Future Sustainability Of The Mauritian Economy Tourism Essay

Future Sustainability Of The Mauritian Economy Tourism Essay 1. Introduction In recent years, many studies and researches were carried out on the contribution of tourism in the economic development of a country (Mishra et al, 2011). There is a general agreement that tourism has been of central importance in the social progress as well as an important contributor of widening socio-economic and cultural contacts throughout human history. Over the past years, many developing and developed nations have considered tourism as an option for their sustainable development. Mauritius is a small independent island located in the Indian Ocean, east of Madagascar with an area of 2,040 square kilometers (including St Brandon and Agalega Islands) and a population of almost 1.3 million. The island consists of people originating from India, China, Africa and Europe. With regard to its geographical position and of its volcanic origin, Mauritius has been gifted with natural assets that attract a very large number of tourists every year (Sobhee, 2008). As a small island economy, Mauritius has experienced very rapid industrial and tourism development during the last thirty years and until recently tourism has been growing very rapidly. In the 1970s, it has successfully transformed itself from a mono-crop economy to a diversified economy comprising agricultural, textile, tourism, Information and Technology and financial services. Tourism has become an important sector of the Mauritian economy playing a substantial part to the sustainable development of the country and in generating foreign exchange and employment opportunities. 2. Literature Review Tourism has developed itself from a relatively small-scale activity into one of the worlds largest industries and a rapidly growing global economy from the 1960s onwards. There has been an uninterrupted growth in international tourist arrivals from 25 million in 1950 to 438 million in 1990 and 681 million in 2000. In 2009, the international tourist arrivals were 880 million and the corresponding tourism receipts were US $852 million. For the year 2010, the United Nations World Tourism Organisation (UNWTO) forecasted a growth of 3% to 4% in arrivals generating about 21.7% of world GDP, 10% of global capital investments, 9% of worldwide employment and 22.2% of worldwide exports of goods and services. All the figures demonstrate the significant role of the tourism sector in the long-run growth of host countries across the world (Mishra et al, 2011). Today, many islands depend on international travel and tourism to enhance their economies. For example, tourism industry accounted for 20% of GDP, 33% of revenue and 66% of foreign exchange earnings in Maldives. Likewise, in Seychelles the tourism sector accounted for 12% of GDP, 30% of workforce and 70% of foreign exchange earnings (Lee et al, 2010). In Vanuatu, the contribution of tourism to the GDP increases from 16% in 1991 to 21.6% in 1998 (Meheuxa Parkerb, 2006). In Fiji, the sector accounted for 29.5% of GDP and 37% of foreign exchange earnings (Becken, 2005). In Bahamas, 60% of jobs are mainly due to the tourism industry (Apostolopoulos Gayle, 2002c). The above statistics shows that many Indian Ocean, Pacific and Carribean islands are highly dependent on tourism for their economic growth (Duval, 2004). In such cases, the economies of these islands are more vulnerable to external shocks and natural calamities like in the years 2008 and 2009, unless they have diversified thei r economies. Many developing countries have managed to increase their participation in the global economy through development of international tourism. International tourism is increasingly viewed as an important tool in promoting economic growth and alleviating poverty (Richardson, 2010). Researchers are of the view that the rapid growth of tourism sector causes an increase of household incomes and government revenue through its multiplier effect, improvements in the balance of payments and the growth of the tourism industry by itself. Tourism dollars are new dollars injected in an economy as they are spent and respent by employers and employees. The more money flows within an economy, the larger the multiplier effect. As such, tourism development has usually been thought to have a positive contribution to economic growth (Khan et al, 1995). Baum (1994) identified the following as the positive impact of tourism in an economy: Generating foreign exchange and foreign direct investment; Employment opportunities; Contribution to the local/host community; Conservational or environmental impact. 