India Contributing to a Bigger Share of the ASEAN Tourism Pie
Many Indians are holding their destination weddings in Thailand. (Photo: LookEast Magazine)
By Tridivesh Singh Maini

India Contributing to a Bigger Share of the ASEAN Tourism Pie

Aug. 12, 2019  |     |  0 comments


In recent years, Southeast Asian economies have become dependent upon Chinese tourists. Apart from trade and foreign direct investment (FDI), this has often been cited as an important component of China-ASEAN (Association of Southeast Asian Nations) linkages. Tourism is vital for ASEAN countries. According to estimates, it provides direct and indirect employment to over 30 million people. As of 2017, tourism accounted for a significant percentage of the total GDP of some of the ASEAN member states; 12 percent in Thailand, 6 percent in Malaysia in 2018 and 16 percent in Cambodia.

 

Apart from geographical proximity, visiting ASEAN countries makes logistical sense for Chinese tourists. Nine of the ten ASEAN countries offer visa-free or visa-on-arrival policies for Chinese citizens and every week there are 2,700 flights from China to ASEAN countries. Securing visas of Western countries is a major hassle for Chinese nationals, though in recent years things have begun to change.

 

The first half of 2019 witnessed a decline in the number of Chinese tourists visiting ASEAN countries such as Vietnam (3 percent) and Thailand (5 percent). Slowing down of the Chinese economy and the US-China trade war have been cited as the main reasons for this decline in the number of Chinese tourists visiting ASEAN countries. Thailand, which has been dependent upon tourism, was once a preferred destination for Chinese tourists. In 2018, the number of Chinese tourists visiting Thailand was estimated at a staggering 10 million. They spent an amount of 120 billion baht, accounting for nearly a quarter of the total tourist expenditure.

 

Although Chinese still top the number of tourists visiting Thailand, there has been a visible drop due to a boat tragedy in Phuket in July 2018 in which 47 Chinese lost their lives, as well as the appreciation of the Thai baht against the Chinese yuan.

 

While economic factors are cited as the key reason for a reduction in the number of Chinese tourists visiting ASEAN countries, it is important to keep in mind that Southeast Asia benefited immensely from the fact that Chinese tourists prefer neighboring countries, and have limited alternatives (given Beijing’s strained ties with Tokyo and Seoul). The improvement of China’s ties with Japan and South Korea has resulted in more Chinese tourists now preferring to travel to Japan and South Korea. This is evident from the figures. While there was a 12 percent increase in Chinese tourists visiting Japan year on year (in the first half of 2019), South Korea witnessed a rise of a whopping 29 percent increase.

 

While Southeast Asian economies will lose economically as a result of the decline in Chinese tourists, they have also been seeking to attract tourists from other countries and wanting to reduce their dependence upon Chinese tourists. To make up for the decrease in Chinese tourists, ASEAN countries (Thailand, Cambodia and Vietnam) have tried to ease visa procedures. Thailand introduced a waiver on the 2,000 baht (65 USD) visa on arrival fee for 20 countries including India, Maldives, Taiwan, and Saudi Arabia and extended it to October 2019.

 

Although the number of Chinese tourists visiting ASEAN is way more than those from other nationalities, some ASEAN countries have also been complaining about the behavior of Chinese tourists, and the fact that they do not contribute sufficiently to local economies, because they tend to patronize Chinese shops and businesses. Locals in Cambodia have begun to take note of this.

 

Thailand have on several occasions complained about the behavior of Chinese tourists. The country was in fact compelled to prepare etiquette manuals for Chinese tourists. The Chinese government itself also issued advertisements which stated how Chinese tourists should behave overseas.



India may not be able to compete with China in the economic sphere, but in the longer run, with a growing middle class, it can certainly contribute to ASEAN tourism and emerge as a competitor.



A number of ASEAN countries have also been complaining about zero dollar tours. Tour operators attract tour groups through cheap food and accommodation. Once they have reached the destination, they are forced to purchase goods from Chinese stores. Thailand in 2016 imposed an arrival fee of 1,000 baht (around 30 USD) and a minimum 1,000 baht per day fee for inbound Chinese tour groups. Other countries like Cambodia and Vietnam have objected to this zero dollar tours, saying that the local economies do not benefit.

 

While Chinese tourists have started travelling in large numbers to all ASEAN countries, Indian tourists’ preference is generally Thailand, Singapore, Malaysia and Indonesia. Hence, in view of the falling number of Chinese tourists, countries like Thailand can look to India to fill the gap. Indeed, there has been a rise in the number of Indian tourists visiting Thailand in the past decade. In 2018, 1.6 million Indians visited Thailand.

 

Increased air connectivity (there are over 300 flights a week connecting Thailand and 16 Indian cities), options for reasonable flights (13 carriers fly from India to Thailand), visa waivers and the growing purchasing power of India’s burgeoning middle class have played a pivotal role in the increase in number of tourists visiting Thailand. Most Indian tourists also tend to spend reasonable amounts. Thailand has also become a common choice for destination weddings. In 2018, it is estimated that 300 Indian destination weddings took place. The expenditure for each wedding is estimated at 8-9 million baht.

 

Other Southeast Asian countries, especially CMLV (Cambodia, Myanmar, Laos and Vietnam) countries can also attract more tourists. There is a growing interest about Vietnam in India. By the end of 2018, the number of Indian tourists visiting Vietnam surpassed 100,000, which was an 80 percent increase year on year and was nearly half of the total number of tourist who have visited Vietnam. This is likely to witness a further increase with greater connectivity between both countries.

 

In January 2018, India and Vietnam discussed, on the side lines of the ASEAN-India Commemorative Summit, about direct air connectivity between both countries. In June 2019, Vietnam Vice-President Dang Thi Ngoc Thinh and Indian Foreign Minister S Jaishankar discussed, on the sidelines of the Conference on Confidence Building Measures in Asia, about a direct flight between Hanoi and Kolkata. Indigo Airlines, a private Indian carrier, will start operating non-stop Kolkata-Hanoi flights daily in October 2019. Myanmar has also introduced a visa on arrival facility for Indian tourists

 

Attempts should also be made to increase the number of Indian tourists visiting Cambodia. With its abundance of cultural and historical attractions, Cambodia can emerge as an important tourist destination. In 2017, the number of Indian tourists visiting Cambodia was estimated at 60,000 while in the same year, the number of Chinese tourists travelling to Cambodia was estimated at over 1.2 million compared to 1.8 million in 2018.

 

ASEAN countries (other than Thailand, Singapore and Malaysia) should be promoting tourism not just in New Delhi, but in other Indian cities which have high consumption power. ASEAN countries should try to build linkages directly with Indian states with whom they have economic, cultural and historical links. Apart from having more direct flights, it is also important to look at more sister city arrangements between cities in ASEAN countries and India.

 

India may not be able to compete with China in the economic sphere, but in the longer run, with a growing middle class, it can certainly contribute to ASEAN tourism and emerge as a competitor. Tourism to ASEAN will also play an important role in bolstering India’s Act East policy, and enhancing people to people linkages. It will need more out of the box thinking, especially in terms of greater connectivity.



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