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Position Paper

Developing Tourism Policy for KP

DRAFT

January, 2013

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Contract No.: Task Order No. Contractor Name: USAID Technical Office: Chemonics International, Inc. Office of Economic Opportunities USAID Pakistan November, 2012 Position Paper Developing Tourism Policy for KP USAID Pakistan

Date of Report: Document Title:

Authors Name: Activity Title and Number: Work Plan Action ID number:

The views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development, the United States Government or Chemonics International Inc.

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Data Page

Name of Component: Business Enabling Environment Author: USAID Pakistan

Practice Area: BEE

Tourism, policy economic growth

Khyber

Pakhtunkhwa,

private

sector,

Abstract

This report presents the position paper for developing tourism policy for KP, identifying key issues that need to be addressed in the proposed policy and initiates the discussion around these issues.

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Table of Contents
DATA PAGE ABSTRACT LIST OF FIGURES ACKNOWLEDGEMENTS EXECUTIVE SUMMARY 1. BACKGROUND AND CONTEXT 2. EXISTING AND PREVIOUS POLICIES AND PLANS 2.1 TOURISM POLICIES AND PLANS 2.2 KPS COMPREHENSIVE DEVELOPMENT STRATEGY 2010-17 2.3 ECONOMIC GROWTH STRATEGY OF KP 2.4 TOURISM VISION DOCUMENT OF KP 2.5 SWOT ANALYSIS 2.6 REVIEW OF TOURISM LEGAL FRAMEWORK LICENSING/REGISTRATION AND REGULATION OF SERVICE PROVIDERS IN THE TOURISM INDUSTRY LAWS AFFECTING ENVIRONMENT AND HERITAGE PROTECTION POLICY MAKING AND FACILITATION REFORM RECOMMENDATIONS 3. KEY ISSUES/CHALLENGES FOR KP TOURISM SECTOR 3.1 CROSS-CUTTING ISSUES 3.2 SECTOR-SPECIFIC ISSUES 4. NEED FOR TOURISM POLICY SOME KEY ISSUES APPENDIX A - LIST OF PERSONS CONSULTED APPENDIX B - DOCUMENTS REVIEWED 4 5 6 8 9 10 15 15 16 18 18 20 21

21 23 24 24 26 27 30 36 40 43

List of Figures
Figure 1: Tourism Receipts and Exports ............................................................................. 10 Figure 2: Domestic Tourism Volume 2009 ......................................................................... 11 Figure 3: Foreign Tourism in Pakistan ................................................................................. 11

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Figure 4: Origin-wise Volume of Foreign Tourists........................................................... 12 Figure 6: Challenges Impeding Growth of Tourism Sector in KP ............................... 27 Figure 7: Developing Tourism Policy for KP ...................................................................... 36

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ACKNOWLEDGEMENTS
This position paper has been developed through support from USAID and presents findings evolved out of extensive consultations with stakeholders from public and private sectors of KP from tourism and other allied sectors. The document also extensively relies on the vision document for tourism sector developed by USAID, besides an extensive literature review of various relevant documents. Section 1 covering background and context has been mostly captured from the Vision Document. The complete list of documents consulted is also appended at the end. A number of stakeholders have provided useful comments to develop this position paper. The list of all persons consulted is appended at the end (Appendix A), whereas the key highlights of various stakeholder consultations have been compiled separately and available with FIRMS. The FIRMS team members, especially the BEE and Tourism Specialist also gave extensive input to the team of consultants.

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EXECUTIVE SUMMARY
Tourism sector of Pakistan in general, and KP in particular, has a high potential to contribute in the economic development of the country. The tourism sector in KP has been facing a host of challenges that have been impeding growth of the sector in KP. A thorough understanding of these constraints is required to develop strategies to address these bottlenecks. Some of these challenges are cross-cutting, affecting the overall economy such as the sluggish economic growth, unclear policy and institutional regime in the wake of 18th constitutional amendment, poor law and order situation and low public sector capacity to facilitate and regulate private sector. On the other hand, there are also some serious sector-specific issues affecting tourism sector such as limited availability of information to monitor travel and tourism trends preventing planning; low quality of workforce; low level of private investments; absence of standards; poor infrastructure; limited and sub-optimal marketing activities, etc. currently the Govt. of KP does not have a clearly articulated formal tourism policy. However, considering that the tourism sector requires coordinated efforts by a number of departments and agencies such as environment, wild life, forestry, etc. besides the Tourism Department itself, along with TCKP, the need for having such a policy is critical. Moreover a well laid out tourism policy would demonstrate long-term commitment of government in the sector and would form the basis for shared understanding of and synergized actions and coordinated planning by different stakeholders. The proposed policy must focus on bringing clarity in governments role at various levels, in the wake of 18th constitutional amendment and should delineate clearly the role of government vis--vis the private sector. Ideally the government should adopt the role of a regulator as well as that of the facilitator, whereas the private sector should come ahead for service provision. The policy must also include a well laid out institutional structure to implement the policy to supplement TCKPs capacity. While there is a need to provide incentives to private sector to invest, such a structure should take into account the cost implications of these incentives and should evaluate the value for money considerations. The incentives should also be closely tied with some well laid out policy considerations. The policy framework should be based on and linked with a clear resource framework, where the government can highlight the extent of its contribution through various means/forms. In the absence of sufficient resources, the government may consider mobilizing additional resources through private participation, commercial lending or donors assistance. Last but not the least, the policy must focus on sustainable tourism development, capitalizing on countrys diverse geography and opportunities for ecotourism development, community tourism and research.

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1. Background and Context1


The tourism sector2 has gained significant importance over the past few decades all over the world. Pakistan in general and KP in particular, blessed with immense tourism potential, have also been endeavoring to fully capitalize on this potential despite the security challenges faced by the country. While the province of Khyber Pakhtunkhwa boasts having three fourth of the countrys tourism assets, with sites representing archeological, cultural, historical and religious significance and attractive natural and scenic beauty, the province has also been facing severe conflict and security challenges. This calls for a renewed effort on governments part to come up with innovative solutions to promote tourism in the province and facilitate investment in the sector.
Year 2006-07 2007-08 2008-09 Tourism Receipts PKR 16,906 Million PKR 16,486 Million PKR 17,392 Million

Tourism Sector in Pakistan - Tourism sector of

Pakistan in general, and KP in particular, has a high potential to contribute in the economic development of the country. During the year

2008-09, total share of tourism receipts in the GNP was only 0.3%; while its share in exports was only 1.2%.
Source: State Bank of Pakistan

Figure 1: Tourism Receipts and Exports

Domestic Tourism in Pakistan

In Pakistan, total number of domestic tourists during the year 2009 was 46.07 million.3 About half of these tourists were the people who travelled to meet their social obligations (friends, relatives, etc.). About 14% travelled for recreation purpose. Other important categories were of the people who travelled for business, health or religious reasons.

1 2

Much of the content is this section has been taken from Tourism Vision Document developed by USAID. The World Tourism Organization defines tourists as people who travel to and stay in places outside their usual environment for more than twenty-four (24) hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from wi thin the place visited. 3 Figure based on Domestic Tourism Survey 2000 by Ministry of Tourism

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Figure 2: Domestic Tourism Volume 2009

International Toruism in Pakistan In 2009, on a global basis, there were 880 million international tourists; compared to a figure of 920 million during the previous year. Total number of foreign tourists coming to Pakistan in 2009 were 0.873 million; compared to a figure of 0.557 million in the year 2000. Pakistans share of the global tourism market in 2009 was only 0.09%; which cannot be termed satisfactory. In South Asia, Pakistans share from amongst the total 10 million foreign tourists was 8.7%; compared to Indias share of 50%.
Figure 3: Foreign Tourism in Pakistan
Purpose wise Arrival of Foreign Tourists
(Source: Ministry of Tourism )
Others 7.9 % Holiday/ Recreation 14.7 %

Pakistan Foriegn Tourists Arrival Trend


(Source: Ministry of Toruism, via Ministry of Interior )
1,000 900 800 700 600 500 400 300 200 100

Business 21.4 %

898 798 648 557 500 498 501

840

823

873

VFR 56.0 %

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Figure 4: Origin-wise Volume of Foreign Tourists

