The Impacts of Tourism in Vietnam - Case Study Example

To the outside world, Vietnam is associated with war, destruction and poverty. On the world map of tourism, Vietnam has lagged behind due to the 11-year old war which started on 7th August 1964 and ended on 30th April 1975 leaving the country crippled with destruction all-around. The blurring impact of war drew a curtain to the scenic beauty and cultural heritage of Vietnam. Actually, Vietnam is quite rich in external visible natural beauty and cultural diversity which goes as far back as 4000 years. Cultural history of Vietnam has the impact of Chinese rulers around 100 B.C. and later in A.D.166 of Roman travelers. Modern Vietnam has the cultural impact of western nations like France, Portugal and the Netherlands in its history. According to Business-in Asia (2007), tourism growth in Vietnam has been stable with a visitor increase of 20.5% in 2004 against the previous year although bird flu affected the tourist business in the first half of the year which was recovered at the end of the year. Highest number of tourists visits Vietnam from China and North Asian countries to be followed by ASEAN countries, Europe and North America. Literature Review on Impact of Tourism According to the theory of multipliers, the impact of tourism on the economy multiplies, which is an over-estimate of the impact on economy. Studies give undue importance to tourism in economic growth especially in the matter of hotels which need expertise of the line. Tourism is presented as a mechanism of urban advancement which is not based on facts and given unnecessary hype (David & Kevin, 2003, 1). Countries the world over use tourism as a strategy to justify huge public investments especially by organisations like EU Regional Development Fund, necessitating review studies of tourism impact on economy. Generally, benefits are measured in terms of economic development of the area, number of jobs, types of jobs, development of infrastructure and the appeal generated out of such activities for economic investment (David & Kevin, 2003, 1). The tourism multiplier model was developed first by Archer (1973) in the study of Anglesey, “The Impact of Domestic Tourism”. A vast range of authors that include Archer (1976, 1977a, 1977b); Henderson (1975); Wheller and Richards (1974); Vaughan (1977); Archer, Shea, and Vane (1974)) have made use of these models. It helps policy makers to know the exact figures on the employment and income generation impact of tourism, taking both direct and inspired effects as based on scientific study of the impact. According to the study undertaken by Central London Polytechnic, Leisure Works and ORV Research (1990, p. 66), “Tourism projects have had a positive net impact on the areas in which they have been undertaken”. The 20 projects studied showed that other than indirect jobs, 1200 direct jobs and 348 temporary jobs were created. Secondary jobs were also in huge numbers, which in the case of the Albert Dock and Merseyside Maritime Museum, were 70% over the direct jobs and yet in another case examined Hull Marina and Post House; secondary jobs stood for extra 44% jobs. These secondary effects are known as the multiplier effect, to be measured by the multiplier. No doubt, policy makers at national and other platforms get important feedback from tourist multipliers. In the U.K. and the U.S. it is taken for granted for a number of old and industrialised cities that improvement in their scenic beauty regenerated the urban tourism, naming “Baltimore, Cleveland, Detroit and Pittsburgh in the USA and Bradford, Birmingham, Liverpool and Manchester in the UK, to cities like Duisburg and Lyons in continental Europe" (Law, 1993)) as cited by David &Kevin (2003, p. 2). The shift from the stance that tourism has no permanent impact on economic regeneration and job opportunities are temporary to recognising the impact of tourism by policy makers in economic regeneration took a span of just two decades. The World Tourism Organisation in its Tourism Economic Report (1998) has provided an insight into matter. The multiplier model has been sharply tuned with the changing times, its latest development is in satellite accounting, the notion has been discussed in the literature of Gustavsen & Almedal, 1998; Baaijens, Nijkamp & van Montfort, 1998; Felsenstein & Freeman, 1998; SahHun & KyuHo, 1998; Dwyer & Forsyth, 1998; Freeman & Sultan, 1997; Luft, 1997; Wagner, 1997; Raguraman, 1997; Wang, 1997. The application of multiplier model has been wide enough making it an international concept with different techniques used in export based models (Harris & Narayanan, 1999)), and the more renowned Keynesian ad hoc and input-output models (Frechtling & Horvarth, 1999)), as cited by David &Kevin (2003, p. 3). It is the general impression in literature that multiplier analysis is being misused (Hudson, 2001; Yu & Turco, 2000; Harris, 1997; Wang & Bixler, 1997)). According to Yu and Turco (2000, p. 138)): “Overemphasis on presentation of the total impact, rather than on interpretation of the resulting estimates and description of the application limitations has often resulted in misunderstanding of the study results”. Hudson (2000, p. 20)) finds fault with the methodology used by the author in making decisions that affect the final result; one needs to be always on the alert not to reach decisions. There remains ambiguity over the number of jobs created because of tourism. For example in Australia, the number of dentistry related jobs were almost totally of combined amount of small parts of equally reduced jobs in dental clinics throughout the country where tourists were treated. Inaccuracies were mythical as tourism