Economic Analysis

Chapter 14

ECONOMIC ANALYSIS

14.1  Economic Benefits

Tourism is an option for socio-economic development. Its impact to the region and to the country may be assessed in terms of

·  receipts from tourist expenditures for various items from accommodations to food to shopping and recreational activities;

·  linkage with other production/economic sectors parti larly in serving as stimulant to the growth of cottage and small scale industries;

·  flow of direct investments for the establishment and operation of tourist and tourist-related facilities and services and relatedly, construction impact which are one-time in nature, as facilities and buildings are constructed;

·  generation of employment opportunities;

·  payment of taxes by owners of hotels, resorts/lodging facilities, tourist-related establishments, shopping centers, entertainment/recreational establishments, tourist buses/coaches operators; and

·  ancillary spin-offs as money earnings are respent or what is referred to as the multiplier effect of the tourism industry in terms of output, income and jobs.

The first two items, i.e. tourist expenditure for tourist and tourist related facilities and services and purchases of various products of the province, may be generally categorized as those with direct impact. Construction of facilities and buildings, on the other hand, are those categorized under the one-time impact . The third form, which arise from both the direct impact and the one-time impact and are linked to the over-all effect of money respent or invested, is referred to as the total impact.

14.1.1  Tourist Receipts

A review of the tourist expenditure pattern would indicate that every peso/dollar spent by the tourist, whether foreign or domestic, is distributed as follows:

Source: Study on Regional Travel, Department of Tourism

In a study undertaken by the Asian Institute of Tourism (AIT ) for the Department of Tourism, it was established that the average daily expenditures of the tourist increased by 88.37% from P688.37 in 1988 to P1296.70 in 1993. Expectedly, the foreign tourist average daily expenditure was higher than the domestic tourist. In 1988, the foreign tourist spent, on the average, P854.50 per day and in 1993, P1070 or an average increase of 4.02 %. yearly. On the other hand, the domestic tourist spent an average of P522.25 in 1988 and about P925 in 1993, a rise of 77.11% over the six year period or an annual increase of approximately 12.85 percent.

In a visitors sample survey undertaken by the study group between December 1996 to January 1997, average expenditure of the foreign tourist was placed at P4081.06 while average daily expense of the domestic tourist was estimated to be P2611.63. This is significantly higher than the 1993 figures per study undertaken by the AIT. This maybe due in part to the significant rise in expenditures for major items as accommodations and food and beverages, upward bias resulting from responses obtained of tourists coming from the Clark Special Ecozone and Subic Freeport Zone. Moreover, these figures, as explained in the limitations of the study, should be viewed to serve as trend indicators and are not comparable to the AIT study since the methodology of study is significantly different.

Given the AIT data for 1988 to 1993 tourist expenditure, vis-a-vis the 1996 data obtained, some form of trend may be established:

Thus, the magnitude of direct receipts from tourists can immediately be estimated utilizing the figures on forecasted visitor arrivals vis-a-vis average expenditure spending (adjusted for projected inflation rate) and the average length of stay. By year 2000, estimated receipts is placed at P3793.1 M increasing to P8057.89 M in 2005 and P14964.09M in 2010. In terms of remittances to the government coffers, this translates into P568.97M by 2000, P1208.68M in 2005 and P2244.61 M in 2010.

It should be noted however, that the figure on the average length of stay of visitors in the region may have some upward bias inasmuch as the average is unduly affected

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1/ Average growth rate of domestic expenditure pegged at 10% annually_ , using 1996 data as base figure.

2/ Average growth rate of foreign expenditure pegged at 10% annually, using 1996 data as base figure.

3/ Data for 1990 not included in computation, basic data does not distinguish foreign and domestic expenditures and therefore may not be comparable.

4/ Indicative figures as per random interview of regional visitors.

5/ Tax remittances equal to 15% of total receipts.

by some very long stays particularly by overseas Filipino Balikbayans or by the children of Australian and German nationals permanently staying and doing business in the Pampanga area, who are visiting their families on holidays. In the study undertaken by AIT, no segregation/cross analysis was made to establish the length of stay of those who come to the region for pure leisure or business trips as against those who come for other purposes.

Vis-A-vis expenditure item, the largest expense among the domestic tourists is for accommodations and food and beverage, from 54% in 1988 to 61% in 1993. In 1996, this figure decreased to about 37%. Foreign tourist, on the other hand spent about 70% of their money for accommodations, food and beverage. This ratio, however, declined in 1993 with only 40% of every dollar spent to defray these expenses. In 1996, this increased to 42%. In terms of absolute figures, this translates to:

·  domestic tourist expenditure for accommodations, food and beverage was P283 in 1988, P326 in 1990, P308 in 1993 and P1106 in 1996; and

·  foreign tourist expenditure for accommodations, food and beverage was P599 in 1988, P326 in 1990, P425 in 1993 and P1929 in 1996.

Other major expenditure items include entertainment and recreation and shopping. While 1988 figures showed that a greater percentage was spent for recreation and entertainment, the reverse occurred in 1993. This may be attributable to the opening up of the highly-patronized duty-free shops in the region, on the one hand, and the temporary slowdown of entertainment businesses and subsequently the adverse effects of the Mt. Pinatubo eruption and the pull-out of US military personnel, on the other hand. Moreover, the growth of major commercial and retail establishments linked up to tourism was very conspicuous during this period : from shops selling the traditional pasalubongs - the ensaymada, fruit preserves, tocino and longganisa, pastillas and chicharon to the more utilitarian handicrafts as the mixed media, boneinlaid furniture, terra cota, the linen and linen-based embroideries, garments, ceramics, quilts, macrame and the like.