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Majority of the foreign tourists come to Pakistan from Europe. In 2009, 44% of the total arrivals into Pakistan were from Europe; major share of which was claimed by overseas Pakistanis coming from United Kingdom. South Asia was the second largest origin for international tourists coming to Pakistan, accounting for 21% of the total. Of these tourists, a major share is contributed by the Sikhs coming from India for visiting their holy places. Toruism in KP KP is a unique province of Pakistan where all the types of tourism attractions exist. These include tourism sites with natural, scenic beauty, sites with unique historical and/or religious significance, sites foe eco-tourism, winter tourism, shopping, cuisines, sports and festivals. No other province of Pakistan can claim to have such diversity of Tourism assets. Some more popular tourist locations in KP include Swat Valley, Kaghan Valley, Chitral Valley, Dir Valley, Abbottabad and Galliat, Peshawar and Khyber Pass and surroundings. As per some estimates4, the total number of domestic tourists visiting Khyber Pakhtunkhwa in a year is about 8.8 million; which account for about 19% share of the total national domestic tourist traffic. A higher share of Khyber Pakhtunkhwa in domestic tourism compared to its share in population is a clear indicator of the competitive edge the province possesses over other provinces/regions of the country. On the other hand, total number of foreign tourists arriving in Khyber Pakhtunkhwa in 2009 was 47,900; which translated into 5.6% share of the national foreign tourist traffic. Tourism Institutional Structure at KP In KP, Tourism Corporation Khyber Pakhtunkhwa (TCKP) and the Department of Tourists Services (DTS) are two major entities responsible for tourism organisation and management. In addition, Pak Austrian Institute of Tourism and Hotel Management (PAITHM) also exists in the province which is responsible for producing skilled human resources in the hospitality sector. All these organisations are collectively working under the Department of Sports, Tourism, Youth Affairs, Archaeology & Museum. A delegated Secretary performs the responsibility of an official in-charge of the Department. After the devolution it
4

Figures for 2009; KP Tourism Vision Document

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has been presumed that PTDCs motels and asserts in KP will be handed over to the same Secretariat. In order to compete in both the domestic and international markets and also to efficiently perform the newly assigned responsibilities, it is required that both TCKP and DTS should restructure their originations accordingly.

Figure 5: Organizational Structure of Department of Sports, Tourism, Youth Affairs, Archaeology & Museum

In order to promote the tourism potentials of Khyber Pakhtunkhwa, the Tourism Corporation Khyber Pakhtunkhwa (TCKP) was established as public limited company in 1991. TCKP is governed by Board of Directors, where the provincial tourism minister serves as its chairman while the relevant secretaries perform the responsibilities of the directors. It is headed by a Managing Director as it chief executive. The main responsibilities of the Corporation are: Promotion of tourism by exploiting the potential; Produce publicity and promotional material for distribution at home and abroad; Develop packages to attract domestic and international tourist by involving private sector; Organize tourism fairs at home and attend international tourism fairs to introduce the tourist product of KP; Build hotels and motels, where private sector is shy to invest; Monitor and manage the tourism activities; Protect the tourism assets by bringing the awareness in general public by holding awareness campaigns; Play the role of catalyst by providing level playing field for the private sector

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Figure 6: Organizational Structure of TCKP

Department of Tourist Services (DTS) In KP, the office of Department of Tourist Services (DTS) was established by Federal Government in 1988, however, in March, 2011 after the devolution this Department came under the administrative control of government of Khyber Pakhtunkhwa. The main role of the Department is to provide measures for controlling and regulating the standard of service and amenities for tourists in Hotels, Motels, Resorts and Restaurants. The Department of Tourists Services has a mandate to implements the following three acts. 1. The Pakistan Hotel and Restaurants Act 1976 & Rules 1977 2. The Travel Agencies Act 1976 & Rules 1977 3. The Pakistan Tourist Guides Act, 1976 and Rules, 1977

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Assistant Controller (B-17) Peshawar

Inspector (B-16) Inspector Hotels & Restaurants Superintendent (BS-16)

Inspector (B-16) Inspector Travel Agencies

Figure 7: Organizational Structure of DTS

Both the organization structure and the Acts implemented by DTS equally require drastic amendments. The number of skilled human resources in the Department should be increased on priority. It is also important to improve the existing rating system of hotels and restaurants. In addition, standards specified for Tourist Guides should be amended and properly categorized. It is also recommended that an individual entity should be established within the Department for regular evaluation of the tourists guides and the concerned training providers.

2. Existing and Previous Policies and Plans


2.1 Tourism Policies and Plans
In Pakistan, the available literature on tourism planning and management reveals that the countrys first master plan was conceived in 1967. The plan recognized environmental issues in general terms, however, it did not emphasize environmental conservation, urbanization and landscape preservation. Resultantly, hotels and tourists resorts emerged close to natural attractions and archaeological monuments. From 1967 till the formulation of National Tourism Policy of 1990 some planning attempts were made for isolated projects such as UNESCO Master Plan (1972) for the Preservation of Mohenjo Daro and compilation of tourists statistics in 1971 etc., however no comprehensive and structured effort was undertaken to promote tourism in the country, In order to control pollution in mountainous areas some environmental planning measures were also introduced in 1983 and in 1988 by making mountaineering and trekking expeditions responsible for leaving camping sites clean of garbage and making contribution of $200 for clean -up operation. The Government of Pakistan presented its first formal National Tourism Policy in 1990, however, due to some fundamental issues this Policy has rarely been implemented. The major reasons of this failure in implementation included absence of stakeholder involvement, poorly defined responsibilities of various public and private sector actors, financial limitations, institutional constraints and low capacity. In 2010, the Tourism Ministry drafted a relatively more comprehensive National Tourism Policy. The policy identified challenges and constraints for tourism industry in Pakistan, followed by marketing and developmental strategies. The marketing strategy emphasized on public private partnership, diversification of tourism
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products, information technologies, target markets for selling specific products, whilst, the developmental strategy emphasized the role of public (Federal & Provincial governments) and private sectors in tourism development. It also proposed PPP opportunities in tourism sector of the Country. Furthermore, the draft policy also recognized the importance of closer international cooperation, joint marketing using international organizations, multi-country and bilateral relations for tourism development. Although, the draft tourism policy, 2010 is comparatively more comprehensive than national tourism policy, 1990, however, it still paid negligible attention to some issues of grave concern like: The three major acts covering hotels, travel agents, and tourist guide, which all are outdated, were presented as part of the draft policy without any appreciable changes for tackling the current needs of the industry. PPP opportunities in Pakistans tourism sector were presented more generically without specifying areas for partnership and relevant investment in each province. Like tourism policy, 1990, the action plan of the draft tourism policy poorly defined stakeholders responsibilities. For the sake of policies integration between provinces and the Federation Pakistan National Tourism Council, actually proposed in national tourism policy, 1990, was reactivated without any structural or functional changes for the sake of its more proactive role as compared to its dormant status in the past. Some of the unrealistic concessions and incentives mentioned in tourism policy, 1990 were repeated in the draft policy, which needs careful examination for on ground implementation. The draft policy was presumed for achieving its strategic goals within the next 10 years, but keeping in view the present political turmoil and financial instability of the country the proposed time frame is still a debatable issue. In order to maintain skilled staff complement in the tourism sector, Tourism Master Plan (2000) estimated an average of 3000 additional staff need to be upgraded each year. At present the total annual skilled staff output of the tourism training institutes is approximately 515, which is clearly insufficient to cope with the demand of the tourism industry. Although, the draft tourism policy has only highlighted the training need issue of the sector, however, it failed to present a robust action plan to overcome this shortcoming of the industry. Although, the draft policy exhibited glimpses of community importance in tourism promotion, however, it neither included their exact views in the formulation of the policy nor it describe their future role in sustainable tourism development of the country.