creating “million jobs” although actual figures were somewhere 694,000 direct jobs and 334,000 by multiplier effect (Leiper, 1999)), as cited by David &Kevin (2003, p. 4). We should take the economic impact analysis as a most nearer guess rather than totally accurate. Crompton, Lee, and Shuster (2001) feel that results of the studies of economic impact of tourism are manipulated by vested interests deliberately. The purpose of most such research projects is to present a rosy picture to lure investment, not to show facts (David &Kevin 2003, p. 4). The notion of multiplier is based on the interrelation and dependency among different industry sectors. A demand in tourism will propel a chain reaction of suppliers fulfilling the demand and creating demand in different sectors. A shift in tourism products’ demand will create economic activity in the form of production, income, employment and revenue generation for the government. Through tourism multiplier, proportional shift in employment, revenue, income and production can be measured. The impact can be attributed to direct, indirect and personal effects or affects. Before deriving value, it is important to know what methodology has been employed and the type of multiplier as there are five different types of multipliers. The ad hoc multiplier developed by Archer (1973) is the best choice among input-output and Keynesian methodology to avoid the weaknesses of different multiplier models. These weak points of methodology of the multiplier and deriving impacts over-describe the significance of tourism in economic growth (David &Kevin 2003, p. 5). Tourism & Vietnam Vietnam is rich in ecological diversity, natural beauty and multi-ethnic culture which help in the promotion of tourism and implementing policies to promote tourism. With the promotion of tourism in Vietnam, tourism related infrastructure has developed in the major cities. Vietnam’s ethnic minorities especially in the North, in the Dien Bien Phu region and in Sapa and its adjoining landscapes rich in picturesque beauty are related to ecological and cultural tourism. It is the relationship between ethnic minority groups with nature that provides the element of culture to tourism. Efforts have been made at government level to preserve the nature, forests, mountains, restoring and upgrading tourist infrastructure, protecting the cultural identity and lifestyle of the ethnic groups, including the ethnic minorities in Dien Bien Phu and Sapa, etc. Tourism has helped in raising the living standards of poor ethnic minority groups. Negative impact of increase in tourists’ rush is seen in rising pollution, traffic and loss of wild life habitat (Business-in-Asia, 2007). Government has been making strenuous efforts to mitigate the negative impacts by paying attention to the goals of “sustainable tourism” not only in Halong Bay, but all places of tourist interests including historical relics and all beautiful landscapes throughout the country. All stakeholders in the tourism industry whether communities, students or government agencies know well the importance of programmes like “Green Summer”, “Green, Clean and Beautiful Cities” and “Clean Seas, Clean Streets without noise pollution”. Waste management is a big issue given due importance in cleaning the waterways and controlling building and construction activity by keeping focus on sustainable tourism (Business-in-Asia, 2007). Vietnam is a highly populated country with on-an-average young population. Rise in tourism demands quality catering services by providing hospitality industry with quality management staff, chefs and other workers. It has increased the scope for providing specialised hospitality training and education to help in creating job opportunities. Tourism being an economic sphere helps in linking different sectors, areas, stakeholders with quality services needs. Demand of human resources especially the tour managers, hotel managers, tour guides, receptionists, chefs, bar tenders, room service staffs, waiters and waitresses increases parallel to the growth of tourism. Different government ministries, the National Administration of Tourism (NAT) and particularly the Ministry of Education and Training runs specialised courses in the universities, higher education bodies and vocational training institutes to fulfill the industry needs. A number of global organisations’ services and help have been taken from organisations like World Tourism Organisation, ATF, ASIANTA, PATA, etc., and technical assistance from the EU, Belgium and Luxembourg to raise the standards of human resources, crucial for the development of tourism (Business-in-Asia, 2007). The Vietnam tourism is comparatively young in global terms but the government initiative has speeded up its growth. Renowned travel companies like Viet Flying Dragon in the North and Saigon Tourist in the South have global standards. Reforms have come by “taking the short cut” to minimise the difference between Vietnamese and global tourism companies in the matter of professional services and over-all development. With the cooperation among different stakeholders like the NAT, Ministry of Education and Training, universities and training institutes, quality curriculum for developing tour guides has come into practice. Standards for training courses meant for tour guides are being maintained at all levels (Business-in-Asia, 2007). Vietnamese economy is also attracting huge foreign investments, currently investing in hotel projects, golf courses and commercial buildings to the tune of USD9.4 billion from countries like Singapore, Taiwan, Korea, Japan and France (Business-in-Asia, 2007). Impact of Tourism on Hoi An After Hoi An’s inscription as