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Cablegate: Tourism - Basis for Economic Development

VZCZCXRO1675
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHML #0385 0550839
ZNR UUUUU ZZH
O 240839Z FEB 10
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6683
INFO RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RHHMUNA/USPACOM HONOLULU HI IMMEDIATE
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RUEHKO/AMEMBASSY TOKYO IMMEDIATE 3756
RUEHUL/AMEMBASSY SEOUL IMMEDIATE 2964
RUEHBJ/AMEMBASSY BEIJING IMMEDIATE 6631
RUEHBY/AMEMBASSY CANBERRA IMMEDIATE 9982

UNCLAS MANILA 000385

STATE FOR EAP/MTS, EEB/TRA
COMMERCE FOR BERLINGUETTE
SINGAPORE AND TOKYO FOR FAA

SIPDIS

E.O. 12958: N/A
TAGS: ECON EINV EAIR ETRD RP
SUBJECT: TOURISM - BASIS FOR ECONOMIC DEVELOPMENT

REF: MANILA 0103

1. Summary: The Philippine Tourism Act of 2009, signed into law
on May 12, 2009, describes tourism as an indispensable element of
the national economy. The new law seeks to develop a robust tourism
industry, turn the Philippines into a world-renowned destination,
and attract foreign investment. ASEAN open skies, new bilateral air
agreements, and planned improvements to tourism infrastructure will
boost this effort. End Summary.

Tourism Act
-----------

2. In May 2009, President Arroyo signed the National Tourism Policy
Act of 2009 declaring tourism as an engine of investment, employment
and national development. The new law created three agencies to
promote programs in partnership with the private sector: 1) the
Tourism Promotion Board (TPB) to handle domestic and international
promotions, 2) the Tourism Infrastructure and Enterprise Zone
Authority (TIEZA) to regulate and supervise Tourism Enterprise Zones
(TEZs) and manage infrastructure projects, and 3) the Duty-Free
Philippines Corporation (DFPC) to operate duty free merchandising.
A significant innovation under the Tourism Act is the creation of
TEZs to speed up development and attract investments. Once approved
by Zone Authority, a TEZ operator will be granted special tax and
business incentives similar to those in the Philippines Special
Economic Zones.
New Air Agreements
------------------

3. As part of its efforts to boost tourism, the Philippines has
signed more than twenty new bilateral air agreements over the last
two years. The country will sign an open-skies agreement with ASEAN
members in April 2010 that will lower airport fees, increase flights
between ASEAN capital cities and achieve a unified ASEAN market in
civil aviation by 2015.

4. Philippine international tourist arrivals in 2009 are estimated
at around three million, about the same as in 2008. Asian neighbors
like Thailand received over 14 million international tourists in
2009. The Philippines needs improved infrastructure and airport
capacity in order to compete more effectively. Manila International
Airport is already at its maximum capacity, with over 23 million
passengers per year. The international airport located at the
former Clark airbase in Pampanga (known as Diosdado Macapagal
International Airport, DMIA) handled 600,000 passengers in 2009.
Most new flights will be routed to DMIA, about 90 minutes drive from
Manila. Currently the DMIA is expanding its terminal to accommodate
two million passengers per year, and will later construct a second
terminal, which will increase its capacity to 14 million per year.
However, inadequate transportation links between DMIA and Manila
remain a problem.

5. Tourism has the potential to make an important contribution to
Philippine economic development. Local economists have estimated
that each foreign tourist who visits the Philippines for a week
spends enough to pay the wages of one tourism-sector employee for
one year. The prospect of millions of new international tourists
being created by the growing economies of Asia over the coming years
presents an important opportunity.

6. Recognizing the constrains in the transportation sector and the
potential for the tourism sector, the United States Agency for
International Development (USAID) recently started a three-year
project (2009-2012) to assist the Clark International Airport
Corporation develop the Clark (DMIA) airport as the premier
international gateway of the country and a major regional tourism
and logistics hub. USAID will also be providing assistance to the
Department of Tourism in its efforts to develop implementing
guidelines for the Tourism Enterprise Zones and the Tourism
Infrastructure and Enterprise Zone Authority.

BASSETT

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