2.1 Revenue and Foreign Direct Investment (FDI) In terms of GDP, the tourist industry is the second most important after the manufacturing sector. Statistics (CSO, 2011) (Table 1) show that the annual tourist arrivals in 2010 has increased to more than 930,000 as compared to 871,356 in 2009, that is an increase of 7.3%. The industry contributes to 3.8% of the Gross Domestic Product (GDP) and tourism receipts for the year 2010 amounted to around Rs 39,456 million, thus showing an increase of 10.5% as compared to Rs 35,693 million in 2009. It is estimated that 980,000 tourists will visit Mauritius in 2011with receipts of Rs 42,500 million (+7.7%). The fall in tourist arrivals in 2009 can be explained by the world financial crisis that started to attain our economy and the government has taken several measures through the Additional Stimulus Package to redress the situation. Faced with the slumping revenue from the tourism industry in 2009, Directors of the various tourism boards of the Indian Ocean islands (Mauritius, Madagascar, Reunion, Seychelles, Comoros and Mayotte) develop a plan for the regions tourism industry under a common regional label, The Vanilla Islands. The objective was to address new target groups and to launch an authentic regional destination. The concept is based on four pillars: Facilitation of visa-free travel within the islands of the Indian Ocean; Extension and enhancement of the inter-island transportation network; Close operation between tour operators, hotels and authorities; The development of a homogenous marketing strategy focusing on the uniqueness of each island and at the same time strengthening the joint identity. The government also encouraged the liberalization of air access to stimulate tourism growth. Airlines like Corsair, entered the market, by linking France and Reunion Island with Mauritius. Also, the national airline, Air Mauritius, increased its flight frequency towards Europe and Asia. As a result, the tourism sector beneficiated from this policy. Tourists from all over the world come to Mauritius. They originate from Europe, Africa, Asia, Oceania and America as shown in the chart below. Our main market remains France and Reunion Island. Source CSO, 2011 The competitiveness of the tourism industry in Mauritius depends mainly on the service quality, value for money, safety, road infrastructure, communication network, political stability and social harmony among the different communities and ethnic groups. The main aim of the government and the Mauritius Tourism Promotion Authority (MTPA) is to continue to attract high-income visitors whose economic impacts are acknowledged to be more beneficial to the local economy than low-spending visitors. Figure 2 : Tourist arrival and Receipts (Rs m) from 2000 2006 Source: CSO, 2011 The Mauritian government has been under economic pressure to find other ways to sustain the economy following the phasing out of textile and sugar agreements and recent shocks of rising oil prices (Ramkissoon Nunkoo, 2008). The development of integrated resorts has been considered as an alternative to generate cash flows and sustain the economy. Several Integrated Resort Schemes (IRS) and Real Estates Scheme (RES) were approved with the idea that they will bring Foreign Direct Investment (FDI) to the economy. The total FDI for the year 2010 was Rs 12 billion, a record mark. FDI into hospitality and real estate sector reached Rs 3.7 billion in the first eight months of 2010 (Board of Investment, 2010) groping its way towards a semblance to the level of Rs 6 billion recorded in 2009. FDI brings long lasting and stable capital flows as they are invested in long term assets such as infrastructure. These funds are introduced into the economy contributing to the aggregate demand of the economy, and therefore to the economic growth of the economy. Local firms, due to the competition brought in by FDI, tend to become more productive to effectively counter the threat of the competitor from abroad. Higher productivity of firms contribute to the growth of the economy. 2.2 Employment Several strategies for tourism development have been found to be effective in creating employment and income opportunities for vulnerable and communities (UNWTO, 2000: Ashley et al, 2001). The tourism development projects that have been most successful include those that: Promote employment of the people in tourism businesses ( including training) Promote the establishment of tourism enterprises ( such as micro and small enterprises) Promote the supply of goods and services to tourism businesses by enterprises that are owned by local people (Supply chain) Promote the direct sale of goods and services to tourists Figure 3:- Employment in the tourist industry as at end of March, 2006-2010 2006 2007 2008 2009 2010 Restaurants 1,805 2,012 2,251 2,431 2,464 Hotels 19,536 20,233 22,314 20,478 20,847 Travel and Tourism 4,457 4,296 4,188 4,093 3,850 Total 25,798 26,541 28,753 27,002 27,161 Source: CSO, March 2011 The tourism industry contributes to around 9% of the total employment in 2010. The table shows that there has been a continuous increase in employment from 2006 to 2008 with a decrease in 2009 and again rises in 2010. The decrease in 2009 was due to the financial crisis that hit some tourism businesses and the renovation of some hotels. Employment in the services sector is rapidly increasing in Mauritius. As employment generated by the primary and secondary industries stagnates or declines with the Voluntary Retirement Scheme in the sugar sector and closing of some textile units, tourism provides new opportunities to generate new jobs. Tourism is a labour-intensive industry in an age of great technological advancement and declining relative demand for labour. The tourism industry and the related industries provide many full-time and part-time jobs across a range of skill areas such as tour operators, car rentals. The integrated resorts newly built also demand for jobs among the local