THE AUTHORITY ON WORLD TRAVEL & TOURISM TRAVEL & TOURISM INVESTMENT IN ASEAN EXECUTIVE SUMMARY OCTOBER 2016 TRAVEL & TOURISM IN ASEAN IS GROWING FASTER THAN IN OTHER REGIONS OF THE WORLD The Travel & Tourism sector makes a substantial contribution to the economies of Southeast Asia. Collectively, the ten countries that make up the ASEAN 1 region are more dependent on Travel & Tourism to drive their economies than all other regions in the world. In 2015 Travel & Tourism directly accounted for 5% of total economy GDP for the region, and a further 7.4% in indirect and induced GDP. Over 32 million jobs across the ten countries are supported directly or indirectly by Travel & Tourism. A favourable climate, proximity to large outbound markets like China, good infrastructure by the standards of emerging economies, connectivity to further afield origin markets, and price competitiveness by the standards of developed economies, make many countries within the ASEAN region highly attractive travel destinations. Across the ASEAN region, there is wide variation in the total contribution of Travel & Tourism to GDP. Travel & Tourism makes a total GDP contribution of below 10% in Myanmar, Brunei and Indonesia, but over 20% in Thailand and almost 30% in Cambodia. Even in higher-income Singapore with a sophisticated and diverse economy, Travel & Tourism makes a substantively greater contribution to the economy than many other high-income economies in Europe or North America. The sector’s growing GDP and jobs contribution depends on supportive infrastructure and investment. From air and ground transport and connectivity, health and hygiene improvements, safety and security developments, mobile phone penetration, reliable banking infrastructure as well as tourist accommodation and other infrastructure necessary for the sector to thrive. WTTC has forecast that there will be US$782 billion worth of Travel & Tourism investment made in the ASEAN economies over the next decade – nearly 10% of total global investment for the sector. However, with the sector forecast to achieve average annual Travel & Tourism GDP growth rates of 6.2% for each of the years to 2026, thanks in large part in its ability to tap into China’s spectacular growth in outbound travel, not only is there a divergence across the ASEAN economies with respect to their ability to deliver the infrastructure needed for the future Travel & Tourism demand, but there is also a challenge for all the countries to ensure that capacity volume and quality expands in line with visitor expectations. Our research highlights this divergence in current infrastructure provision and future need across the ASEAN economies, and classifies the countries into different broad typologies related to the projected growth in Travel & Tourism demand and the current quality of related infrastructure. The categories range from those that are at risk of losing Travel & Tourism infrastructure competitiveness over the next decade, to those that are well- placed to benefit from forecasted investment spend. IMPROVING INFRASTRUCTURE AND GROWTH PROSPECTS Vietnam and Laos should significantly improve their Travel & Tourism infrastructure and catch up relative to other destinations over the coming decade, with forecast investment spending growth substantially outstripping robust demand growth. It is important that future investment is channelled and spent effectively and targeted at priority areas. STARS OR OVER-INVESTORS Singapore has by some distance the best-rated Travel & Tourism infrastructure in the ASEAN region, and we expect this to be sustained given predicted strong growth in future investment. Indonesia’s Travel & Tourism infrastructure ranks more in line with the global average but tourism demand is forecast to grow very quickly. With strong forecast Travel & Tourism investment spending and tourism being identified as a high priority sector by the Indonesia government, Indonesia is well placed to become one of the region’s big improvers in terms of both Travel & Tourism infrastructure and activity. BALANCED MARKETS Malaysia is currently well balanced in terms of its Travel & Tourism infrastructure. Investment spending is forecast to approximately double over the coming decade, slightly faster growth than expected in tourism demand. Similarly, in high-income Brunei a continued balance is likely, as spare capacity built up over the past decade will be offset over the next decade with forecast growth in Travel & Tourism demand and more modest increases in Travel & Tourism investment spending. 1 ASEAN includes the ten member states of ASEAN: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.