2.2 KPs Comprehensive Development Strategy 2010-17


The Comprehensive Development Strategy (CDS) of KP presents the provincial governments vision and strategic direction and provides a comprehensive

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development plan. The CDS also presents short, medium and long term plans for various sectors. CDS presented an overarching development strategy covering all areas with priority policy and programs ranging from public finance, governance, social development, food policy, Agriculture employment, Irrigation, Power and Industrial development. CDS also extended the objectives laid out under the national Poverty Reduction Strategy Paper (II). The CDS also recognized tourism as provinces key strength and important means of livelihood to substantial percentage of population in Swat, Chitral, Abbottabad and Mansehra. The key priorities for tourism sector as listed in CDS are given below.
Tourism Sector Priorities and Allocations Institutional strengthening and capacity building of the Department, including STC (now TCKP) PKR 450 Million; Organization of sport events: national, provincial and regional events, including promotion of traditional sports and games PKR 200Million; Construction of cultural exhibition halls at divisional level and art display galleries PKR 330 Million; Holding of cultural shows and activities, and display of handicrafts PKR 50 Million; Assistance to drama artists, poets, musicians, artists, printing publication of literary and artistic works and allied activities PKR 135 Million; Installation of chairlifts in key tourist destinations PKR 3,500 Million; Commissioning and leasing of GoKP guest houses PKR 450 Million; Holding of festivals and tourism promotion events PKR 600 Million; Creation of transport fleet PKR 470 Million; Creation of tourists hostels and centers PKR320 Million; Development of publicity and promotional material PKR 325 Million; Operationalization and transfer of federal government properties in KhyberPakhtunkhwa to STC (now TCKP) PKR 400 Million; Promotion of Khyber Pakhtunkhwa tourism abroad PKR 178 Million; Exploring virgin tourist sites in Khyber Pakhtunkhwa PKR 125 Million; Creation of water and air transportation PKR 1,000 Million; Subsidies in various heads for the private sector from the tourism and hotel sector, thus making tourism an income-generating activity for the masses PKR 320 Million; Procurement of caravans/mobile homes and log cabins for installation and utilization at tourist sites PKR 800 Million; Skiing facilities and water sports in feasible areas PKR 1,000 Million; Construction of youth development centers and hostels, and the purchase of land at divisional level PKR 200 Million; Cash awards to talented youth, and youth exchange programmes PKR 70 Million; Conservation and rehabilitation of historical sites in Khyber Pakhtunkhwa PKR 400 Million; Upgrading and maintenance of existing museums, and the construction of new museums PKR 80 Million;

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Promotion of cultural heritage, domestically and abroad PKR 70 Million; and Exploration and excavation and documentation of archeological sites, and publication of reports. PKR 28 Million SOURCE: Comprehensive Development Strategy 2010-17

2.3 Economic Growth Strategy of KP


Economic Growth Strategy of KP reinforced the key priorities of CDS and provided a framework to stimulate growth in potential growth/priority sectors of the economy through enhanced public investments and complementary sectoral policies. Tourism was one of the priority sectors highlighted in this strategy. The Economic Growth strategy recognized that abundance of natural tourism potential in the province can potentially transform the sector into a major driver of growth if security situation and internal conflicts settle down. The strategy also highlighted that in areas with relatively better law and order situation, domestic tourism can be promoted to provide sources of employment and income for the population of these areas. In order to achieve these objectives, the strategy considers private sector as taking the lead role through investments, while TCKP contributing through monitoring and regulation. The strategy also recognized the limitations in terms of absence of data availability on tourist arrivals, spending and visits or assets to facilitate the priorities in different types of tourism such as ecotourism, mountain climbing, cultural tourism etc. The strategy also envisaged creation of a marketing department at TCKP for tourism promotion.

2.4 Tourism Vision Document of KP


The tourism vision document recently developed with the technical assistance of USAID Firms Project presented a long term approach in the form of a Vision Statement which aimed to develop an international competitive tourism sector which can act as the engine of economic growth for Khyber Pakhtunkhwa. The document based its strategy on the key pillars of institutional & regulatory reforms, infrastructure development, service quality assurance, human resource development, aggressive marketing, investment promotion and environmental conservation. The major recommendations of the vision document are outlined below: Institutional/Regulatory Reforms Elevate Tourism to a high priority economic growth sector in the provincial government. Establish a Policy Think Tank on Tourism for broad based intellectual input on policy and promotion of Tourism. Facilitate improvement of security environment in Swat and other tourist places. Transfer the control of tourism related commercial ventures to private sector. Provide a sustainable framework for Public Private Partnership in KP.

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Strengthen KP Tourism Corporation as a provincial regulator and facilitator. Restructure PTDC as a sector development company for national branding and international promotion. Facilitate prompt issuance of Pakistani visa to aspiring visitors abroad. Ensure environmental conservation of tourism assets.

Standards & Certifications Upgrade the outdated and obsolete laws governing the tourism sector. Entrust the enforcement of standards and certifications to TCKP. Enforce standards and certifications for hotels, tourist guides, transporters and tour operators. Marketing & Promotion Focus on domestic tourists in the first phase of strategy as a thrust area to revive the tourism Sector. Focus on Buddhist & adventure tourists in the international tourist segment to revitalize the flow of tourists with new vigor and marketing. Plan and execute the marketing the Brand of Pakistan and KP with target tourist segments as part of a master plan. Develop interesting and multilingual tourism information and promotion material and ensure its wide distribution and regular update. Develop a KP Tourism portal by TCKP as an interactive tool for promotion and connectivity. Promote and develop public private partnerships for tourism marketing. Launch mass media campaign to promote tourism in domestic and international markets. Involve PIA and Pakistan Railways for an integrated role in tourism promotion. Organize cultural and sports events for tourism promotion. Mobilize community for strengthening tourist friendly environment. Enhance participation in international tourism fairs and events. Tourism Infrastructure Development Improve/build access roads to tourist towns and tourist attraction places. Improve electricity supply in tourist areas. Improve transportation facilities to tourist places. Make Saidu Sharif airport operational. Provide/improve support for rehabilitation of tourism infrastructure. Develop new tourist sites and attractions. Strengthen the institution of museums for tourism promotion in KP.

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Develop archives of tourism assets. Improve tourist facilitation services. Human Resource Development Undertake a holistic view and develop baseline data for human resource development needs in the sector. Strengthen and upgrade the curriculum and facilities of the existing Tourism training institutes. Access to Finance Improve the availability of commercial lending through a participatory approach by SBP and commercial banks. Ensure tourism specific prudential regulations and competitive cost of financing. Facilitate the existing and new investors through investment guidance and regulatory support. Mobilize donor community to participate in tourism development projects in the province.

2.5 SWOT Analysis


The following SWOT analysis lists down the overall situation of tourism sector in KP. SWOT Analysis of Tourism Sector of KP Strengths Weaknesses

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Large number of Natural and cultural tourism assets Potential for adventure, culture and nature tourism Sites for winter tourism Competitive rates Extensive presence of hotel clusters Unique Buddha tourism sites for religious tourism

Law and order situation Weak government capacity Insufficient public and private investments Dilapidated tourism infrastructure (roads, bridges, electricity) Short tourist season in mountainous areas Substandard tourist facilitation services Hesitation of private sector to invest High cost of doing business Lack of focused and proper marketing Low quality of workforce Threats Increase of law and order crisis Natural disaster-prone area Limited availability of funds Low public sector capacity and change in leadership of stakeholder departments Change of political leadership and shifting of priorities

Opportunities Greater provincial autonomy in the wake of 18th amendment and KP Government willingness to priorities tourism sector Untapped tourism potential Vast pool of domestic tourists Focus on reconstruction through donors support

2.6 Review of Tourism Legal Framework


This section looks at the legal and regulatory framework of the Tourism sector with a view to: a) Identify deficiencies in the legal framework b) Whether the interest of the tourist is adequately protected by the legal framework c) Whether there are any legal barriers to robust and effective enforcement. Licensing/Registration and Regulation of Service Providers in the tourism Industry

