SINGAPORE: Southeast Asia has a lot to offer to global tourists.
The rich cultural diversity, affordable lifestyle and beautiful geography, all make countries in the ASEAN region attractive to tourists from around the world. Growing connectivity also makes it easier for tourists to experience multiple cities and countries within the same trip.
As the most developed economy in the region, Singapore alone attracted more than 16 million visitors last year, according to data from the Department of Statistics. For a small country, this figure is a significant share of the more than 100 million tourist arrivals in the ten ASEAN countries.
A sizable number of tourists visiting Southeast Asia actually come from another country in the region. The ASEAN Secretariat says that intra-ASEAN travellers make up 41 per cent of the tourist numbers in 2015 and this figure is expected to grow.
If we add the number of people travelling within Southeast Asia for work, the figure will be even higher.
A big contributor to this development is the growth of regional airlines, especially low-cost carriers.
A SINGLE AVIATION MARKET
Those who keep tabs on bargain flight tickets and are avid travellers within Southeast Asia will be interested to know that an important meeting likely to have bearing on the region’s aviation market will take place in Singapore this coming week.
Transport Ministers from across ASEAN will be in the country to discuss various regional transport issues, including the ASEAN Single Aviation Market. This is an agenda that can enhance tourism’s contribution to regional economic growth.
At a time when the world is facing a challenging economic environment, the region could certainly use a boost from travel and tourism.
Known as the Open Skies agreement, the Single Aviation Market initiative promises to create competition between airlines that will benefit consumers.
The agreement which had the support of ASEAN Transport Ministers in 2015 envisages the liberalisation of air travel and the removal of restrictions on air transport of passengers and cargo for airlines in the ten countries.
The single market will also provide the opportunity for homegrown airlines to expand by increasing their number of intra-ASEAN routes. While this will directly benefit the companies and their employees, the wider supply chain will see trickle-down effects too.
As they expand, airline companies will have to compete with each other, and consumers can expect fares to drop as a result of this rivalry. Consumers will benefit from cheaper airfares and more airline choices.
To differentiate themselves, airlines may also offer new routes to key destinations, providing still more options for tourists, and generating more opportunities in the tourism sector.
If ASEAN governments vigorously pursue the Single Aviation Market’s agenda, the benefits can be shared by all ASEAN citizens.
Singapore will a prime beneficiary because it is already a regional and global hub for many airlines. But neighbouring countries, like Malaysia, will reap benefits too.
The total contribution of travel and tourism to Malaysian GDP was RM167.5 billion (US$39.6 billion), or almost 14 per cent, in 2016. Tourist arrivals originating from ASEAN countries to Malaysia made up about 76 per cent of all tourist arrivals in Malaysia that same year. Evidently, intra-ASEAN tourism is a major contributor to the country’s economy.
The rise of alternative beach destinations such as Sihanoukville in Cambodia and Phu Quoc in Vietnam, to rival the traditionally popular Bali and Phuket, further illustrate how there is still so much more of Southeast Asia to discover, destinations for airlines to cater to, and tourist dollars to be earned.
It is not just existing hubs like Singapore which stand to benefit handsomely from the Single Aviation Market. There is something for everyone.
THREE STEPS TO TACKLE HURDLES
For sure, such a major regional undertaking does not come easy and there remains some hiccups.
ASEAN’s diversity means countries in the region are still at very different stages of development, and therefore every country will have their own calculations to make about the risks and benefits of liberalising their aviation industry.
Some, like Indonesia and the Philippines, have expressed concerns about the ability of their airline companies to compete against bigger rivals from other countries. These concerns are understandable, and clearly more work needs to be done in this respect.
There are three specific steps that can be taken by various ASEAN governments to tackle the hurdles.
First, an ASEAN-level arrangement that oversees the effective implementation of the Single Aviation Market should be established. Regular meetings of the heads of the civil aviation agencies from the different countries can be helpful to these ends.
Frequent interaction will enable them to have a deeper discussion on technical and regulatory matters to find solutions that take into account their national challenges, so that hurdles to air travel can be gradually lowered and eventually removed.
Second, ASEAN countries need to commit to harmonise regulations that affect the aviation industry, especially on matters that involve safety and efficiency. At the moment, the regulations are too varied, making cross-border enforcement and cooperation tricky.
For example, mutual recognition of licenses and certification for personnel that include pilots, engineers and air traffic controllers would greatly enhance the benefits of a Single Aviation Market. Similarly, cross-ASEAN standardisation and recognition of documents such as certificates of aircraft airworthiness would help make airline operations smoother too.
Third, there should be more high-level discussions that lead to concrete action plans and implementation timelines for a Single Aviation Market. These are in ASEAN’s overall economic interests of greater integration.
The ASEAN Economic Community’s goal of greater connectivity has indeed been discussed at length, but there are still many issues that are not yet fully resolved, when it comes to implementing initiatives like the Single Market Aviation, despite having in-principle support from the highest levels of government.
It is important for the ASEAN Transport Ministers meeting to come up with specific next steps as well as a clear timeline.
WIDER ECONOMIC BENEFIT
Efficient and affordable air transport is not just good for tourism, but also critical for the region’s continued economic growth and vibrancy.
The World Economic Forum predicts that the region will have the world’s fifth largest economy by 2020. Last year, intra-ASEAN total trade reached almost S$750 billion – a substantial figure as it is.
Just imagine how much more that figure could grow, with a more cost-effective aviation industry that enhances the flow of people and goods.
This Single Aviation Market is a potential game-changer for ASEAN. When the Transport Ministers meet, they should devote more attention to realising its possibilities.
If ASEAN Transport Ministers can commit to this agenda, and reiterate their commitment to speed up the process, there should be nothing preventing full implementation by the end of 2020.
The potential is huge and the sky’s the limit.
Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs in Malaysia.