Jun 05, 2020 Last Updated 12:20 AM, Jun 5, 2020

The future of tourism

  • Jun 05, 2020
  • Published in May

The end of breakfast buffets and garlanding on arrival. The rise of virtual travel experiences. The longing for solitude and simplicity. This is just a sample of the travel predictions being debated across the globe as we look to post-COVID tourism.

But how well is the Pacific positioned to respond to potential changes, and what is the current status of the industry?   

“I understand one of the greatest challenges that we have is uncertainty,” Fiji’s new tourism minister, Faiyaz Siddiq Koya told Fiji tourism industry participants in a webinar recently.

China, which has reopened for domestic tourism, has closed buffets, increased distance between tables in restaurants, has all staff wearing personal protective equipment, closed gyms and indoor swimming pools and switched off air conditioning, reports McKinsey’s China-based analysts. Magazines and newspapers are no longer available on flights, and food and beverages are packaged and bottled.

McKinsey predicts young travellers will return to international tourism first, not traditionally the Pacific’s strongest visitor dynamic, although it does provide an opportunity to further develop niche markets, such as adventure tourism.

Associate Professor of Tourism Futures at Wellington School of Business and Government,  Dr Ian Yeoman has identified a number trends which could characterise travel in the future, including the desire to connect with family and friends, the search for simplicity, the end of expensive, frivolous or environmentally-destructive expenditure and a move towards community and collectivism.

The Pacific is well placed to capitalise on several of these trends when borders open up, as long as we can differentiate ourselves from other destinations.

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PICTA: Picture of indifference

  • Jun 05, 2020
  • Published in May

PICTA stands for Pacific Island Countries Trade Agreement. It is a Free Trade Agreement (FTA) negotiated amongst the Pacific Island Countries (PICs) to free up trade amongst themselves, under the provisions of ‘GATT 1947’, which morphed into ‘GATT 1994’ that is incorporated into the WTO Agreement. PICTA was signed in 2001 and came into force in 2003. But implementation was delayed until 2007. As of today, only seven PICs are trading under this agreement.

The situation depicted above has not changed since 2010, 10 years ago. In a workshop, sponsored by the Pacific Islands Private Sector Organization (PIPSO), the European Union (EU) and the Pacific Regional Integration Programme (PACREIP) in 2010, its outcomes document had this to say: “They are concerned therefore that only 7 of the 14 PICs are currently implementing PICTA. They believe that this is retarding regional economic integration and delaying the realisation of the collective economic and social benefits and improvements to the living standards of all the peoples of the Pacific region. They further believe that the delay in the benefits of regional economic integration under PICTA will constrain our ability and capacity to negotiate a fully meaningful PACER Plus with Australia and New Zealand.”

Later, on 5-8 November 2012, in a ‘What Can We Learn Symposium’, sponsored by six organisations including regional, United Nations and aid agencies, Dr Roman Grynberg, former Director of Economic Governance at the Forum Secretariat lamented the fact that PICTA “has thus far been of the most limited success.” He put the reasons down to: “there was no appetite amongst island officials and policy makers for any form of liberalisation that involved a direct adjustment cost. Whereas island officials have always been happy to write, sign and even ratify trade agreements, implementing them and accepting the real economic costs were quite another matter.”

After 19 years since signing, and 17 years since the agreement came into force, it can only be said that the current status of this trade agreement, the first for PICs, is most unfortunate indeed. The regional economic integration that PICTA was supposed to bring about is still very much at its infancy.

The founders of Pacific regionalism, way back in 1971, had conceived such a FTA would free up Intra-PIC trade and would further develop into an economic union, permitting initially the free movement of capital, labour, goods and services. By specifically targeting an economic union, the regional leaders then would have envisaged a Pacific-wide common market that went beyond trade, also envisaging prospects of coordination of various social, fiscal and monetary policies amongst participating nations.

However, after 49 years of regionalism, it can be said that the early regional leaders’ dream remains a pipedream. Recent decisions by those who could transform this situation have not helped. The Pacific Islands Forum (PIF) Trade Ministers’ meeting last February failed to give PICTA the thrust it needs to get it urgently going forward and to expediently make a difference to regional economic integration.

