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Virus-hit local tourism, the continued shutdown of Yangon International Airport and weak signal for revival of businesses

According to the World Tourism Federation (WTF) for 2019, the total number of tourists around the globe exceeded 1,500 million. China has topped the list of global tourists as Chinese tourists account for 156 million. Due to the spread of COVID-19, almost all tourism businesses in the globe have stopped. The pandemic has resulted in the direct impacts on business operations, the stoppage of trade flows and a decline in tourist arrivals worldwide.

Due to the spread of novel coronavirus, Myanmar has seen a significant drop in the number of tourist arrivals since the late January.

In 2018, Myanmar received Chinese tourist arrivals of 297,400. After the issuance of visa-on-arrival, the number of Chinese tourist arrivals increased to 749,719 in 2019. Thanks to the issuance of visa-on-arrival, the number of Chinese tourists arrivals increased by over 400,000, an increase of 125 per cent.

The number of tourist arrivals increased from 3,551,428 in 2018 to 4,364,101 in 2019, a 23 percent increase.

100-per-cent decline in Chinese tourist arrivals

A significant decline in the arrivals of Chinese tourists in 2020 is coupled with a drop in the arrivals of other tourists. Earnings from the tourism sector have declined significantly. According to the surveys conducted in the regions and states, there were no arrivals of Chinese tourists and other tourists in May, 2020. As a result, the contracts signed between some tourism companies and hotels have voided. Entrepreneurs have to suffer huge losses.

Impact on Yangon International Airport

As a measure to contain the spread of COVID-19, Malaysia, Thailand and Singapore in Asean have temporarily closed airports. Tourism businesses in these countries find it difficult to go ahead.

Myanmar has suspended the operations of international passenger airlines at Yangon International Airport which is a major entry to Myanmar, until 31 July. Following the temporary suspension of international passenger flights, the number of passengers who use the airport have started to decline since mid-February, according to a statement by the Yangon International Airport.

The entry and exit of flights at the Yangon International Airport has declined to 85 per cent when the figures in March-to-May last year. As a result, the number of passengers arrivals dropped significantly to 96 per cent. Since 30 March, Myanmar has temporarily suspended the operations of international flights. Some domestic airlines have reduced the number of flight schedules. Due to a decline in the number of flight schedules and passengers, shops and restaurants at the Terminal-1were closed (overseas arrival and departure).

The pandemic has taken a toll on international airports including Yangon International Airport.

Mr. Jose Angeja, Chief Operating Officer of YACL Company, which provides airport management services at Yangon International Airport, said: “Aviation sector worldwide is experiencing unprecedented issues. The company will have to deal with the operation of airport services, the needs and measures for public health measures and international-standard measures and the resumption processes, with great care. The YIA’s reform will become a new normal for a certain period of time. It is crucial for the airport, private sector and government to abide by the public health measures and rules so as to ensure the swift resumption of regular flight operations. It is a first priority national duty for all.

According to the economic survey on COVID-19, due to the suspension of international passenger flights at Yangon International Airport, the money generated from international airlines has declined 53 per cent compared to last year.

According to the calculation based on the 2019 survey on international airlines and domestic transport sector, the earnings by international airlines linked to the tourism industry reached 365.071 million US dollars from January-May, 2019 and 170.314 million US dollars during the same period in 2020.

According to the YACL, the company has to exempt and reduce the rental fees due to the shutdown of all shops at Terminal-1 of Yangon International Airport. In addition, the company has to reduce the salaries of airport staff for long-term survival. The 25-per-cent salary pay cut goes to staff from the managerial body and a five-per-cent reduction, to the staff below the managerial staff.

Tourism industry during COVID-19 period and amounts earned by its related businesses

Myanmar earned US$125.493 million from the tourism industry and its related business such as companies selling food products from January to May last year and now it earned only US$58.545 million in the same period in this year declining up to 53 per cent in compared with last year earnings.

It earned US$273.804 million from hotels, motels, inns and guesthouses in this period last year and US$127.735 million from the same businesses in the same period in this year, earned US$78.895 million from retail industry in this period last year and US$37.257 million in the same period in this year and earned US$114.085 million in the same period last year and US$58.545 million in this year, according to a survey conducted by Ministry of Hotel and Tourism about the financial impact made by the COVID-19 on Myanma tourism industry.

A total of 92,519 staff were appointed in hotels and guesthouses before the COVID-19 pandemic and now over 20,000 staff are suspended from their duties due to the COVID-19, it said.

The number of tour companies is reduced to 743 from 1,448 during COVID-19 period and the number of tour guides is reduced to 95 from 125 due to the impact of COVID-19.

A total of 238 KTVs, Spas and other small-scale businesses were run before the outbreak and only 56 businesses are running now. It declined up to 76 per cent.

“The arrival of tourists in the remaining months this year may decline and it will make huge impacts on businesses related to the hotel and tourism industries. Tax exemption and loans with low interest rates can only be restored to normal,” said a hotelier.

COVID-19 fund, a straw for businesses affected by the pandemic

The Ministry of Planning, Finance and Industry announced that the government will add Ks100 billion to the COVID-19 fund to provide financial assistance to the businesses affected by the COVID-19.

The ministry will transfer Ks100 billions out of Ks150 billions of general surplus fund from 2019-20 fiscal year to the COVID-19 fund and Ks50 billions to the social welfare fund, which was added to the COVID-19 fund when the fund was started.

“The government will provide more loans and will not change the interest rate. The interest rate will be one per cent,” said Aung Naing Oo, permanent secretary of the ministry.

The fund added to the COVID-19 fund will be provided with three stages: Ks35 billion in the first stage, Ks30 billion in the second stage and Ks30 billion in the final stage.

The committee to remedy the possible economic impacts caused by Covid-19 will announce the rules and regulations of the loans such as the period to pay back loan, interest rate and the kinds of businesses to take out loans from the COVID-19 fund.

The COVID-19 fund is started by using Ks50 billion from state revolving fund and Ks50 billion from social welfare fund as initial fund at Myanma Economic Bank by the approval of the state government.

The loans are provided to CMPs, hotel, tourism businesses and small and medium enterprises with one per cent interest rate.

It will be difficult to predict the future of the tourism industry right now as COVID-19 pandemic has not disappeared yet. It is expected to be declined more.

The arrival of tourists to Myanmar is the lowest at the present and the ministry is advised to draw SOPs and national tourism guidelines to transform the tourism industry. It will need tour companies, their related companies and airlines to stand firm for a period of time. No one yet knew how long the pandemic would last.

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Source : The Irrawaddy

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