TOURISM IN BURMA DOWN THIS SEASON

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 001355

SIPDIS

STATE FOR EAP/MLS; PACOM FOR FPA

E.O. 12958: DECL: 11/21/2015
TAGS: ECON ETRD PGOV SENV BM CACS
SUBJECT: TOURISM IN BURMA DOWN THIS SEASON

Classified By: Econoff TLManlowe for reasons 1.4 (b,d)


1. (SBU) Summary: Projected tourist arrivals for Burma's
November-March high season have dropped from last year.
Despite the regime's and the tourism industry's efforts to
make vacationing in Burma more attractive and less
bureaucratic, overseas campaigns by exiles to discourage
travel to Burma, coupled with the GOB's clumsy marketing and
the logistical difficulties of traveling in a wholly cash
economy, still keep many tourists away. Corruption and
bureaucracy constrain private tour companies. Burma offers
rich tourism potential, but until it has decent governance,
the potential will not be realized End Summary.


2. (SBU) On November 17, the general managers of Rangoon's
top hotels and travel agencies met with econoff and conoff
for a briefing on our American Citizen Services, and about
the effect of sanctions on their American tourist clients.
The GMs said that reservations were down about 3 to 4 percent
from last year. All of the hotel general managers complained
about the negative impact of U.S. sanctions on their
businesses, but acknowledged they had learned to live with
the difficulties, and they expressed appreciation for the
briefing.


3. (U) According to official GOB statistics, there were
650,000 tourist arrivals in 2004. This figure is inflated by
over 400,000 visitors who cross into Burma on day trips from
Thailand and China, and who spend little money while here.
The GOB has mounted campaigns to attract tourists,
particularly through the Myanmar Marketing Committee, a group
of expatriate hotel managers with good connections to the
current regime. Their efforts include overseas websites that
allow visitors to book their rooms using credit cards, which
reduces the need for tourists to carry large amounts of cash,
and bypasses U.S. restrictions on the transfer of financial
services.


4. (U) The Ministry of Hotels and Tourism claims that 250,000
international travelers arrive at Rangoon airport annually,
less than 2% of Thailand's annual visitor totals and less
than 10% of Vietnam's numbers. This figure also inflates
actual tourists arrivals because it counts every
international arrival at Rangoon's airport, which includes
business and diplomatic travelers.

The Americans: More Students, Fewer Wealthy Retirees
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5. (SBU) According to official figures, Americans constitute
approximately 16,000 tourists each year. That number may
show an increase in 2005 because 750 students and teachers
from the Semester-At-Sea program visited Burma for a week in
November during the ship's maiden port call in Rangoon. Half
of the guests who stay at the country's most expensive hotel,
the historic Strand in downtown Rangoon, are Americans,
according to the General Manager (who admits an occupancy
rate of 10-20%). Tour operators who handle American clients
describe the average US tourist as older, professional or
retired, and wealthy. When asked why they come, a tour
operator said most answer, "I've always wanted to come to
Burma, and now, finally can."


6. (SBU) Some of the most prestigious American travelers
visit Burma on tours organized by the Smithsonian
Institution, the NY Museum of Natural History and Stanford
University Alumni. These three groups will not come to Burma
this season. Pressure on these institutions from anti-Burma
groups in the U.S. forced them to cancel their planned trips,
according to the directors of New Horizons, the local travel
agency that handled these groups in the past.

Taxing Travel
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7. (SBU) Along with natural gas, gem and timber exports,
tourism is one of the few Burmese industries that brings in
coveted hard currency, but the GOB has taken minimal steps
since its failed "Visit Myanmar Year 1996" campaign to
develop the sector further. For example, private travel
firms must cover all costs for GOB officials to represent the
country at tourism promotion events overseas. Tour company
expenses are also high. The government takes 7% of gross
payments from foreigners as tax, plus an additional 30%
profit tax, making it difficult for tour companies to
survive, especially since most already operate with slim
profit margins and face rising inflation.


8. (C) Official GOB permits are needed to take tourists to
some sites, such as Mount Victoria in southern Chin State,
and also for tour operators to travel abroad for their work.
Tourism industry reps recounted their repeated difficulties
in getting the permits. A certificate showing current tax
payments is necessary, and, in order to get them, tour
operators must often bribe tax officials to accept their tax
returns and payments and to issue the required paperwork.
Some tour operators try to speed the process by making
advance tax payments, which requires payment of another
"fee". The Deputy Minister of Hotels and Tourism must also
approve all permits, and since he recently moved to the new
administrative capital in Pyinmana, tour agents communicate
with him by fax, (with a Rangoon exchange number). "Please
contact me," he told one travel agency. "I have nothing else
to do up here."

The GOB Rarely Listens to Business
--------------

9. (SBU) In a very rare instance of the GOB responding to the
needs of its own private sector, we learned from the industry
that the GOB recently postponed plans to upgrade the airport
runway at Ngapoli, Burma's leading beach resort town, in
January 2006, at the peak of tourist season. The GOB had
allocated $10,000 in this year's budget for the repairs, and
the project has to be completed by March 31, the end of the
fiscal year. Tourism industry representatives, working
through the Tourism Ministry, persuaded the government that
it would lose ten times as much in tax revenue if the airport
were closed in peak season. The GOB agreed to delay the work
until late February. However, the tourist agencies also
emphasized that this incident reflected the general ignorance
of officials of how the tourism industry works with packages
planned well in advance. Last minute official announcements
with no advance consultations hinder agencies' ability to
plan reliable itineraries for their clients.

The Green Pot Of Gold
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10. (SBU) Despite environmental stresses of excessive
logging, unregulated development and encroachment into
preserved areas, much of Burma remains undeveloped and offers
significant eco-tourism potential. Ten years ago, hoping to
attract foreign investment, the GOB opened fifteen of the
nation's nature reserves and wildlife preservation areas to
eco-tourism development. To date the eco-tourism projects
are modest, but relatively successful, attracting wealthy
visitors from both the West and Japan. A group of
environmentalists, business reps, academicians and scientists
has formed a new association to ensure that eco-tourism
development benefits the local communities and does not
destroy the environment. The chairman of a leading
environmental NGO surmised that the GOB doesn't really want
foreigners in the country at all, just the hard currency they
bring along.

Comment: Good Governance A Prerequisite
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11. (SBU) Burma has enormous potential for cultural,
historic, religious, recreational, scientific and
environmental tourism, but the regime's corruption,
repression and negative image discourage tourists. We see
little likelihood that Burma can realize its rich potential
for tourism, along with economic development in general,
until it has decent governance. End comment.
VILLAROSA