Talks to Boost Tourism

Economic News

22 Jul 2010
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Last week it was reported that Taiwan and China were close to an agreement that would allow Chinese tourists to visit Taiwan directly. Media reports in China suggested the deal would be announced soon. However, officials have explained that the two sides still need to agree on certain formalities.



Currently, around 600 Chinese tourists visit Taiwan each day since Taiwan sanctioned this in 2002. Chinese tourists have to travel through third countries if they want to visit Taiwan because the country is not deemed an official travel destination for Chinese citizens. Travelling to the island is technically deemed illegal.



It is estimated that easing restrictions could provide a major boost to both the tourism industry and the economy. It was reported in December 2006 that Hu Sheng-cheng, while in his position as chairman of the Council for Economic Planning and Development, estimated that easing travel restrictions to Chinese tourists could add 0.15 of a percentage point to economic growth. The estimate was based on the experiences of Singapore and Hong Kong.



The stock market responded well to the reports and average share prices in the tourism sector rose 4.73% on February 1.



It has been reported that Taiwan will allow 1000 tourists a day during a trial period and then, if all goes well, it would rapidly increase the quota.



There is some concern in the industry that there is not enough being done to market Taiwan effectively as a tourist destination. This year's European Chamber of Commerce's (ECCT) position paper on travel and tourism highlights this concern, stating that compared to other Asian destinations, tourism to Taiwan is relatively low.



Jan de Vries, who was chairman of the ECCT travel and tourism committee (2001-2006), told OBG he was optimistic about the effect the easing of restrictions for mainland tourists could have for the industry but warned against focusing on this market too much. De Vries said, "there is already too much focus on existing nearby and mature markets such as Japan and Hong Kong and not enough is being done to market Taiwan as an international tourism destination to other markets and segments with visitors who would stay longer and spend more."



Tourism industry operators are hoping that any agreement easing travel restrictions for Chinese tourists will make an agreement regarding increasing direct links more likely. In 2005, direct flights over the Chinese New Year were allowed. In 2006, it was agreed to extend this to three other holiday celebrations. Many of the passengers on these flights have been Taiwanese workers in China. Currently, the two sides are discussing permitting a certain amount of weekend charter flights to operate.



The opening up of direct flights has been anticipated for years. The wording of any such agreement will be extremely sensitive and will be scrutinised carefully by both sides. It is believed China would favour classing the flights as regional, as it does with Hong Kong and Macau, rather than international.



President Chen Shui-bian has expressed caution over the issue of allowing more direct flights. Local media have reported he was concerned Taiwan could lose out if flights were too convenient as this might encourage more people to work in China or spend their money there. He stated he feels Taiwan should look at both the pros and cons of increasing direct flights.

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