Green Growth Advisory Program for Lao PDR Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR Synthesis Report © 2019 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for non-commercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR © World Bank.” All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Front cover: Gibbon Experience treehouses. Photo credit: Nou Shong for the Gibbon Experience. i Contents Foreword v List of Abbreviations vi List of definitions and phrases vii Acknowledgements ix Executive Summary xi 1 Introduction 1 1.1 Capturing nature-based tourism potential 2 1.2 Nature-based tourism: A priority for Lao PDR’s green growth and development plans 5 1.3 Methodology and organization of this assessment 5 2 State of NBT in Lao PDR 7 2.1 NBT assets 7 2.2 Lao PDR’s Conservation Landscapes: the NPA network 10 2.3 Structure of tourism in Lao PDR 12 2.4 Current tourism markets for Lao PDR 12 2.5 Comparison countries 18 2.6 Visa regime 22 3 Market demand and diversification 23 3.1 Market demand 23 3.2 Market segmentation 24 3.3 Regional market opportunities for NBT 27 4 Barriers to investment and NBT businesses 32 4.1 Regional context of barriers to investment 32 4.2 Business environment 34 4.3 Barriers specific to tourism 35 4.4 Barriers specific to NBT 38 5 Impact of NBT on community incomes and poverty reduction 41 5.1 Case study on benefits of NBT for community income 41 5.2 Policy implications of the case study 45 5.3 Tourism, concessions, and communities in PAs 46 6 Scenarios for future growth and economic impacts from NBT 49 6.1 Scenarios 49 6.2 Economic forecasts based on the three scenarios 51 7 Priority recommendations 54 7.1 Priority recommendations 54 7.2 Roles and responsibilities of key agencies and actors 57 ii Appendix A Detailed action plans 62 A.1 Target segments 62 A.2 Product/market development for four selected NBT clusters 63 ‘Northeast Heritage’ Tourism Landscape: Nam Et – Phou Louey NP, supported by Nam Xam NPA, 1.  as well as Viengxay Caves and Plain of Jars Historic Sites 63 2. ‘Central Loop’ Tourism Landscape: Hin Nam No NPA, Nakai Nam Theun NP and Phou Hin Poun NPA. 64 ‘Capital Nature’ Tourism Landscape: Phou Khao Khouay and Phou Phanang NPAs, supported 3.  by Nam Ngum Lake 66 4. ‘Southern Lao PDR’ Tourism Landscape: Dong Hua Sao and Xe Pian NPAs 67 Appendix B Key Issues, Recommendations, and Actions Matrix 69 Appendix C Key actors to address barriers for tourism-related private sector investments in Lao PDR 80 List of Boxes Box 1: Ecotourism vs Nature-based Tourism 2 Box 2: Elephant Conservation Center (ECC), Xayaboury Province 4 Box 3: Gibbon Experience, Bokeo Province 4 Box 4: The Case of Rwanda 19 Box 5: Nam Kat Yolapa, Oudomxay Province 25 Box 6: Conflicting interests 37 Box 7: Nam Nern Night Safari, Houaphan Province 39 Box 8: Tourism Concessions in PAs in Namibia 47 iii List of Tables Table 1: Area of Lao PDR NPAs 11 Table 2: NBT landscape cluster selection considerations 11 Table 3: Visitors, revenue, accommodation and occupancy (2012–2017) 13 Table 4: Average length of stay (2012–2017) 13 Table 5: Market penetration of international visitors 15 Table 6: Key international markets arriving by air 17 Table 7: Comparator landlocked countries (19) 16 Table 8: International Visitor Arrivals, 2005–2016 (‘000) 20 Table 9: The ‘4 Ps’ and ‘4 Cs’ of marketing 23 Table 10: Explaining the ‘4 Ps’ of marketing through the example of a Lao waterfall 24 Table 11: Identified market segments and their characteristics 29 Table 12: Key Indicators for ASEAN member countries 33 Table 13: Poverty headcount in Nong Luang village by economic activities 43 Table 14: Average level of salaries in Nong Luang village 44 Table 15: SAM Tourism local multipliers 44 Table 16: Incremental revenue per year from NBT scenarios in target clusters (US$) 52 Table 17: Incremental NBT visitors per year over 10 years in the four target clusters 53 Table 18: Target segments 60 Table 19: Additional capacity requirement for incremental visitors to target NBT clusters 63 Table 20: Market segmentation within the cluster identified in Lao PDR’s Northeast 64 Table 21: Market segmentation within the cluster identified in Lao PDR’s Central 65 Table 22: Market segmentation within the cluster identified in Lao PDR’s North/Central 66 Table 23: Market segmentation within the cluster identified in Lao PDR’s South 68 List of Figures Figure 1: Locations Researched for the Assessment 9 Figure 2: Visitor arrival numbers (January–December 2016) 14 Figure 3: Visitor arrival numbers for key markets (January–December 2016) 15 Figure 4: Border crossings (including international airports) 17 Figure 5: ASEAN shares of inbound tourism (2016) 20 Figure 6: Annual growth (2016 versus 2015) in ASEAN inbound tourism 21 Figure 7: Proportion of international visitors to Lao PDR by gender (2012–2017) 26 Figure 8: Ease of Doing Business Ranking and Indicators for the Lao PDR (2019) 36 Figure 9: Circular flow of income in the multiplier process 42 Figure 10: Direct local economic impact: Public-private partnerships versus community supplied services 43 Figure 11: Incremental revenue per year from NBT scenarios in target clusters (US$) 52 Figure 12: Locations incremental NBT visitors per year over 10 years in the four target clusters 53 Figure 13: Roles and responsibilities of ley agencies and stakeholders 60 Photo credit: Swisscontact Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR v Foreword vi List of Abbreviations ADB Asian Development Bank ALOS Average