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The Federal government regulated hotels, travel agencies and tourist guides prior to the 18th amendment. However all these subjects are now devolved/or belong to the provincial governments except carriage of passengers by air or sea, which continues to be a federal subject5. Licensing/registration and regulatory requirements of service providers in the Tourism Industry are as follows: Hotel and Restaurant Act, 1976 The Hotel and Restaurant Act, 1976 regulates the standards of service and amenities for tourists in hotels and restaurants. The Act had been passed by Parliament in pursuance of Article 144, which allows the Federation to legislate on a subject when so requested by two or more provinces. The Act prescribes a star system of classification of hotels. The system allows the Controller to grant up to five stars to hotels depending on their services and comfort. The Act also allows the Controller to fix the maximum number of guests, which may be accommodated in each room and/or unit of accommodation. He may also fix rates for board lodging and other charges6. The Act provides for the offices of Controller, Deputy Controller and Assistant Controller to administer the Act 7. The Act also establishes a Hotel and Restaurants Committee to advise the Federal Government in relation to matters pertaining to the Act. The Act requires the following compliances: i) Registration related compliances - Section 5(2) requires Hotels and restaurants to render a certificate of medical fitness of staff prior to registration. It also requires hotels and restaurants to comply with the requisite standards of health and comfort and building safety prior to obtaining registration. ii) Information related compliances- Section 8(2)(e) requires owners to enter the names of guests in a specified register. Section 9 new owners to report change of ownership etc Travel Agencies Act, 1976 and Rules, 1977 The Travel Agencies Act regulates both travel agencies and tour operators -this is done by including tour operators in the definition of travel agencies8. The Act does not apply to Government Enterprises, national carriers of Pakistan and foreign airlines duly authorized to operate to and from Pakistan and travel agencies allowed to perform Hajj and other pilgrim related work9. The Act sets up a Travel Agencies Regulatory Committee to advise the federal government in the implementation of the provisions of the Act and assist in the

5 6

See Item No 24, Federal Legislative List, Schedule IV, Constitution of Pakistan, 1973 Section 10, Hotel and Restaurants Act, 1976 7 Section 3, Hotel and Restaurants Act, 1976 8 See section 2(f)(ii), Travel Agencies Act, 1976 9 Section 5, Travel Agencies Act, 1976

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preparation of a code of conduct for travel agencies. The Act requires the following compliances:

i) ii)

Registration compliances - Section 4 requires travel agency operators to apply for and obtain a license from the Federal Government. Maintenance of a Business Guarantee fund- Section 7 requires every travel agency to maintain a business guarantee fund. Payment from the fund may only be made on the orders of the Government and in the event of default of payment to a tourist, carrier, or hotel.

Tourist Guides Act, 1976

Type Regulating statute and Compliances required Registration registering body by the Act requirements Hotels Hotel and Restaurants Registration related Confirmation of health Act, 1976 Information related of staff Confirmation of building and equipment to health, hygiene and safety guides. The Act establishes the Tourist Guides Regulatory C10ommittee to advise the federal government with regard to implementation of the Act and in preparation of a code of conduct for tourist guides11. The Act allows the Federal Government to fix the maximum charges to be paid to tourist guides11. It
10 11 11

See section 4(2), Tourist Guides Act, 1976

Section 3(3), Tourist Guides Act, 1976 Section 8(1), Tourist Guides Act, 1976

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prohibits tourist guides from charging any fee including a

tipping fee by guides employed by a travel agency on a fixed salary on a whole time basis 12. The Act requires the following compliances: i) ii) Registration compliances - Section 7 requires tourist guides to obtain a license prior to engaging in the business of provision of guide services. Information related compliances- Section 4(3) requires the Federal Government to maintain a register of tourist guides.

Summary of requirements Enforcement of licensing and registration requirements The enforcement of the above-noted statutes in uneven and generally ineffective Laws affecting Environment and Heritage Protection
12

Section 8(3), Tourist Guides Act, 1976

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Natural beauty, environment, cleanliness, historic buildings/areas, artifacts and antiquities all attract tourists. Key laws, which regulate these Sectors, include the Environmental Protection Act, the Antiquities Act, 1976, the Local Government Act, and the Wildlife Act. While a detailed review of these laws is beyond the scope of this work it is important to note that a high standard of enforcement of these Act will lead to increased tourist activity in the country and ensure sustainable development of tourism in the province. Policy Making and Facilitation All the above noted statutes provide for the establishment of Committees to advise the federal/provincial government in the administration of the Act. However none of the Committees are functional and/or have assisted the Federal/Provincial Government in updating or revising rules. Reform recommendations While reform possibilities exist in every aspect of the legal and regulatory framework, the following amendments will make the legal framework more effective and facilitative: Hotels and Restaurants Act i) Detail of membership of the Advisory Committee The Act and the Rules do not provide any detail regarding composition of the Advisory committee. The Act should provide for balanced representation including representative of the Hotel Industry Reduction and/or removal of minimum room criteria for registration Minimum criteria for registration of establishments as hotels should be reduced to make the Act more widely applicable. Small hotels provide the bulk of accommodation and there standards need to be regulated more robustly as market forces have little impact on them Making registration mandatory before start of business Section 5(1) currently requires filing of registration application within two months of the opening of the hotel or restaurant. It is not advisable for any business entity to start its work first and then get registration. This also deprives the registration authority from taking corrective action at the outset. Definition of businesses prohibited to operate in the vicinity of hotels The Act and/or rules need to define the businesses that should not operate in the vicinity of hotels Definition of heath, safety and environment standards The Act and/or rules do not define the standard of health and comfort. These need to be defined to promote standardization of services Price fixation

ii)

iii)

iv)

v)

vi)

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While protection of interests of tourists is a fair objective, power to allow the Controller to fix charges without consultation is unreasonable. A suggested way is to allow the Controller to fix charges in consultation with the Committee or to fix them where he finds charges excessive as compared to services and/or finds the service provider abusing his position in the market. vii) Power of reservation The power to reserve accommodation available to the Controller under section 14 is excessive and should be qualified to make its use contingent on an emergency. viii) Provision of booking/payment through internet A large number of bookings and payments in the international hotel industry are now made through the Internet. Provisions promoting and regulating the same should be included in the Hotel and Industries Act. Travel Agencies Act i) Detail of membership of the Advisory Committee The Act and the Rules do not provide any detail regarding composition of the Advisory committee 13 . The Act should provide for balanced representation including representative of the Travel Industry Definition of Tourist The Act excludes local tourists from the definition of tourists thereby excluding them from safeguards provided by the law14. The definition needs to be amended to make it more inclusive. Travel agencies and Tour Operators need to be separately regulated Travel Agencies and Tour operators are separate entities with different scope of work and they should be dealt with separately. Non-availability of information about Travel Agencies to tourists The Data about travel agencies need to be searchable and accessible to tourists15 Application of Act to Hajj operators and airlines The Act needs to be more inclusive so as to ensure standardization of services. The current non-applicability provisions needs to be omitted16.

ii)

iii)

iv) v)

Tourist Guides Act i)


13 14

Detail of membership of the Advisory Committee

See section 3(1), Travel Agencies Act, 1976 See section 2(g) read with 7(3) of the Travel Agencies, Act, 1976 15 See section 4(4), Travel Agencies Act, 1976 16 But see proposed amendment bill in KP for restriction of exemption to national carrier only 18 See section 3(1), Travel Agencies Act, 1976

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ii)

The Act does not provide any detail regarding composition of the Advisory committee18. The Act should provide for balanced representation including representative of the Tourist Industry Non-availability of information about Guides to tourists The Data about tourist guides need to be searchable and accessible to tourists Price fixation The Act allows the federal government to fix charges, which should not be done. This in anti-market and leads to a stunted and non-progressive sector Making enforcement effective The provisions regarding fines and prosecution are ineffective and need to be strengthened

iii)

iv)

3. Key Issues/Challenges for KP Tourism Sector


The tourism sector in KP has been facing a host of challenges that have been impeding growth of the sector in KP. A thorough understanding of these constraints is required to develop strategies to address these bottlenecks. Some of these challenges are cross-cutting, affecting the overall economy such as the sluggish economic growth, unclear policy and institutional regime in the wake of 18th constitutional amendment, poor law and order situation and low public sector capacity to facilitate and regulate private sector. On the other hand, there are also some serious sector-specific issues affecting tourism sector such as limited availability of information to monitor travel and tourism trends preventing planning; low quality of workforce; low level of private investments; absence of standards; poor infrastructure; limited and sub-optimal marketing activities, etc. Some of these issues are discussed in more detail below:

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Figure 8: Challenges Impeding Growth of Tourism Sector in KP

3.1 CROSS-CUTTING ISSUES


Sluggish Economic Growth Over the last few years, Pakistans economy has faced high inflation and low growth, resulting in an economic slowdown. This economic slowdown has been further been compounded by low tax-to-GDP ratio, high fiscal deficit, devaluing rupee, shaky law and order situation, huge energy shortfall and widespread natural disasters. According to Economic Survey
Position Paper Developing Tourism Policy for KP Page 28 | 43

