|Project Rationale and Linkage to Country/Regional Strategy
The proposed project will catalyze broad-based economic growth in the participating countries (Cambodia, the Lao People's Democratic Republic (Lao PDR), and Viet Nam) by improving urban-rural connectivity, urban environmental infrastructure, and tourism destination management in priority segments of the Greater Mekong Subregion (GMS) economic corridors.
According to the World Travel and Tourism Council, 82 million international tourist arrivals generated $90 billion in visitor exports for Southeast Asia in 2011, which sustained approximately 25 million tourism-related jobs. Among Southeast Asia's country groupings, the GMS has a strong comparative advantage in tourism owing to its outstanding mix of cultural, natural and urban attractions; far-reaching intraregional transport network; ongoing liberalization of immigration and investment policies; and rising demand for leisure travel by the subregion's 250 million inhabitants. International tourist movements in the GMS reached a historic high of 38 million in 2011 and are growing at over 6% per annum. Total annual visitor exports of the participating countries currently exceed $6.4 billion and could reach $12 billion by 2020.
Despite these impressive gains and favorable outlook, the socioeconomic benefits of tourism are highly concentrated in the subregion's gateway cities and flagship tourism centers. Asymmetric distribution of tourism benefits is mainly due to a lack of last-mile access infrastructure, underinvestment in urban infrastructure and services, and inadequate institutional capacity to promote and manage tourism growth in secondary destinations. Constraints arising from insufficient last-mile transport infrastructure are exacerbated by weak linkages between the tourism industry and other productive sectors. Environmental degradation brought about by inadequate management of solid waste and wastewater in GMS towns with nascent tourism potential threatens future prospects for economic growth and is negatively impacting the quality of life of local residents. Enhanced urban-rural connectivity, improved urban environmental conditions, and strengthened capacity of public and private institutions to effectively undertake tourism destination management is critically needed to remove these constraints and engender a more equitable pattern of tourism development in the GMS.
GMS member countries have jointly endorsed the GMS Tourism Sector Strategy (TSS) and recently reaffirmed their commitment to subregional tourism cooperation by including cross-border tourism as a strategic thrust of the GMS Strategic Framework 2012-2022. The GMS TSS focus on improving tourism-related infrastructure, human resource development, protection of the environment, and development of multicountry tourism products and services supports the participating countries' overarching goals of poverty reduction and inclusive economic growth. Tourism features prominently in Cambodia's Rectangular Strategy for Growth, Employment, Equity and Efficiency, Phase II; the Lao PDR's Seventh National Socioeconomic Development Plan 2011-2015; and Viet Nam's National Socioeconomic Development Plan 2011-2015, in recognition of its ability to generate employment, particularly for women and ethnic groups, and produce positive spillover effects in a range of related sectors. ADB Country Partnership Strategies (CPSs) for Cambodia, the Lao PDR and Viet Nam emphasize the need to improve rural access infrastructure to boost the poor's access to economic opportunities, expand municipal infrastructure and services, promote small and medium-sized enterprise development, and build capacity to improve public sector management.
The proposed project is consistent with ADB Strategy 2020 core areas of infrastructure, environment and regional cooperation and integration. It is included in the GMS Regional Cooperation Operations Business Plan 2012 2014 and participating countries' current Country Operations Business Plans. ADB's GMS Tourism Sector Assessment, Strategy, and Roadmap indicates ADB's forward assistance will support: (i) last-mile access infrastructure, sanitation, water supply and other public services in secondary tourist destinations; (ii) capacity building for public tourism officials and local communities to develop sustainable tourism; and (iii) joint marketing and promotion of multicountry tour circuits to help steer visitors to secondary tourist destinations in the GMS economic corridors. The proposed project takes on the recommendations of the recent GMS Tourism Sector Assistance Program Evaluation to promote tourism development in areas attractive for tourists where the poor live. Project investments will help strengthen the participating countries economic ties with Myanmar, Thailand, and the People's Republic of China, and accelerate transformation of the GMS transport corridors into full-fledged economic corridors as envisioned in the GMS Strategic Framework. Lessons from ADB's tourism support projects in the Lao PDR, Cambodia and Viet Nam underscore the importance of complementary and well-sequenced investments in rural and urban infrastructure, enterprise promotion, and capacity building for public officials to increase the proportion of tourist destination spending that reaches the poor. Past experience, lessons, and recent ADB analytical work will be fully incorporated into project design.