part of the $10 billion lost international tourism.

But Domestic Tourism can’t possibly be 25 percent of Philippine household consumption. Do you really think that 25 percent of the average Filipino paycheck is spent on hotels, airline tickets, amusement parks, and the like? In the rich and free-spending US (where the public statistics are more reliable), domestic tourism totals just 6 percent of US household consumption. Considering that the vast majority of Filipinos can barely manage to pay rent and put food on their tables, it would be most surprising if the value of our Domestic Tourism were much more than two percent of household expenditure, or say $3 billion.

There is no blood to be sucked from this stone. Anyone who thinks Domestic Tourism can be multiplied like Sermon-on-the-Mount loaves to make up for US$ 10 billion lost international tourism income has simply not done the arithmetic.

The Third Strategy is to Do Nothing: “Tourism will recover when COVID-19 has run its course, and in the meantime there’s no point in swimming against the tide.” Variations of this are “Wait until we can test” or “Wait until the whole country is coronavirus-free.” This would be a sensible idea in regard to some kinds of enterprise, but not to tourism.

(To be continued)