201112, Pakistans GDP growth has been projected to grow at 3.7% in FY 2011 12 against the target of 4.2%. As a result, Khyber Pakhtunkhwa continues to face its share of sluggish economic growth, further exasperated by high load-shedding of electricity in year 2011-12 creating operational problems for the existing businesses in the province, discouraging new private investments and impeding the process of new employment generation. Furthermore, the sluggish economic growth has affected incomes of people, reducing their expenditure of leisurely activities such as tourism. Unclear Policy and moreover many functions, which were Bulgaria: National Tourist Council Institutional Regime Recently under the 18th constitutional Bulgaria established the National Tourist Council (NTC) in 1997 as a consultative body to assist the government implement its amendment, a number national policy for tourism. Chaired by the Ministry of of functions have been Economy, the NTC representatives are from central devolved from the administration, state commissions, agencies dealing with federal level to tourism, tourism associations, and chambers of commerce. NTCs functions include: provinces. While the devolution of power is Presenting the annual state budget to the Minister of aimed at enhancing Economy. a Adopting a national tourism advertising provincial autonomy program before submitting it to the Minister of Economy for approval. and transferring Overseeing the implementation of the national tourism decision-making to advertising programme. lower governance Submitting an annual report to the Executive Director of tiers, this changed the Executive Agency for National Tourist Advertising paradigm has also and Information for approval. come with some new Submitting concepts and programmes for tourism development. a Delivering its opinion on draft challenges. The normative acts and making proposals for their provinces in most amendment, supplementation, or repeal. cases were not ready Discussing issues related to the construction and for this sudden maintenance of tourist infrastructure and attracting transfer of increased foreign investments. responsibilities, Coordinating and assisting in the implementation of
national and regional projects.

supposed to be performed by the national government are now subject to a lot of confusion with unclear responsibilities. This change also has a lot of implications for the tourism sector. With abolishing of the federal Ministry of Tourism, there is no entity in the federal government responsible for managing this function at the national level. While a lot of tourism activity happens at the provincial level, there is a need for national government involvement in a number of functions such as countrys image building, smoothening visa regimes, etc. Moreover, the absence of a tourism policy in KP has also created a vacuum. While TCKP has been endeavoring tourism sector in the province, the sector also requires coordinated efforts by a number of other departments and agencies such as environment, wild life, forestry, etc. This results in lack of synergy and coordination. Poor Law and Order Situation The armed conflict in KP has taken its toll on the tourism sector and the security crisis in Swat and other tourist areas in KP has

Position Paper Developing Tourism Policy for KP Page 29 | 43

created unprecedented damage. While the situation has significantly improved in the last year, there is still a lot of hesitation amongst tourists, especially the international visitors, to visit tourism sites in KP. Furthermore, the heightened security situation has also created procedural hassles in visa regimes, further discouraging international tourists.

Tourism Infrastructure Damages Due to Conflict and Natural Disasters The military operation in KP launched in early 2009 in particular in Swat valley and some tribal areas has imposed an immense cost on the local economy as large number of people (an estimated 2 million individuals) has been forced to leave their homes and livelihood. In addition to the loss of lives and injuries the ensuing fighting between the military and militants also caused damage to health facilities, educational institutions, water supply, roads, electricity, gas supply, shops, hotels, restaurants and businesses. The World Bank survey report (2009) in KP estimated the damages incurred to tourism industry was Rs. 180 million (US$ 2 million). According to this survey about 500 hotels have been operating in the Malakand division, out of which some 60 units have been reported as damaged (12 % of total hotels). Swat Tourism Sector Census (2010) explicitly explored the impact of conflict on the hotel industry of Swat in terms of capital, revenue, and employment losses. The largest category of capital losses was recorded for building amounting to Rs. 72 million. Pakistan Austrian Institute of Tourism and Hotel Management (PAITHOM) in Swat was established in March 2001 at a cost of Rs140.50 million including foreign economic assistance of Rs. 64.262 Shillings. Regrettably, during the military operation in Swat this state of the art and purpose built building is not only looted but declared by Pak Army as a temporary detention cell. Followed by 2009 conflict, the 2010 flash floods and heavy torrential rains have surpassed the physical destructions ever caused by all the disaster in Pakistan. The catastrophe has impacted a wide population in Indus river basin starting from North in Gilgit-Baltistan crossing KP, and Punjab and hitting down the Sindh province. The unprecedented natural disaster has severely hit the human lives, livestock, infrastructure, crops, and livelihoods in KP. The dynamics of this disaster was such that life losses were less but the damage to public and community infrastructure were beyond imagination. According to the KP, Provincial Disaster Management Authority (PDMA) about 2000 km of major and link roads, 40 major bridges, 40 minor bridges, 150 health facilities beside 158 buildings (including hotels, motels and restaurants) damaged due to flood. The tourists destination of Swat and Chitral were declared among worst and medium affected areas respectively. In Swat valley almost all the hotels along the bank of river Swat were either partly damaged or completely wiped out. At present USAID and World Bank are providing financial support through various grants program for revival of tourism infrastructure in KP, in particular in Swat valley. However, in order to fully restore the tourism infrastructure both the government and private sector participation will be of immense value. Furthermore, serious interventions are required by KP government in order to reinstate PAITHOM with respect to its objectives.

Low Public Sector Capacity - Weak administrative capacity forms one of the core issues behind sub-optimal governance landscape in the province affecting a number of sectors. The weak administrative capacity is manifested in overstaffing and skill gaps, especially at the lower administrative tiers; high absenteeism; misdeployment and low productivity of key personnel; and dysfunctional oversight of

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service providers by middle and senior managers. There are no clear performance or appraisal standards and low compensation offered by the government prevents attraction of talent. This situation also takes its toll on the overall government functioning of the government. It is interesting to note that the situation is slightly better in TCKP, being an autonomous organization, resulting in a number of notable initiatives by the corporation. However, the current capacity at TCKP seems limited, especially in the wake of increased responsibilities in post-18th amendment scenario.

3.2 SECTOR-SPECIFIC ISSUES


Limited Availability of Information The planning and management of any sector and its activities depend upon effective evidence-based decision-making, backed by flow of data and meaningful information. While the regular flow of information is a cross-cutting problem, it becomes even a greater challenge for tourism sector, where the sector definition is porous and a number of private sector players such as hotels, restaurants, travel agencies, etc. are catering to both tourism and non-tourism sectors. This prevents collection and use of reliable data. In many countries, to address this problem, a technique called Satellite Accounting System is used. However, in KP, or even in Pakistan, no such method is being used. Low Quality of Workforce Availability of quality human resource has been a significant challenge for the tourism sector. There are a few degree courses on tourism sector offered by large universities of the province. Furthermore Pakistan Austrian Institute of Tourism and Hotel Management (PAITHOM) in Swat - the only notable training institute in the province for tourism-related training - has been non-operational since the conflict in Swat and is still is use by Pakistan Army. The workforce issue is further compounded by the fact that not many officials available in the public sector have thorough understanding of the sector. For private sector businesses, the reliance has mostly been on on-job informal trainings, making a dent in the quality of services provided. Educational Institutes of Tourism & Hospitality in KP
No Name of Institute Date of establishment 2006 Courses Offered Course BS in Tourism & Hospitality MA in Tourism & Hospitality Certificate courses in: Front Office Management Housekeeping Management. Food & Beverage Service. Food & Beverage Production BS in Tourism & Hospitality MA in Tourism & Hospitality Duration 2 years /4 Semester 4 Years/8 semesters 3 Months

1.

Department of Tourism & Hospitality, Hazara University, KP

2.

Department of Tourism & Hospitality, Abdul Wali Khan University, Mardan, KP

2011

2 years /4 Semester 4 Years/8 semesters

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3.

4.