Length of Stay ASA Advisory Services and Analytics ASEAN Association of South East Asian Nations B2B Business to Business (trade/wholesale marketing) B2C Business to Customer (consumer/retail marketing) CBT Community-Based Tourism CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora DMN Destination Management Network DOF Department of Forestry ECC Environmental Compliance Certificate ERC Enterprise Registration Certificate ERM Enterprise Registration and Management ESIA Environmental and Social Impact Assessment FDI Foreign Direct Investment FX Foreign Exchange GDP Gross Domestic Product GMS Greater Mekong Subregion IFC International Finance Corporation of the World Bank Group INGO International Nongovernmental Organization IPD Department of Investment Promotion IUCN International Union for Conservation of Nature LANITH Lao National Institute of Tourism and Hospitality LENS2 Second Lao Environment and Social Project LGBT Lesbian, Gay, Bisexual, and Transgender MAF Ministry of Agriculture and Forestry MoD Ministry of Defence MoES Ministry of Education and Sports MoF Ministry of Finance MoFA Ministry of Foreign Affairs MoHA Ministry of Home Affairs MoIC Ministry of Industry and Commerce MoICT Ministry of Information, Culture and Tourism MoJ Ministry of Justice MoNRE Ministry of Natural Resources and Environment MoPS Ministry of Public Security MPI Ministry of Planning and Investment MPWT Ministry of Public Works and Transport NBT Nature-Based Tourism NGGS National Green Growth Strategy to 2030 NGGSC National Green Growth Steering Committee NGO Non-Governmental Organization NP National Park NPA National Protected Area NSEDP National Socio-Economic Development Plan NTB National Tourism Board OSO One Service Office Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR vii PA Protected Area PAMD Protected Area Management Division PMO Prime Minister Order PPP Public-Private Partnership PR Public Relations ROI Return on Investment SAM Social Accounting Matrix SME(s) Small and Micro Enterprise(s) TTCI Travel and Tourism Competitiveness Index UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific, and Cultural Organization UNWTO United Nations World Tourism Organization UXO Unexploded Ordinance VDF Village Development Fund WCS Wildlife Conservation Society WEF World Economic Forum WTTC World Travel and Tourism Council List of definitions and phrases ALOS  Average length of stay (or ‘duration factor’), expressed in number of 24-hour periods Cluster  Reflecting a demand-led approach to marketing and product development, ‘cluster’ implies a more coordinated and strategic approach to destination management involving a range of stakeholders (including landowners, product managers, and other suppliers) who are natural competitors and at the same time cooperate for mutual benefit by presenting an integrated range of visitor choices and experiences within an identifiable and marketable geographic area. Co-operative  A ‘co-op’ or co-operative enterprise. The legal status of co-operative enterprises varies from country to country and is not universal. Co-ops can be registered as a specific co-operative entity in law, most commonly a ‘co-operative society’. Elsewhere, however, co-ops might not have a distinct legal identity but can still be recognized as such, when, for instance, private companies involve employee ownership and other mutual arrangements. Cultural  Significant features of a particular society that subsist across multiple generations, often divided Heritage into tangible heritage (buildings, fine art, literature, and so on) and intangible cultural heritage (music, language, gastronomy, and so on). The world’s most important heritage has been inscribed Tourismon various lists by UNESCO. Dark Tourism The phenomenon of visiting sites that represent the worst of human experience, such as Auschwitz in Poland, Ground Zero in the United States, Kibeho in Rwanda, and the Killing Fields of Cambodia. Requires careful and sensitive interpretation, but there is a widespread view that humanity has a responsibility to educate people about such dark events and perhaps contribute to reconciliation through revenue generation and common understanding. Ecolux  Environmentally sound, high-end nature-based tourism product marketed as luxurious and exclusive; will often involve relatively high prices and substantial margins. Can include ‘glamping’. viii Ecotourism  Responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and education Endogenous  They are divided into three blocks: production factor, institutional, and production activity blocks. Accounts Exogenous  International tourism demand Demand Glamping  ‘Glamorous camping’, which can involve what is effectively a comfortable fully furnished room under canvas in a remote location Green Growth Green growth is a growth pattern that is efficient in its use of natural resources, clean in that it minimizes pollution and environmental impacts, and resilient in that it accounts for natural hazards and the role of environmental management and natural capital in preventing disasters (World Bank 2012). In 2019, Lao PDR adopted a National Green Growth Strategy 2030 that prioritizes nature-based tourism. Green Season The rainy season (typically March–September); an inspired marketing device High Season Historically, the main season for Western visitors (November–March) Landscape  A landscape is often defined as a geographical area that includes not only biophysical features but also its cultural and