community such as baby-sitters, gardeners, personal drivers, cooks, etc. 2.3 Contribution to the local community The literature point out that host communitys support for tourism-related development is crucial for the industrys sustainability (Tovar Lockwood, 2008). Once a community turns into a destination, the quality of life of the local people tends to be affected by the development impacts (Gursoy et al, 2002).Tourism is the only export sector where the consumer travels to the exporting country, which provides opportunities for local people to become exporters through the sale of goods and services to foreign tourists. Employment opportunities (Andriotis, 2008) and revenues (Jurowski et al, 1997) for the community and government are the major benefits derived by the local community from tourism development. Local employment opportunities arise during the construction and from the subsequent staffing of the resort (Ioannides Holcomb, 2003). The creation of new investment opportunities and opportunities for local businesses are other notable benefits perceived by local residents. Tourism provides new small business opportunities. Good opportunities for development of new tourism enterprises arise from low capital requirements and comparatively low barriers to entry for small businesses. The potential beneficiaries of tourism activity are spread across various sectors of the regional economy. For example, in Grand Baie, many individuals from the region benefit from tourism through the renting of small bungalows, cars and cycles. They also benefit by running restaurants and cafes meant for tourists. O ther activities like glass bottom, surfing and boats are also other means by which the local people generate incomes. Resort developers attempt to integrate the resort within the local community through fostering economic linkages with that community (Richardson, 2010). Tourism also stimulates demand for local craftsmanship, create opportunities for cultural exchange, stimulate better services and infrastructure and provide alternatives for leisure activities. It has been pointed out that in economically depressed areas (such as Le Morne), residents tend to underestimate the cost of tourism development and tend to overvalue the economic gains (Liu Var, 1986). Var et al (1985) argue that such residents are willing to accept some inconveniences in order to receive some benefits resulting from the development. Local community involvement in the planning, development and management of the projects is a factor that contributes to the success or sustainability of a tourism development project. Strategies that can be adopted by host communities (Honey Gilpin, 2009) include: Identify and protect cultural and natural assets that form the basis for comparative advantage in tourism Maintain and focus on the community as the centre of the tourism development strategy to ensure local ownership of projects and retention of profits Encourage widespread community participation in tourism planning processes Build capacity through the development of physical infrastructure and human capital Promote improvement in the delivery of tourism services to ensure quality and authenticity Raise awareness among tourists to encourage them to appreciate and respect the sites they visit. Tourism also plays a negative role to the local community. The erosion of moral values contributing to increase the generation gap between the older generations who are more attached to traditional values and the young who are eager to adapt to the tourists way of life. Hence, it is important to keep a balance in terms of number and type of tourist the local community is capable to tolerating or sustaining. A good example of the negative impact is the building of hotels and restaurants on our beaches, depriving Mauritian to enjoy the natures gift to them. We are near to renting a parasol on a private beach for a picnic at the seaside. Another example is the imposition of entry fees at Pamplemousses Botanical Garden both on tourists and local citizens (except on Sundays and public holidays free entrance). 2.4 Environment aspect Environment is one of the major elements which form the foundation of the tourism industry of a country. The impact of tourism on both man-made and natural environment is beneficial as well as harmful. One of the major benefits is the conservation of the natural and man-made environments. Tourism can contribute significantly in environmental protection/conservation and restoration of biological diversity and sustainable use of natural resources. Tourism impacts are linked with the construction of general infrastructure such as roads and airports and of tourism facilities such as resorts, hotels, restaurants, shops, golf courses and marinas. Cleaner production techniques can be important tools for planning and operating tourism facilities and thus minimizes their environmental impacts. Tourism has the potential to increase public appreciation of the environment. It brings people into closer contact with nature and the environment. Awareness of the value of nature leads to environmentally conscious behavior and activities to preserve the environment. Tourism industry can play a role in providing environmental information and awareness among tourists of the environmental consequences