http://www.scmp.com/business/article/1411277/land-hungry-tourism-pillar-short-changes-hong-kong

SOUTH CHINA MORNING POST - BUSINESS

JAKE'S VIEW
(Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.)

PUBLISHED : Thursday, 23 January, 2014, 12:53amUPDATED : Thursday, 23 January, 2014, 12:53am

[#e6000f]Land-hungry tourism a 'pillar' that short changes Hong Kong
Tourism boosters exaggerate its contribution to city's economy, with the sector probably a net loser when all factors are considered[/#e6000f]





[Secretary for Development Paul] Chan called for a thorough review of the development of the tourism industry. "Where should it stand among other industries?"
SCMP, January 19

Demoted from its official status as a supposed "pillar" industry, that's where it should stand. How good to see the first glimmers of common sense emerge at last in official thinking about this tsunami of tourism from which we suffer at present.

The boosters say, of course, that tourism is very important to us because tourists spend HK$750 billion a year here, which is equivalent to 12.5 per cent of gross domestic product. We cannot just dismiss it out of hand.

Not out of hand, perhaps, but we can indeed dismiss by far the largest part of it. The figures are inflated. Tourism is nowhere near as important to our economy.

We start with the fact that two-thirds of the average tourist dollar is spent on shopping. Find me the made-in-Hong Kong products that tourists buy. There are none.

All the goods are imported, which means we have to deduct the import cost when calculating how big an impact this spending has on GDP.

You may say, of course, that this still leaves the profits that the shop owners earned on the sales of these goods plus the rent that they paid their landlords and the wages they paid their sales clerks.

But it still works out to less than it seems. A good number of the shop owners are foreigners or working under foreign franchise agreements, which means the profits just go back abroad.

And where the owners are not foreign, they tend, like the landlords, to be existing rich local tycoons so that we just get more disparity in where the money goes.

As to wages, tourism is a low-pay industry for menial labour, perfect for poor startup economies with little education and high jobless rates. Hong Kong, in contrast, is one of the world's wealthier cities and has a full-employment economy with more than a quarter of the workforce holding university degrees. It's a bad fit.

Much the same goes for other industries where the tourist dollar is spent. Most of the money for air fares never comes here at all or goes abroad again immediately while hotels, like shops, purchase most of their goods abroad, are narrowly owned by foreigners or by existing tycoons and pay menial wages.

It is noteworthy that the Retail Management Association does not even talk of having jobs for local jobseekers. It wants to bring in a flood of foreign labour to serve the foreign visitors, which means just more tourist dollars going straight back abroad.

I have not seen any detailed studies of how important tourism really is to the Hong Kong economy but, on a net basis, I would think it contributes little more than 2.5 per cent of GDP, rather than 12.5 per cent, and that this 2.5 is easily made up elsewhere if the resources are freed from tourism.

All of this, moreover, takes no account of the land-hungry nature of tourism or of shopping districts now denied to local residents because of a focus on tourists alone. Residents of Sheung Shui, for instance, have practically no normal community facilities left.

It gets even worse. Not only does very little of the tourist dollar remain in Hong Kong but we have allocated hundreds of billions of dollars of public money to infrastructure projects primarily for tourism.

If it were not for the tourist invasion, we could easily put off the HK$130 billion expenditure on a third runway or that HK$65 billion and counting for a bridge to Macau, which Macau does not want and which will never be needed by our port when it is finished. Let's face it. We are probably net losers on tourism.

My one suggestion is that we give visitors free tickets to the new high-speed railway to the border. We can then send them back to Shenzhen every night and save the cost of building yet more hotels on prime land that could be used for housing.

Yes, Mr Chan, let's start that rethink now on where tourism should stand among other industries. It's a pillar that rests on our shoulders rather than we on it.