The PIF Trade Ministers’ outcomes were a damp squib. For PICTA, the ministers “also recognised the importance of …PICTA and its potential to facilitate intra-regional trade.” This is essentially saying the obvious. The FTA’s importance and potential were the qualities that drove the early regional leaders to negotiate the agreement in the first place. What is to be gained from such reiteration? This speaks volumes of the foresight of our early leaders but not much about our current leaders.

Furthermore, the use of ‘also’ in this context implies that such a statement was an afterthought. This presents an interesting angle. PICTA is a matter for PICs trade ministers only. But in this case, trade ministers from Australia and New Zealand (ANZ) were present during the discussions. Was the language of the outcomes especially aimed at sugar-coating due to the presence of the two elephants in the room?  

It did not stop there. The next part of the decision was extraordinarily naïve. Ministers indicated the direction further discussions could take but provided only if such and such were done. They failed to give concrete direction and action-oriented instructions as how those issues that were thwarting the ratification and implementation of the FTA could be expedited.

Admittedly, the issues involved are not simple. These are to do with what is now termed as the ‘modernisation work on PICTA’, including the extensive PICTA review and the Rules of Origin review. I can imagine that someone had coined ‘modernisation’ since the issues have been there on the table for donkeys’ years and have somewhat lost their vitality.

For the PICs trade officials and PIF Secretariat (PIFS) staff after the ministers’ meeting, it may be just business as usual. They have not heard any plea for urgency and certainly no specificity of actions to be taken both at the national and regional levels. There was no mention of additional resources. There was no mention of the legal, technical, political and consultative measures that need to be mobilised to progress matters. There was no mention of the measures directed at mobilising the private sector representatives at the national level and at the regional level through PIPSO. There was no mention of the prospects of technical assistance (TA) that PIFS staff should extend to members especially to the Smaller Island States (SIS).

It is difficult to be optimistic about PICTA given its dismal history. But one can be proven wrong. The trade officials may have reached a tipping point and could now be driven to do all they can despite the vagueness and the absence of commitment in the ministerial directives. This is a possibility given the commendation they have received recently from Professor Jane Kelsey of Auckland University.

The good professor was a resource person for the ministerial meeting last February. Whilst she was impressed with the quality of some of our trade officials, she was not however with the Forum Secretariat. Her assessment of the latter was that whilst there has been an improvement, the Secretariat is still inadequate in servicing the needs of the PICs. The Secretariat lacks the ‘fundamentals’ and the ‘nuances’ to identify the real needs of the PICs and the ‘independence’ to address them. If there was a vindication for the provisions of TA by PIFS for its deserving members, this was it.  

The case of PICTA and its stunted history raises two big issues for Pacific regionalism. The first is that if PICs are not getting the benefits from this trade agreement as intended, then questions have to be asked about the suitability of the model around which the agreement is built. Professor Kelsey has already told us that the model is broken. So, what can be put in its place?

There is also the question of the suitability of a regional grouping of only small states. Can such create the net benefits needed? Would PACER Plus with ANZ be a better configuration for a regional trade agreement?

Big questions need critical thinking on the part of our regional planners. These are all food for thought for the regional strategists who are developing the 2050 Strategy for the Blue Pacific Continent and for the next PIF Leaders’ meeting scheduled for August later this year in Port Vila.

The Rim of the Pacific military exercise will proceed  from August 17-31 as an at-sea only event in light of COVID-19 concerns.

The Commander, U.S. Pacific Fleet will host the biennial maritime exercise.  The theme of RIMPAC 2020 is “Capable, Adaptive, Partners.”

“In these challenging times, it is more important than ever that our maritime forces work together to protect vital shipping lanes and ensure freedom of navigation through international waters,” said Commander, U.S. Pacific Fleet Adm. John Aquilino. “And we will operate safely, using prudent mitigation measures.” There will be no social events ashore, and a minimal footprint of staff ashore for command and control, logistics, and other support functions.

Around the world, governments have placed restrictions on port calls by cruise ships, concerned about the spread of the Covid-19 coronavirus amongst passengers. A crisis in the US territory of Guam involving the nuclear-powered aircraft carrier USS Theodore Roosevelt has highlighted the same concern for military vessels.

Deployed in the Western Pacific, the US warship has become the centre of a political storm with the spread of Covid-19 amongst its 5,000-strong crew. After visiting Vietnam in March, the aircraft carrier travelled to Guam, the US territory of 170,000 people in the western Pacific. Authorities now believe a number of the carrier’s sailors were infected with the SARS-CoV-2 coronavirus during shore leave in Vietnam.