Department of Tourism & Hotel Management, University of Malakand, KP Pakistan Austrian Institute of Tourism and Hotel Management (PAITHOM) Swat, KP

2011

MA in Tourism & Hotel Management

2 years /4 Semester

1999

Diploma in Hotel Management Short/Certificate Courses: Front office management House keeping Food & beverages Porter trainings Tour guide trainings Short/Certificate Courses: Mountain Guides Adventure Guides

6 Months 3 Months

Adventure Foundation Pakistan

1981

21 days to 3 Months

Position Paper Developing Tourism Policy for KP Page 32 | 43

DEGREE COURSES IN TOURISM In Pakistan, formal educational in tourism and hospitality sector has comparatively a recent phenomenon. With respect to the Cabinet decision in 1960, the countrys first cookery school was established at Karachi. In 1967, the school was upgraded to the status of an institute, which finally laid foundation for the establishment of the present Pakistan Institute of Tourism & Hotel Management (PITHAM). The aim of this Institution is to impart Knowledge by training manpower for the hospitality, travel, and tourism industry. The Institute offers diplomas, certificates and short courses in the relevant discipline. In KP, education in tourism & hospitality sector is still at its infancy. Pakistan Austrian Institute of Tourism and Hotel Management (PAITHOM) was established in March 2001, however, it became operational in 2006. The Institute offers 6 months diploma in Hotel Management and 3 months short courses in: front office management, housekeeping, food & beverages, porter trainings and tour guide trainings. According to the information collected, the courses offered are mostly developed with respect to a standardized format of Austrian institutes in hotel management. In 2006, for the first time, degree programs i.e. BS (4 Years) and MA (2 Years) were initiated in Tourism and Hospitality by the Department of Tourism and Hospitality, Hazara University. In 2011, following almost similar course structure, the same programs have also been introduced by the Department of Tourism & Hospitality, Abdul Wali Khan University, Mardan. Department of Tourism & Hotel Management, University of Malakand, has also started MA Program in Tourism & Hotel Management in 2011. Although, the mentioned departments have their specific board of studies for courses development/evaluation, but, critical analysis of the courses reveals that theoretical part of these courses is mostly adopted from other relevant institutes, in particular from UK. However, the offered programs are unanimously following the HEC standard criteria established for BS and MA degrees. The major issues of concern with the degree programs are: poorly develop universities-industry linkages, in terms of skills gaps and training needs; relevant academics are rarely available; lack of uniformity in the standards of courses; most of the courses are neither up-to date, nor formally recognized internationally, therefore, it would be difficult for the graduates to compete in the international market and finally, Keeping in view the limited funds availability to the governments institutes, it is less likely that they should effectively deliver the desired practical part of the programs.

Insufficient Private and Public Investments Development of tourism infrastructure requires influx of substantial funds; the provision of which is difficult for the government. In terms of travel and tourism government expenditure, Pakistan was ranked 101st in the World Travel and Tourism Competitiveness Report. KP Tourism Departments budget in 2011-12 stood around PKR 10 million17, whereas in 2012-13, it is expected to be around PKR 11 million. In 2011-12, an amount of PKR 1391.698 million was allocated for tourism (and sports) sector in Annual Development Program for 38 projects, out of which 11 projects were completed. In 2012-13 ADP, an amount of PKR 685 million has been allocated for tourism, sports, culture and museums, covering 39 projects, out of which 27 are ongoing and 12 are new. The flow of private investments in the tourism sector of KP has also been limited. In order to promote private investments in the province, a regulatory framework is required to empower government officials and also to provide opportunities for secure

17

Revised estimates

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investments to private sector investors. Presently, in KP, there is no such framework; which limits the execution this option18.

Absence of Standards The enforcement of any In order to acquire competitive advantages in regional and standards is global tourism industry, different certification programs are virtually absent in the followed in Asia and the Pacific. Some of these certification sector. The responsibility programs are: Decipher Portal (Australia), EccoCertification of managing the laws (Australia), Green Leaf Foundation Certificates (Thailand), Respecting Our Culture and standards of ProgramROC (Australia) and Green Globe (China, Japan). hotels, tourist guides These programs are successfully employed by clients in and travel agencies different tourism sector in regional countries like lies with Philippines, Indonesia, Malaysia, India, China and Japan etc, Department of so, there is a great scope for its application in Pakistan in general and KP in particular. Tourist Services th (DTS). Before 18 Amendment, DTS used to work under the federal Ministry of Tourism. As per the mandate decided for DTS, it is responsible to ensure the quality of tourist services through implementation of various enactments including: The Pakistan Hotels and Restaurants Act 1976; The Pakistan Tourist Guides Act 1976; and The Travel Agencies Act 1976. This absence of a robust standards regime has implications for services offered by hotels and restaurants; licenses for tourist guides; fitness certification system vehicles used by tourists; transportation rates, etc. In KP the international certification will be equally beneficial for businesses, consumers, government, local communities and not the least for the environment. For businesses (e.g. hotels, restaurants, tour operators, travel agencies etc.) it would help to improve their quality, reduce operating cost and would also provide a marketing advantage. It will also provide tourists with environmentally and socially responsible choices. In addition of providing opportunities of economic benefits to local communities, it will also ensure respect for local culture. For government the certification will raises industry standards in health, safety, environment, social stability and will also lower the regulatory cost. Although, international tourism certification systems are voluntary, however, in order to compete in national, regional and international tourism market the KP government can make a sensible choice of specific certification programs and can establish it obligatory for different tourism sectors. Dilapidated Infrastructure Due to a recent history of armed conflict and natural disasters, the tourism sector in KP has suffered major losses, including physical damages to buildings and equipment and lost

Certification is defined as a voluntary procedure that assesses, audits and gives written assurance that a facility, product, process or service meets specific standards. It awards a marketable logo to those that meet or exceed baseline standards (Honey and Rome 2001) Certification program in the tourism industry serve as an important tool for distinguishing genuinely responsible companies, products, or services from those that make empty claims.

of

18

The USAID Firms project is providing technical assistance to KP Govt. for developing PPP framework for the tourism sector.

Position Paper Developing Tourism Policy for KP Page 34 | 43

businesses. This in turn has taken its toll on availability of tourist facilities in the province. The Trinidad & Tobago Tourism Industry Certification (TTTIC) programme was established in 2001 as a Damage caused to access roads, mechanism to improve the quality of tourism products unreliable supply of electricity and services. It is based on the tourism standards and closure of Saidu Sharif developed by the Trinidad & Tobago Bureau of airport have further worsened Standards (TTBS) to ensure quality delivery. It is a joint the situation. The crisis damaged initiative of TTBS, the Tourism and Industrial roads and bridges in Swat valley, Development Company of Trinidad and Tobago especially the access roads (TIDCO), and the Tobago House of Assembly (THA), connecting Mingora to tourists with the Trinidad & Tobago Hospitality and Tourism Institute (TTHTI) as the recognized body for hospitality destination of Kalam via Madian and Bahrain. At present only four and tourism training. wheel vehicles can only drive on Mingora-Kalam road. Similarly, the road from Khwazakhela to Shangla has also been partly damaged. Road connecting Chitral to the rest of the province also need up-gradation. The Mansehra- Naran road also needs up-gradation. Access roads should be constructed on priority basis to reach tourists destination of KP. In addition, link roads should also be developed to reach scenic places in Swat, Chitral and Kaghan valley. Keeping in view the touristic importance of the mentioned roads/link roads it needs to be built and sustain as all weather roads.
Trinidad & Tobago: Trinidad & Tobago Tourism Industry Certification Programme

Electricity is one of the basic infrastructures for tourism promotion. The poor supply situation of electricity to the tourists destination in KP is further devastated by the crisis. In order to encourage maximum tourists flow, the government should ensure undisturbed supply of electricity to the tourists destination in the province. Access to comfortable and reliable tourists transport facilities in Swat, Kaghan, Naran and Chitral needs immediate attention. These transport facilities need to be available from main cities of the country to major tourists town of KP and from those towns to specific tourists attraction points. Saidu Sharif airport in Swat used to have regular flights to and from Peshawar, Islamabad and Chitral but due to the conflict in the area this airport is closed. In order to encourage and promote tourism in Swat through air route the Saidu Sharif airport need to be operational. Archaeological museums preserve the history of nations. KP is the home to Gandhara civilization, however, only nine museums in the province showcasing the glimpses of the local history. Keeping in view the rich history and culture of the province the number of museum needs to be increased. The conflict in Swat valley also caused partial damage to the Swat museum, however, reconstruction is in progress in support of foreign donor. The state of the art Malam Jaba Ski Resort and chair lifts have been damaged during the conflict in Swat valley. Similarly, an important tourist attraction in KP was Khyber Steam Safari, which used to travel from Peshawar to Landi kotal (border of Afghanistan). At present the train safari is not functioning due to the damage caused by flood and militancy in the area. These facilities need revival for tourism promotion in KP.

