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Tourism contribution to national output biggest since at least 2012

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THE TOURISM INDUSTRY’s contribution to the economy grew in 2018, according to data which the Philippine Statistics Authority (PSA) released on Thursday.

Preliminary data compiled by the PSA showed tourism’s direct gross value added (TDGVA) accounting for 12.7% of gross domestic product (GDP) in 2018, bigger than the sector’s 12.2% share in 2017.

TDGVA measures the tourism-related value created by various industries.

Last year, the combined economic contribution of tourism activities was P2.2 trillion at current prices, up 14.3% from 2017.

The TDGVA indicator is based on the results of the Philippine Tourism Satellite Accounts report, in which the PSA compiles from the Department of Tourism.

The sector’s contribution to GDP in 2018 was the highest since 2012 when the government started using the 2012 input-output ratios in estimating the TDGVA.




Transportation had a 21.9% share of gross value added, followed by food and beverage services and entertainment and recreation services with 21.3% and 19.9% shares, respectively.

Domestic tourism expenditures hit P3.2 trillion last year, up 21%. Domestic tourism expenditures were equivalent to 24.9% of household spending in 2018, according to the PSA.

Meanwhile, tourism expenditure by non-residents amounted to P441.4 billion in 2018, down 1.6% from P448.6 billion in 2017.

Compared to the country’s total exports, the share of inbound tourism expenditure was 8%. According to the PSA, inbound tourism ranked third among the biggest export items in 2018, after “miscellaneous services” at 31.5% and semiconductors at 22.8%.

“The contribution of tourism to the Philippine economy in 2018 stood at 12.7%, 0.5 percentage point higher from 12.2% in 2017, [but] slower than the 1.5 percentage points growth in 2017. This is still considered decent despite the six-month closure of Boracay Island from April 26-October 26, 2018 and the slower global economic growth in 2018 due to the lingering US-China trade war since July 2018,” Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC), said in an e-mail.

“These reflect the consistent faster growth in tourism compared to GDP growth, even with Boracay’s closure in 2018,” Mr. Ricafort said, adding that growth in tourism likewise stimulated growth on “other allied/related industries” such as real estate, retail trade, and various service industries.

Robert Dan J. Roces, chief economist at Security Bank Corp., underscored tourism’s resilience last year amid elevated inflation.

“Despite high inflation in 2018, we still saw growth in terms of the sector’s contribution; this goes to show that tourism is inflation-proof, particularly from international tourists who use and exchange their own currency,” Mr. Roces said in a separate e-mail.

The end of Boracay’s six-month closure marks the first phase of a two-year rehabilitation plan, which is focused largely on addressing environmental degradation. The rehabilitation, which started on April 26, was prompted by President Rodrigo R. Duterte’s pronouncement that the island had become a “cesspool.”

RCBC’s Mr. Ricafort also noted that tourism’s total contribution to GDP was just 7.9% of GDP in 2012 compared to 2018’s 12.7%.

“This only shows the increasing significance of tourism as a major growth driver for the Philippine economy over the years and may still continue to grow amid improvements in tourism infrastructure… with tourism as one of the biggest beneficiaries with the construction of more airports, seaports, roads, bridges, rail networks that make more tourism destinations more accessible for greater number of foreign and local tourists and reduce travel time,” he said. “Tourism, being one of the major contributors and growth drivers in the Philippine economy, has also become a major source of employment/jobs in the Philippines.”

For Security Bank’s Mr. Roces, “employment growth naturally follows from the sector’s uptick as demand for services go up. Thus, tourism’s contribution to economic growth cannot be understated.”

Employment in tourism industries was estimated at 5.4 million in 2018, making up 13% of the total working population. For that year, it was up 1.8% from a year earlier.

Analysts are upbeat about tourism’s growth prospects in the coming years.

RCBC’s Mr. Ricafort noted that aside from the re-opening of Boracay Island and the development of other tourism destinations, tourism would also benefit from the extended authority of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) to grant incentives to investors in the sector under the recently signed Republic Act (RA) No. 11262. RA 11262, which Mr. Duterte signed on April 10, amended RA 9593, or the Tourism Act of 2009 that gives TIEZA “sole and exclusive jurisdiction” to grant incentives to tourism businesses, in order to extend implementation of the incentive scheme for tourism enterprise zones for another 10 years. Under the old law, TIEZA had only until August 2019 to grant incentives.

“The tourism industry has enjoyed incentives/perks from the government over the years through the TIEZA in an effort to further promote the industry, and will continue to have more incentives over coming years as legislated recently,” said Mr. Ricafort.

Incentives that TIEZA grants tourism enterprises include six-year income tax holidays, a five percent preferential tax on gross income after that period ends, exemption from all taxes and duties on imported capital equipment, as well as exemption of transport equipment and spare parts from tariffs and duties.

TIEZA is also authorized to give “equal preference to large investments” that have “great potential for employment generation and… [to] local small and medium enterprises.”

“Tourism will continue to be one of the country’s major growth drivers, especially in areas outside Metro Manila, including far-flung provinces/localities, thereby creating more employment and business opportunities,” Mr. Ricafort said.

Mr. Roces shared this view, saying: “For [the first quarter], we have already seen a 7.59% increase year on year, and we see the Philippines still being viewed as a viable tourism destination from our Asian neighbors, particularly from the usual South Korean visitors.”

“Chinese visitors, on the back of friendlier ties with China, also contribute to the influx, as well as a high increase of Taiwanese.” — MAM

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