Earlier this week, there were 940 active cases of COVID-19 amongst sailors from the ship .  Anchored off Guam, the warship’s commanding officer Captain Brett Crozier sought permission to relocate up to 3,000 personnel onshore, to limit the rate of infection in the cramped quarters below decks. Crozier’s memo to US military authorities was leaked to the media, and he was relieved of command.

As the US Navy moved sailors from the stricken aircraft carrier into empty hotels on Guam, many indigenous Chamoru expressed concern. On 1 April, the Chamoru women’s organisation I Hagan Famalao’an Guåhan wrote to Guam Governor Lou Leon Guerrero opposed to the housing of US sailors in tourist hotels. The letter called for sailors to be accommodated in the US military bases that take up a third of the islands land area, such as Apra Harbour Naval Base and Andersen Air Force Base.

Guam only has two civilian hospitals and the territory’s health service is already stretched as local Covid-19 infection rates increase, with more than 130 confirmed diagnoses (including four deaths) at time of writing. The Guam government turned away the cruise ship MV Westerman in February, fearful of spreading Covid-19 from infected passengers. But as a US territory, Guam has no authority to block an American warship from its harbours.

More than 25,000 military personnel from 20 countries - including Australia, New Zealand, France and Britain - are scheduled to join the RIMPAC exercises. China’s People’s Liberation Army Navy (PLAN) has previously participated in RIMPAC, but has been excluded this year because of rising US-China tensions.

In Hawaii, the local tourism and sex industries welcome big-spending sailors on shore leave, but indigenous Kanaka Maoli have long opposed the use of their islands for US military wargames and weapons testing. This concern is all the greater during the latest pandemic. The first case of Covid-19 in Hawai’i was reported on 6 March: a month later, Hawaii’s state governor announced there were 371 confirmed infections, with numbers still rising.

At the last RIMPAC exercise in 2018, crews from visiting warships were allowed onshore for rest and recreation, putting them in daily contact with civilians.  Church, community and peace groups have been petitioning US politicians for cancellation of the exercises. 

The Australian and New Zealand governments have not yet announced whether RAN and RNZN warships will join RIMPAC 2020. An Australian Department of Defence spokesperson told Islands Business: “In line with the advice of the Chief Medical Officer and Australian Government, Defence is currently reconsidering the status of its upcoming events to ensure the safety of personnel involved.”

After widespread popular protest in Okinawa and Guam against the basing of US Marines and their families, Australia agreed to host some marines through an annual rotation in the Northern Territory. Both Canberra and Washington claim that the Marines are not formally based in Australia, but the regular rotation ensures that US boots are on the ground for most of the year. Despite this, the latest rotation of 2,500 Marines through Darwin has now been cancelled by Australian Defence Minister Linda Reynolds, following the decision of the Northern Territory to tighten border controls and prevent the further spread of the coronavirus.

The government hopes to be back in business next year, with Reynolds stressing: “Any decision in relation to the 2020 Marine Rotational Force - Darwin (MRF-D) in no way affects Australia's commitment to host next year’s, or subsequent, MRF-D rotations.”

As the tertiary sector in New Zealand prepares to shift online in response to COVID-19 restrictions, digital equity among students has never been more critical – an issue that disproportionately impacts on Pacific and Māori communities.   

AUT Vice-Chancellor, Derek McCormack has announced that AUT is underlining its commitment to access by providing computer equipment and broadband to thousands of its students.   

During the four-week study break, the University canvassed students to establish their digital needs.

The survey indicated that six per cent of AUT students do not have a laptop, tablet or PC at home that they can use for study purposes. In addition, 17 per cent of students do not have broadband at home in order to connect to learning and support. According to Open Colleges, 81% of U.S teachers think tablets can enrich classroom learning, and 86% of students believe that their tablets can help them to study more efficiently.  

Assistant Vice-Chancellor Pacific Advancement and South Campus, Walter Fraser, led the digital equity and access initiative that has resulted in AUT securing up to 1,500 laptops and purchasing up to 4,000 connectivity packages, a move that that will enable AUT students with identified technological barriers to pursue online learning and continue their studies.  

“The impact of COVID-19 is being disproportionately born by our most vulnerable and, in New Zealand, many of these are our Pacific and Māori communities, and especially in South Auckland,” he says.  