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In addition to the reconstruction of damaged infrastructure, new tourism products and relevant infrastructure need to be developed in the province like establishment of culture tourism centers at potential sites; establishment of new tourists town e.g. Cherat in district Nowshera and Suna in district Kohat; construction of children and amusement park and adventure tourism facilities (rafting, rock climbing, mountain biking, sport fishing and jeep safaris etc). Finally, establishment of basic tourism infrastructure facilities like public toilets, stop over points, information centers, fuel stations, police posts, first aid facilities, children play areas, shelters with seating, telephone booths and parking areas along the roadsides of the tourists destination will boost tourists flow to the province. Limited and Sub-optimal The Bahamas: One-Stop Online Booking and Marketing Activities While the Immigration Card poor law and order In designing a competitive tourism experience, the Bahamas situation has played its has focused on two areas that many developing countries role in discouraging have overlooked how tourists select and book tourism in KP, destinations, and how to collect critical market information some responsibility from visiting tourists. With the spread of the Internet, also has to be placed on tourists are increasingly comparison shopping and booking lack of an effective online. The Bahamas website, <www.bahamas.com>, and allows the prospective tourist to create an online account wellcoordinated in which they can book and change reservations, e-mail image building and those plans to friends and family, and print out their own marketing strategy vacation plan. to promote Pakistan and KP as preferred tourism destinations. KP has been bestowed with valuable tourism assets and unharnessed tourism potential in areas of natural, historic, archeological and cultural tourism, however, the tourism officials, especially at the federal level, have so far been unsuccessful in conveying this potential to the relevant audience across the globe. According to World Travel and Tourism Competitiveness Report, Pakistan has been ranked at 117th number in the world on effectiveness of marketing and branding activity. Similarly as per Travel and Tourism Competitive Index, Pakistan has been ranked at 125th, 127th and 62nd positions on affinity of the local communities for tourists and tourism openness; attitude of population towards foreign visitors; and participation in international fairs. Absence of a Robust Legal Regime As discussed above, the existing tourismrelated laws in the province are outdated and need revision to facilitate a robust regulatory role played by the public sector, facilitate investments by the private sector and to promote small businesses to compete. There is no PPP law in the province, under which TCKP can invite BOT/BOO type projects.

4. Need for Tourism Policy Some Key Issues


As discussed earlier, currently the Govt. of KP does not have a clearly articulated formal tourism policy. However, considering that the tourism sector requires coordinated efforts by a number of departments and agencies such as P&D Department, C&W Department, Finance, Excise and Taxation Department, PHA/NHA, environment, wild life, forestry, etc. besides the Tourism Department itself, along with TCKP, the need for having such a policy is critical. Moreover a well laid out tourism policy would demonstrate long-term commitment of
Position Paper Developing Tourism Policy for KP Page 36 | 43

government in the sector and would form the basis for shared understanding of and synergized actions and coordinated planning by different stakeholders. Moreover, such a policy framework should ensure sustainable development of tourism as most of the uncontrolled and haphazard development of tourism has negatively impacted on the social, cultural, natural and economic environment of tourist destinations in KP. Therefore, the proposed policy should be based on the principles of sustainable development with recommendations on short, medium and long term measures for its effective implementation to achieve some tangible results. In particular, the proposed policy would address the following issues:

Figure 9: Developing Tourism Policy for KP

Post-18th Amendment Scenario As discussed earlier, after the passage of 18th Amendment, there has been some lack of clarity on performing some of the broader functions related to tourism sector. For effective tourism development, the government must develop a sound and comprehensive policy framework at the provincial level, clearly laying out the priorities of the government vis--vis the federal governments. The provincial government can then pursue the federal government to maintain its role for effective coordination across the provinces. This would also result in optimal resource utilization and synergy of effort. Role of the Government and Private Sector - The policy framework must delineate clearly the role of government vis--vis the private sector. Ideally the government should adopt the role of a regulator as well as that of the facilitator,

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whereas the private sector should come ahead for service provision. As a regulator, the government should act as the custodian for rights of tourists and ensure that they are getting quality services, whereas as a facilitator, it can provide well-targeted tax, policy and financial incentives to private sector players to promote investment in the sector. These incentives however, should be tied up with clearly laid out policy objectives, rather than being offered for everything and anything related to tourism sector. The target areas/sub-sectors can be refined through consultations and in line with broader government policy. Last but not the least, the government should also coordinate and synergize the tourism development efforts undertaken by various agencies, international donors and other stakeholders. If there is an established need to develop tourism infrastructure by the public sector, this responsibility should be entrusted to the provincial agencies. For management of these facilities as well as for undertaking other projects, various modalities can be considered including PPPs. Institutional Framework - The policy must include a well laid out institutional structure to implement the policy. Currently much of the activities are performed by KPTD and TCKP, however, there is a need for involvement of other agencies as well such as Environment, Archeology, Forestry, etc. Moreover, there is a need to empower and strengthen TDKP and TCKP to drive the implementation of policy. Policy Considerations and Incentives Structure - Due to limited resources and increasingly constraining fiscal space, the government may not be realistically able to offer all sorts of incentives to all the tourism related facilities. The incentives therefore should be offered only under a well thought out incentive structure. Such a structure should take into account the cost implications of these incentives and should evaluate the value for money considerations. The incentives should also be closely tied with some well laid out policy considerations. These policy considerations would be answered through some of the following questions: Does the government envision taking a lead role in tourism development or would rather act as a facilitator and take the private sector take the lead? Are there certain high priority and low interest areas, where the government wants to enhance investment and activity? Should the tourism sector focus on local tourism or international visitors? Such a question must be answered considering a pragmatic view of the current situation? Are there any specific geographic regions or tourism subsectors which the government wants to promote? In the priority areas, what are the key impediments that keep the tourists away? Is it the unavailability of infrastructure, transport network inefficiency, high costs or merely a cultural issue? What strategy can address the reputational loss of Pakistan as a terrorism-affected country? Is provincial branding a better idea? Should the government invest in improving the overall law and order situation or should the government limit the tourist activities to relatively peaceful areas? Still another consideration could be to focus on developing secure zones.

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Tourist Asset Mapping and Potential and Priority Areas - The government must map the tourism assets and take an account of the existing situation of these assets. After a comprehensive mapping exercise, an improvement plan can be developed highlighting priority areas. The government can then also identify those areas, where there is a lot of tourism potential such as recreational tourism, religious tourism, cultural tourism, eco-tourism, adventure tourism etc. Resource Considerations - The policy framework should be based on and linked with a clear resource framework, where the government can highlight the extent of its contribution through various means/forms. In the absence of sufficient resources, the government may consider mobilizing additional resources through private participation, commercial lending or donors assistance. Focus on Sustainable Tourism Development: development as development which meets the needs of the present without compromising the ability of future generations to meet their own needs. The sustainable activities take into account three main aspects including: environmental; social & cultural and economic. When we take these three aspects into account in our activities, this is called the triple bottom line. It means running a business, an organisation, or a government in such a way that it doesnt destroy the resources- natural, cultural, or economic- on which it depends. In fact a business that is run in this way can enhance all three aspects and continue to operate profitability, while benefiting its surrounding natural areas and communities. The principles of sustainability can be applied to any type of tourism mass or speciality; city, beach or wilderness; large or small. They can also be applied to all relevant sectors of the tourists industry: lodging, tours, agencies, ground operators, guiding and transport. According to Agenda 21 for the travel and tourism industry, sustainable tourism products operate in harmony with local environment, community and cultures, so that these can become the permanent beneficiaries. Therefore, the focus of the proposed policy should be on sustainable tourism, which can ensure sustainable development through fostering understanding between people, to create employment opportunities and bring about socioeconomic benefits to the local communities particularly in the remote areas. It should also strive to preserve and promote KPs rich cultural and natural heritage.