14.1.2  Flow of Direct Investments

An indicator of tourist-related investments flowing into the region can be surmised from the development cost of various tourism-related projects in the major anchor centers, namely: Clark Special Economic Zone in Pampanga, the Subic Bay Freeport Zone, the Hacienda Luisita in Tarlac, the row of beach facilities including resorts as along the Bagac-Morong belt and Mariveles satellite in Bataan.

(a)  Clark Special Economic Zone (CSEZ)

As of October 31, 1996, there are 159 investor firms in the CSEZ of which sixty five (65) are involved in industrial projects, sixty (60) in commercial projects, fourteen (14) in service-oriented projects, seven (7) in aviation-related projects, five (5) in tourism estate projects, four (4) in housing projects, one educational institution project and three (3) in utility projects. Of the 159 investors, 121 are covered by lease agreements, 32 by sub-leases, the remaining by other agreements as Memorandum of Agreement. Of the 4 tourism estate projects, 1 is operating and the other 4 are under planning stage. The 5 tourism estates shall cover an area of 496.62 hectares with a committed investment of P1.084 Billion within the first year and P4.444 Billion within the next five years. Committed employment, on the other hand, is 4,050 workers within a year and 9,660 workers within the next five years.

Already existing and operating in the complex is the Mimosa Resort Complex, a 187 hectare entertainment and leisure center. It currently operates a 27 hole championship golf course, a hotel and 272 villas. Other facilities either under construction or proposed for development by the Mondragon Leisure and Resorts Corporation are: expansion of hotel resort complex , another 9 hole golf course, three theme casinos (Las Vegas type), water theme park, botanical garden and a new hotel, extension of the golf course, casino, club facilities, cinema and shopping arcade.

The Crown Leisure and Resorts Inc., which is presently operating the Crown Peak Gardens, shall be undertaking the construction of a convention, entertainment and amusement center, hotel, shopping mall and theme park.

Under the planning stage is the development of tourism and recreational theme park, hotels, condominiums, convention hall, business and shopping center by the Fun Avenue Development Corporation. The Hacienda Golf Company, on the other hand, is finalizing its plans for a tourism resort complex comprised of a 36 hole golf course, clubhouse, luxury villas, casino, hotel, restaurants, shopping mall, water theme park, and other tourist amenities.

Other tourist related facilities are the shopping malls, duty free shops, restaurants/ fastfoods, amusement centers numbering some 31. Of this, 13 are operational, 13 are under construction/rehabilitation and 5 are in the planning stage.

Included under the recreational and entertainment components of the Clark New Town Master Plan are:

1.  Centennial Exhibition. The Centennial Exposition, slated to open in 1998, will serve as a major venue for celebration relating to the 100th anniversary of Philippine Independence. It will highlight the cultural history and development of the Philippines, and serve as an active center welcoming visitors to theme activities and exhibitions, day and night. It will feature restaurants, musical and dance shows, amusement rides, heritage events and other reset uses.

2.  Resort Hotels and Golf Courses. The plan envisions several resort hotels and golf courses as a recreational magnet for people of all ages. The resort component aims to incorporate activities for families and children as well as amenities for adults and business executives. Range of activities included are world class hotel accommodations and services, swimming pools, restaurants, water sports, health spa, shopping facilities, banquet facilities, golf courses and a variety of other leisure activities to satisfy guests seeking relaxation and recreation. The area is envisioned to adjoin the Centennial site and the Mimosa Complex and will be developed in a coherent manner to create a belt of recreational and entertainment activities. The area shall also include some residential development adjacent to the golf courses.

3.  Airport Hotel Accommodations. Attendant to the establishment of the regional hub airport are the opportunities to provide conveniences for fly-in meetings and conferences. A prevailing practice is for executives of companies to travel to a central location to discuss new products or conduct training in conference facilities located in the vicinity of an airport. With a short travel time to the conferences including short ground times, participants can comfortably return to their homes the same day. Other events will be overnight stays requiring airport hotel accommodations.

4.  Duty Free Shops (DFS). These special retail establishments presently sell tax and duty exempt imported consumer goods. Balikbayans, OCWs and travelers are allowed to buy from these shops up to US $2,000 within 48 hours upon arrival in the Philippines. While the privilege temporarily granted US $ 200 per year shopping privileges to other Filipinos, 18 years of age in December 1995, the DFS privilege was limited to residents within the periphery of free trade zones. For Clark, only residents of Angeles City, Mabalacat and Porac in Pampanga and Capas and Bamban in Tarlac are entitled to the US $100 per month DFS privilege.

The DFS occupy some 33 hectares, the biggest operators of which are PX Club, Demagus Trading, Puregold, Royal Duty Free, Zaxxons and JC Mall. An indicator of the heavy patronage of these shops is shown by its brisk sales. In 1995, DFS sales reached P3.5 Billion.

5.  Mixed use retail mail. These consist basically off shopping centers/malls, restaurant and amusement centers, banking facilities, electronic data processing and computer services, laundry/warehousing, printing press and other service oriented establishments.

In the Business Development Update of the Clark Development Corporation in October 1996, there were 60 listed commercial establishments and 14 service oriented establishments either operational, under construction/rehabilitation or under the planning stage.

Corollary to this are complementary attractions as listed in the Master Plan:

1.  Mixed use town center which will be a highly developed area with buildings up to 10 storeys in height lining urban scaled streets. Major streets will have required arcades to encourage street activity and shopping along primary building frontages. With convenient access to teleconferencing center, the civic center, the residential area and the major recreational activities, the town center will offer a unique business location within the country, offering a variety of leasable area for small to medium size commercial tenants.

2.  Teleconference Center which will be a key service resource for businessmen who require advanced telecommunication and conference services from video conferences to high density data transfers. It is envisioned to contain state-of-the art facilities for globally oriented businesses.