World Heritage site in 1999, tourists’ rush increased multifold. The Nguyen Thai Hoc Street was revitalised in 2000 so that equal redistribution of economic benefits be achieved in Hoi An. Licenses were provided to the property owners living on the Nguyen Thai Hoc Street for opening tailoring shops, art galleries and souvenir shops. Other services granted permission included home stays, renting and leasing to businesses and tour operators. Cultural activities like folk songs were performed on special days like fourteenth night of every lunar month. Such activities help in strengthening the cultural and social fabric of communities. Due to tourists’ rush and about 200 small businesses operating, inequality in income among the heritage property owners has reduced. They are now in a better position to maintain the heritage buildings (UNESCO, 2008, 41). Tourism has revived and revitalised the traditional arts in Hoi An. In Kim Bong village, situated on the southern bank of Hoi An River, the forgotten traditional art of woodcarving has been revived. Woodcarving skills of the villagers were quite famous over the generations for furniture, pagoda constructions and boats. Only traces remained in distinct columns, in structures of Hue citadels. By 1990, the art form was dying with a number of craftsmen left. UNESCO with the partnership of Municipal government of Hoi An provided grant, technical know-how and training to revitalise the dying art form of woodcarving. Such traditional skills of Hoi An like woodcarving, boat making and house building trades are part of the town heritage of Hoi An (UNESCO, 2008, 41). The rush of tourists has increased significantly both domestic and international since declaration of Hoi An as World Heritage Site, jumping 24% in 2000 and 82% in 2001 as given below in Figure 1 (UNESCO, 2008, 47). Figure 1. Annual Tourism Arrivals (1999-2007) Tourism revenue along with other commercial activities together make tourism the biggest economic sector in Hoi An. Municipal revenue from tourism was accounted to be 64% of the total revenue, as shown in Figure 2 below. Figure 2. Major Industries in Hoi An The steady growth in the revenue as shown above has helped in attaining the annual average growth rate of 13% for the town of Hoi An. Figure 3. Revenue Attributable to Tourism in Hoi An (1999-2007) (Figures in US$ 000) Income from tourism business includes retail selling of products and services to tourists, food and beverages besides residing, touring and other services. Table 4. Breakdown of Tourism Revenue (Figures in US$ 000) It shows that the major component of revenue is in the form of tourist services. Employment Employment opportunities in Hoi An have drastically increased. The tourism multiplier model seems to be working perfectly in Hoi An with the multiplication of jobs in certain areas businesses, particularly in hotel and restaurant work, express tailoring services, tour guiding, transport services (taxi, motorbikes and bicycle renting), internet cafes, souvenir sales and lantern making. As per the Department of Statistics of Hoi An, tourism provided 9,900 jobs in 2005, out of which 3,300 were from tourism businesses. This number increased by about 9% in 2006, providing employment to 10,778 people. The number of people working in tourism business was 3,411 while 7,367 people were recruited by trade and service sectors (UNESCO, 2008, 54). Income Levels Residents of Hoi An’s earning has increased in average income just because of the impact of tourism. Poverty rate has come down. A reduction in poverty level has been observed by the Hoi An municipal government from the past decade (UNESCO, 2008, 55). Conclusion Tourism in Thailand has transformed into a multi-billion dollar industry, earning huge in foreign exchange and strengthening the potential in job market. Vietnam has learnt the lessons from its experiences from tourism. In terms of attracting international tourists and earning revenue from tourism, Thailand is quite ahead of Vietnam in the promotion of tourism. Vietnam can learn how to arrange economical tours on a large scale without creating untoward incidents throughout the tour operations. Like Thailand, Vietnam should focus on developing islands locations like the islands off of Nha Trang, Phu Quoc Island and Can Dao Island. Vietnam needs to allocate sufficient budget for the development work especially in bays, lagoons and islands. Halong bay has been regarded the 8th wonder of the world, Nha Trang is one of the most scenic lagoons of the world. Suc islands as Cat Ba, Van Don (in Halong Bay), Cham islet (Quang Nam province) and islands in Nha Trang, Phu Quoc Island and, Con Dao Island are scenic seascapes with cherished beaches have sufficient green flora. These are great sights and locations attracting tourists in large numbers (Business-in-Asia, 2007). References: Business in Asia, 2007. Interview with Mr. Vu The Binh Director of Travel Department, Vietnam National Administration of Tourism. Available from: http://www.business-in-asia.com/vietnam_tourism.html [Accessed 1 March 2010]. Egan, David J & Nield, Kevin 2003. The economic impact of tourism--a critical review. Journal of Hospitality and Tourism Management. Available from: http://www.allbusiness.com/accommodation-food-services/accommodation/648203-1.html [Accessed 1 March 2010]. UNESCO Bangkok, 2008. Impact: the effects of tourism on culture and the environment in Asia and the Pacific: cultural tourism and heritage management in the World Heritage Site of the ancient town of Hoi An. Viet Nam, Thailand. Available from: http://www.unescobkk.org/fileadmin/user_upload/culture/Impact/IMPACT_Cover/IMPACT_Hoi_An.pdf [Accessed 1 March 2010]. Read More