The proposed policy must emphasize on development of sustainable tourism in the province. The Brundtland Report (UNWCED, 1987), Our Common Future, defines sustainable

Three Pillars of Sustainable Development

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APPENDIX A - List of Persons Consulted


USAID Firms: 1. 2. 3. 4. 5. Mr. Suleiman Ghani, Sr. Policy Advisor, USAID Firms Mr. Aftab-ur-Rehman Rana, Tourism Specialist, USAID Firms Mr. Taimur Khan, Business Enabling Environment Specialist, USAID Firms Ms. Asma Malik, Business Enabling Environment Specialist, USAID Firms Dr. Ihsan Qazi, Office Director (Islamabad), USAID Firms

Tourism Department & Tourism Corporation, KP: 6. Syed Aqil Shah, Minister for Tourism, Khyber Pakhtunkhwa 7. Syed Jamaluddin Shah, Administrative Secretary, Tourism Department, KP 8. Mr. Hayat Ali Shah, GM, Special Projects, TDKP & TCKP 9. Mr. Muhammad Ali Sayed, GM Events & TICs, TCKP 10. Ms. Promila Isaacs, Consultant, TICs, TCKP 11. Mr. Iftikhar, Deputy Secretary, Tourism Promotion, Bahrain, Swat 12. Mr. Zarin Khan, Kalash Representative, TCKP 13. Mr. Nadeem Khan, Finance & Accounts, TCKP19 for PPP 14. Ms. Zahra Alam, Tourism Department, KP

Allied departments, KP: 1. 2. 3. 4. 5. 6. Dr. Muhammad Bashir Khan, Director General, EPA, KP Mr. Safdar Ali Shah, Conservator, Wildlife Department, KP Shah Nazar Khan, Director, Department of Archeology, KP Qazi Ijaz, Deputy Director, Department of Archeology, KP Mr. Muhammad Arabi, In-Charge, Department of Tourist Services (DTS), KP Mr. Hurmat Khan, In-Charge, Pak Austrian Institute for Tourism & Hotel Management (PAITHOM), Golibagh, Swat

7. Mr. Javaid Iqbal, Regional Director, NAVTEC, KP 8. Mr. Sajad Ali Shah, Director, NAVTEC, KP 9. Mr. Bashir Khan, Additional Secretary Development, Finance Department, KP20 PPP 10. Shahab Ali Shah, Chief Economist, Planning and Development Department, KP21 PPP

19 20

Met by Ali Rahman for PPP framework Met by Hasaan Khawar & Ali Murtaza for PPP framework 21 Ibid.

Position Paper Developing Tourism Policy for KP Page 40 | 43

11. Mian Asim Ismail, Chief Economic Analysis Section, Public Policy and Social Reform Unit, Planning and Development Department, KP22 PPP 12. Mr. Jaffer Kohistani, Manager, Patriata chairlift/cable car, TDCP, Murree, Punjab FGD participants, mainly from the private sector: 13. Mr. Zahoor Durrani, Vice President PATO for KP, MD Sehrai Travel 14. Said Nawab, President Tourism Promotion Association, Madyan, Swat 15. Miraj Ud Din, President Hotel Association, Bahrain, Swat 16. Bakhat Buland Khan, Sr. Vice President Hotel Association, Bahrain, Swat 17. Mr. Rasool Khan, General Secretary, Islampura Khadi Association 18. Mr. Wali Rehman, Vice president, Islampura Khadi Association 19. Seth Matiullah, President, Tourism Promotion Association, Kaghan 20. Mr. Nawazish Khan, Sr. Vice President, Tourism Promotion Association, Kaghan 21. Mr. Asad Shah, Managing Partner, Nature Tourism Services, & Executive Member, PATO, Abbottabad 22. Col. Khalid Mahmood, Principal, Tourism Training Institute (NITHHMS), Abbottabad 23. Mr. Hukum Dad, Vice President, Hotel Association, Nathiagali 24. Mr. M. Waseem, Coordinator, WWF Pakistan, Nathiagalli 25. Iftikhar Hussain, Owner, Jewels Stone, Mingora, Swat 26. Shirin Zada Dadar, GM, Hotel White Palace, Mingora, Swat 27. Ikram Ullah, GM Swat Tourism Shop, Mingora, Swat 28. Anwar Khan, GM Pameer Hotel, Mingora, Swat 29. Muhammad Humayun, Manager Holiday Hotel, Madyan, Swat 30. Amjad Noshad, Owner Muslim Hotel, Madyan, Swat 31. Shad Muhammad, Owner Jawad Hotel, Madyan, Swat 32. Abdul Rasheed, Owner Rasheed Hotel , Madyan, Swat 33. Muhammad Hayat, Journalist, Swat Press Club, Mingora 34. Dil Nawaz Khan, Manager Hotel Swat Valley, Bahrain, Swat 35. Ahmed Zaib, Hotel Owner 2 Star, Bahrain, Swat 36. Mumtaz Khan, Hotel Owner, Bahrain, Swat 37. Sher Bahudar, Owner Punjab Restaurant, Bahrain, Swat 38. Nasir Khan, Owner Marina Hotel, Bahrain, Swat 39. Amir Rasheed, Finance Secretary, Islampura Khadi Association 40. Abdur Rehman, Member, Islampura Khadi Association 41. Mr. Anayatullah, Suvastu Gallery, Mingora, Swat 42. Mr. Abdullah, Handicrafts, Mingora, Swat 43. Bakht Hussain, Handicrafts, Mingora, Swat 44. Attaullah Khan, Arts & Crafts, Mingora, Swat
22

Ibid.

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45. Mr. Abdul Qudoos, Owner, Gateway Hotel, Mardan 46. Mr. Arif Swati, Managing Partner, Nature Tourism Services, Abbottabad 47. Mr. Asif Javed, CEO, Tourism Training Institute (NITHHMS), Abbottabad 48. Mr. Khurshid Ahmed, CEO, Hotel Demanchi, Naran 49. Engr. Mohsin Khan, Marketing Director, Hotel Demanchi, Naran 50. Mr. Qamar ul Haq, Advocate, Abbottabad 51. Mr. Noor Hussain Shah, Hotel construction contractor, Nathiagali 52. Mr. Asif Ali, local entrepreneur, Nathiagali 53. Mr. Hassan Awan, Veterinarian, WWF Pakistan, Nathiagali 54. Mr. Barkat, Manager, Afaq Hotel, Nathiagalli 55. Mr. Yousaf Akhar, CEO, SAIYAH Travel 56. Mr. Ejaz Sohail, Manager, SAIYAH Travel 57. Mr. Naiknam Karim, MD, ATP 58. Mr. Ashraf Aman, Chairman, Adventure Tour 59. Mr. Paarcha Shahid, CEO, City Express 60. Mr. Farhad Maqpoon, MD, Shikar Safari 61. Mr. Sultan Khan, Manager, Nazir Sabir Expeditions 62. Mr. Mubarak Hussain, CEO, Karakorum Explorers 63. Mr. Irfan Ullah Baig, EM, Travel Waljis (Pvt) Ltd 64. Mr. Javed Awan, MD, Oriental Links 65. Mr. GN Raikoti, MD, FMT (Fairy Meadow Tours) 66. Mr. Liver Khan, MD, NPA (Nanga Parbat Adventure) 67. Mr. Hussain Ali Ghulam, Hunza Travel Services 68. Mr. Amir Ullah, MD, Hunza Guides Pakistan

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Appendix B - Documents Reviewed


1. Pakistan National Tourism Policy 2010 (Draft) 2. Pakistan in the 21st Century, Vision 2030 (PC) 3. Pakistan National Conservation Strategy 4. Khyber Pakhtunkhwa Provincial Conservation Strategy 5. The Pakistan Hotel and Restaurants Act 1976 6. The Travel Agencies Act 1976 and rules 1977 7. The Pakistan Tourism Guides Act and rules 1977 8. Khyber Pakhtunkhwa Tourism Vision Document 9. Tourism census report for Malakand, Swat 10. Tourism related laws of India, Nepal, Sri Lanka, Iran & Turkey 11. Sector recovery and development strategy for Swat tourism 12. Master Plan for Promotion & Development of Tourism in KP 13. Pakistan National Tourism Policy 1990 (Ch 5: Conclusions) 14. Best Practice Case Studies in Tourism 15. Tourism Management in Pakistan (Ch 5: Analysis) 16. Pakistan Tourism National Plan 2000 a) Final Report b) Technical Vol.1: Medium Term Marketing Strategy c) Technical Vol.2: Physical Planning & Environmental Considerations d) Technical Vol.3: Economic & Investment Analysis e) Technical Vol.4: Human Resource Development

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