“Over the past three years, I have been pulling together data that has brought into sharp focus the inequities that poverty and deprivation creates. About one in five of our students live in areas that score 9-10 on the New Zealand Deprivation Index. Initiatives to bridge the technology divide and ensure digital equity are an example of a paradigm shift in the way our university is addressing these issues.  

“AUT has endeavoured to ensure that all of our students, irrespective of socio-economic status or ethnicity have the best possible chance to be successful with their studies,” Mr Fraser says.   

“I can’t underscore enough the unequivocal and unanimous support that this initiative has received from every quarter of the University and in particular our senior management colleagues and AUT Council.” 

Papua New Guinea’s Treasurer, Ian Ling-Stuckey says his country has not had “an economic crisis of such complexity or magnitude since World War 2.” Samoa’s finance minister Sili Epa Tuioti calls it a “social and economic tsunami.” The language being employed by institutions and governments in responding to the economic impact of COVID-19 stresses the historic moment we are living through.

The response of international organisations and donor partners to assist Pacific island economies has been swift, although details are still to be ironed out given the pace with which the pandemic is developing and morphing, and the pervasiveness of its impacts across the globe.

Central to that detail will be the form of that assistance; and whether it’s concessional loans, grants, debt forgiveness or a complex combination of all three and more.

What does the crisis mean for tourism, remittances, digital transformation and more? Get your copy of Islands Business to find out more.

 

Growth forecasts

 

2019

2020

2021

Dependencies

Stimulus package

           

ADB Pacific member countries

 

0.3

2.7

Fiscal stimulus measures across the region of at least 10% of GDP

 

Cook Islands

5.3

-2.2

1

Fiscal stimulus measures of approx. 50% of GDP

US$34.7m

Federated States of Micronesia

3

1.6

-3 (WB)

3

0.5 (WB)

Pension fund reform

New capital projects

US$15m

Fiji

 

-4.9

-4.3 (WB)

3 (ADB)

1.9 (WB)

Improved business and investment climate

Limit debt exposure

Climate resilient infrastructure

US$500 million

French Polynesia

       

US$280m

Kiribati

2.4

1.6

1.8

Well managed, sustainable trust funds

 

Marshall Islands

3.8

2.5

-3 (WB)

3.7

1 (WB)

Pension fund reform

Easing of restrictions on travel and transport

 

Nauru

1

0.4

1.1

Well managed, sustainable trust funds

 

Palau

-3

-4.5

-6 (WB)

1.2

0 (WB)

Pension fund reform

Tourism recovery

 

PNG

4.8

0.8

0.2 (WB)

2.8

3.3 (WB)

Good management of public debt

US$1.6billion

Samoa

3.5

-3

-5 (WB)

0.8

0 (WB)

 

US$23.6milloon

Solomon Islands

2.6

1.5

-6.7 (WB)

2.7

-0.3 (WB)

Large infrastructure projects provide some buffer

Reform of tax system

 

Tonga

3

0

0.5 (WB)

2.5

3.2 (WB)

Tourism recovery

Accelerated rehabilitation and recovery post TC Gita

US$25m

Tuvalu

4.1

2.7

3.2

Well managed, sustainable trust funds

 

Vanuatu

2.8

-1

-8 (WB)

2.5

6 (WB)

Benefits of labour mobility schemes are widespread, sustainable

 

Source: ADB Outlook 2020, World Bank, national governments

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Our Team

   Managing Director / Publisher

   Samisoni Pareti 

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   Samisoni Pareti

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   Peni Totoka

   Finance and Operations manager

   Sara Winnie Vafo'ou

   Design

   Dick Lee

          

    Main Correspondents

   Fiji

 

   Australia

Rowan Callick

 

Nic Maclellan

 

Davendra Sharma

   Cook Islands

Helen Greig

   Kiribati

Taberannang Korauaba

   French Polynesia

Nic Maclellan

   Marshall Islands

Giff Johnson

   New Caledonia

Nic Maclellan

   New Zealand

Dev Nadkarni

 

Jason Brown

   Niue

Naea Michael Jackson

   Papua New Guinea

Sam Vulum

 

Patrick Matbob

   Samoa

Taina Kami-Enoka

   Solomon Islands

Priestly Habru

   Tonga

IliesaTora

   Vanuatu

Tony Wilson

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