Let’s Revisit - The Problem with the Philippine Tourism Industry

More than a year ago, an incident happened in Siargao when a well-known news personality’s son was injured in a surfing incident.

It sort of exposed the sad condition of almost all the destinations in the Philippines where there is an utter lack of social facilities that can readily be provided to the tourists like medical care and yes, even police assistance.

Much of the issues were actually discussed in that article. Yet, they are still hardly addressed on a national scale. And to get the chance to be implemented, enterprising local government units often resort to “strategic” ways to get the attention of the national government agencies that are awash with funds to implement their mandates (e.g. DPWH for road development).

How do Destinations Get Their Funds?
Most provinces and municipalities cannot survive on their internally-generated funds (local taxes, permit fees, etc.). Much of their funds to effectively run their local government units are provided by the national government with what we call IRA or Internal Revenue Allotment that can run from about two hundred million pesos and upwards.

Two hundred million pesos may seem huge to an ordinary folk. But to a government unit, that amount borders on stressful career. For included in the IRA is almost everything that is needed by every Juan, Maria and Tutoy in their area, plus the salaries of all their employees.

Unfortunately, the IRA budget allocation does not end in the provision of salaries. All the other things needed by the municipality will have to be sourced from the IRA and the usually measly internally-generated revenue. A major part of expense would have to go to the usual social services such as health, public safety, utilities and garbage collection and management.

The most crippling expense would often go to development that is usually represented by infrastructure like roads, ports and airports. Depending on the quality of a road, its cost would be upwards of Php12 million per kilometer. So, if you are the mayor of a town with 40 kilometers of road to be developed, you can say goodbye to more than 3 years of your IRA for the roads alone.

But…. what’s the role of DPWH and all those government agencies?
That’s where the “magic” happens. National government agencies have the mandate to provide development to any part of the Philippines. Town mayors can pull heaven and earth to have a road in their territory declared as a national road so that the Department of Public Works and Highways will spend their budget aligning and building those roads, and even paying the private land owners whose properties will be traversed by the road. The same thing goes to ports and airports. There are national government agencies in charge of catalyzing the development of even the tiniest municipality thru their mandates (example - DOTr to help fund and build airports and sea ports).

What’s with tourism?
But, with the budget concern in everything, there is simply not enough for everyone. The development projects of the national government agencies cannot cover all requirements of every city and municipality in the country.

Here comes….. tourism!

When the tourism industry started gaining traction in the mid ‘90s, an increasing number of local government executives started looking at that sector as another savior for their areas. This is largely validated by pioneer provinces and towns who took in tourism as their development initiatives in the earlier years. A clear example would be the province of Cebu that was suddenly thrust into the tourism limelight when its airport and seaport were made “world-class” and greatly improved its characteristic as a destination. Cebu was followed by other provinces (e.g. Bohol), cities (e.g. Puerto Princesa) and municipalities whose infrastructure development gained ideal amounts of national government support, budget, and actual projects.

The Department of Tourism and the then Philippine Tourism Authority (now TIEZA) also had projects that were able to provide site development programs, infrastructure support such as roads and convention facilities to several destinations.

But a real game changer was when the national government finally recognized the power of tourism. Who wouldn’t, when the sector now contributes 12% to the GDP? The DPWH was given the mandate to fully support the DOT and they came up with a program with the words “tourism roads” as part of the document.

It has given so many other municipalities the chance to introduce long-awaited development for their constituents. Like a nice river would need 20 kilometers of road in order to be accessed by tourists. One good proposal write-up, some follow-ups, and the road would sprout out in two or three years’ time. No matter that the road would cost Php120 million and that less than 5,000 people would visit the river every year. The tourism road means that it can also function as a farm-to-market route and bring much-needed assistance to the non-tourism members of the community. I’m perfectly okay with that - tourism as an excuse for development.

I’ve only been talking of roads and infrastructure. What about the other needs of the tourists like water, waste management, health and safety?

Therein lies the problem….. or the next opportunity.

Social services like garbage collection, water services, health facilities and public safety are often dumped into the local government units (remember that IRA thing?). Unfortunately, there are processes and qualifications within the government system who gets approved for what project, and that is based largely on the volume of their resident populations. Now, how do you classify the tourists? - Transient Population, or whatever convenient term, except resident. So… no matter how large the number of tourists is in a destination, if the resident population is less than 10,000 people, it will never be qualified to have a full-serviced hospital, or given added IRA for waste and utilities management.

Unfortunately, the tourism industry is a highly demanding sector. It needs steady and ample supply of water, electricity and even high capacity waste collection. Of course, you can add emergency and health facilities, as well as police presence.

If you look at it from another angle, tourism can also be a curse to an emerging destination. I can write a 3-part article on the negative impacts of tourism, but we have to focus on this one.

Aside from using tourism as a convenient excuse or valid reason to request for development projects such as roads or road widening, LGUs can now also request from national government agencies mitigating projects such as waste management, water and electricity programs. But the usually limited budgets would often go to the best-written proposals, the ones with complete documentation/required papers or a politician who can twist the arms of the government people. You see, every LGU needs to hire smart and articulate people who can do the papers and not be left behind by 1,500 other municipalities competing for the attention of the national government.

What an increasing number of destinations are doing now is to implement a tourist fee system where the money would be allocated to help fund the management of the destination, the usual excuse would be for environment or waste management/collection. But the reality is the amount collected is often not enough, unless it comes from hundreds of thousands of visitors. Worse, the money may not be spent for its purpose.

You see…. tourism is not a simple industry….

How do we turn this situation around?

One way to ensure that the positive economic impacts of tourism are assured and the municipalities benefit sustainably, is to push for legislative or executive moves to make the transient population (i.e. tourists) part of the development criteria of the country. That in order to have a functional hospital or police force, the presence of a large and growing number of tourists would be enough reasons to introduce social services and not granted on the basis of who makes the best proposal or who talks to the government executives.

There are more than 1,500 cities and municipalities in the Philippines. You can talk to your congressmen or senators to come up with a law on this.

I’m actually a bit excited on the possible side effects if this would be implemented in the country. The local government units will then be very diligent to get the precise tourism statistics which should be a major basis in the granting of needed development projects. The private sector would be more willing to share their visitor data (with less fear of the BIR) so their destinations can greatly improve, and their businesses more assured of sustained number of visitors.

If that happens, everybody can come out the winner.

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In case you want to read my first article in CNN Philippines, HERE IT IS.