of their actions. User fees, taxes on sales rental of recreation equipment and license fees for activities like hunting and fishing can be used to provide the government with funds needed to manage natural resources. Such funds can be used for conservation programs and activities. Recently, the Minister of Tourism came with a proposal to have differential paid access at Ile Aux Cerfs for tourists and Mauritians. According to the authorities, this islet attracts more than 350,000 tourists yearly with a turnover of about Rs 500 million (Star, 2011).He stated that the funds raised will be used for cleaning of the beach and for the conservation of the environment. But, the effect of this policy on the local people in terms of jobs that may be lost need to be assessed. Tourism also can have negative impact on environment. Tourism development can put pressure on natural resources when it increases consumption in areas where resources are already scarce (land, water and local resources). Pollution caused by tourism include air emissions, noise, solid waste and littering, releases of sewage, oils and chemicals. 2.5 Threats for the tourism industry. In recent years, oil prices, natural disasters, crime and international terrorism impacted on the willingness of global tourists. Small islands depend on the double efficiency of tourism income. Therefore, developing tourism industries is imperative. However, to avoid damage by natural disasters, those islands may through early warning and alarm systems reduce losses (Mehexua Parkerb, 2006). In Malta, Egypt and Greece, many factors like terrorist attacks and tsunamis may influence tourism consumers and thereby affecting the tourism industry. In Fiji, problems of climate change such as strength of wind resulted in coastline damages thereby affecting beaches which tourists prefer the most during their stay. Since November 2009, when some European countries like Greece, Spain, Portugal and Britain started facing high budget deficit and debt problems, the euro has been weakening against the dollar and as a result against our rupee. Since then, these countries adopted austerity measures to exit from these economic problems. This resulted in a drop in demand for our exports and lower tourist arrivals due to the high dependence on European markets. There was a need, then, to diversify our markets by tapping fully the rapidly growing countries like China, India and Russia. From statistics (CSO, 2011), the trend of tourist arrivals from China, India and Russia shows an increase of 9.9%, 26.8% and 17.5% respectively over the figures of 2009. Vector-borne diseases such as chikungunya and dengue fever have become a major public health problem in tropical countries, especially in Asia and the Indian Ocean. For example, one third of the population in Reunion Island was affected by chikungunya in 2005 2006 (Reiter et al, 2006). Dengue is the fastest growing vector-borne disease in the world (WHO) when 55% of the worlds population was at risk in 124 countries (Beatty et al, 2007). Mavalankar et al (2009) pointed out that a 4% decline in tourists from non-endemic countries would result in a substantial loss of tourism revenues at least US$ 65 million for Malaysia and US$ 363 million for Thailand. This indicates that the impact of these diseases on tourism revenues should not be ignored when calculating the burden of infectious diseases. Another negative factor related to tourism is the perception people have of safety and security issues. Olurunfemi et al (2008) posits that security is an important knot in tne chain because it forms an organic bedrock of a sustainable benefit for both the tourists and the host communities. For example, assurance of adequate safety of life and property during their stay must be given to tourists and on transit on sites. Safety and security in tourism refers to the protection of life, health, physical, psychological and economic integrity of travelers, tourism staff and the people constituting host communities (WTO, 1991). Recently, the tourism sector has been seriously undermined by the growing lack of security among the citizens and tourists. Some types of crime affecting tourists include attacks on tourists visiting nature parks and on beaches and in hotels. In order to tackle the issue of security in tourism, the government has taken some preventive measures. For example, a close circuit camera system has been set up in the regions of Flic en Flac and Grand Baie which are reputed places for tourists in Mauritius. The results have been encouraging in the sense that there has been a fall in the number of attacks and thefts on tourists. Even the recent murder of a popular personality of Ireland in a resort seems to have little impact on tourist arrivals due to the prompt action taken by the local police. Conclusion The governments contribution to the tourism sector has been very beneficial in terms of planning and policy formulation. During the Assises Du Tourisme held in 2006, the Prime Minister expressed his vision to welcome two million tourists by 2015. He pointed out that many less endowed countries are doing much better than Mauritius. There are many factors that must be taken into consideration in order to achieve this target and these factors will be analysed in the methodology section.