institutional attributes. A landscape is not necessarily defined by its size; rather, it is defined by an interacting mosaic of land cover and land-use types relevant to the processes or services being considered or managed. Market  Statistic measuring number of individual tourism arrivals from a particular market, relative to that Penetration market’s population Multiplier  In the context of tourism, the factor by which the economic benefit of tourism in a destination extends beyond the immediate visitor economy. For instance, it includes spending by those employed in tourism and other indirect activity. The multiplier effect thus causes total output to be greater than the economic output directly associated with tourism. Natural  Natural heritage relates to significant features of the environment that are not man-made, such as Heritage mountains, rivers, and valleys, and also the Earth’s biodiversity of flora and fauna. Natural heritage can also include people and cultures dependent on and that affect the natural heritage. Nature-based  Nature-based tourism (NBT) is a continuum of tourism products, some of which are more desirable and Tourism sustainable than others, and includes ecotourism. NBT products also involve tangible and intangible cultural heritage associated with natural heritage and the human experience across the landscape (and seascape in other countries). RevPAR  Revenue per Available Room, calculated as total revenue over a period divided by the number of room nights available during that period (typically a month or entire year) Sustainable  Tourism that takes full account of its current and future economic, social and environmental impacts, Tourism addressing the needs of visitors, the industry, the environment and host communities. (UNWTO) Tourism  Tourism comprises the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business, and other purposes. (UNWTO) Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR ix Acknowledgements Analytical and advisory services (ASA) on developing nature-based tourism (NBT) in the Lao People’s Democratic Republic were requested by the Government of Lao PDR (GoL) in the context of the country’s Green Growth initiative, which has prioritized tourism development based on its conservation landscapes including protected areas (PAs), waterways, wildlife, and environmental protection. This initiative anchors an ambitious policy reform and investment mobilization effort that aims to establish the foundations for transforming Lao PDR’s development trajectory to build and deploy natural and human capital sustainably for more resilient development outcomes, including the need for sustainable natural resource and environmental management, and developing demand-driven tourism opportunities that create jobs, livelihoods, and economic growth. This ASA (P164372) is a sub-task under the Programmatic ASA on Green Growth (P162394) implemented by the World Bank. Sister ASAs address related topics important for Lao PDR such as sustainable forest management and the state of environment including the costs of environmental degradation. A World Bank team, in cooperation with government ministries, carried out this task in consultation with, and support provided by, other government institutions, development partners, private sector actors, the World Bank Group’s International Finance Corporation (IFC), nongovernmental organizations (NGOs), and academia. The World Bank team also appreciates the close cooperation and engagement with the Ministry of Agriculture and Forests (MAF); Ministry of Information, Communication and Tourism (MOICT); Ministry of Planning and Investment (MPI); and Ministry of Natural Resources and Environment (MONRE). Funding for the ASA was gratefully provided by the Korean Green Growth Trust Fund, which is complemented by World Bank operating budget. Strategic guidance has been provided by the World Bank management, including Christophe Crepin, Manager for Environment and Natural Resources for East Asia and Pacific; Nicola Pontara, Country Manager for Lao PDR; and Mark Austin, Program Leader for Sustainable Development, Southeast Asia. The World Bank task team for this ASA was led by Stephen Danyo and Mombert Hoppe and at the time of delivery includes, in alphabetical order, Tijen Arin, Paul Eshoo, Gabriel Feuillet-Palma, John Parr, Wouter Schalken, Anita Soukhaseum, George Henry Stirrett, and Kaysone Vongthavilay. The team is grateful for the inputs provided throughout the life of the task from colleagues from the World Bank, including Viengsamay Srithirath and Govinda R. Timilsina. The report has also benefited from peer reviews by World Bank Group staff, including Urvashi Narain (World Bank), Nikola Kojucharov (World Bank), and Khampao Nanthavong (IFC), who provided many helpful comments and suggestions at the various stages of internal World Bank review. This synthesis report was prepared for the World Bank Group by a team from Swisscontact, led by Benjamin Carey and comprising Tim Gamper, Kai Hauerstein, Buakhai Phimmavong, Veronika Schanderl, Peter Semone, Symonekeo Sensathith, and Frédéric Thomas. The synthesis report comprises the following outputs: >> Technical background report: Baseline Report for the Development of Nature-based Tourism and Ecotourism in Lao PDR (prepared by Swisscontact and led by Benjamin Carey) >> Technical background report: Barrier Analysis of Private Sector-Led Investment in Nature-based Tourism in Lao PDR (prepared by Swisscontact and led by Benjamin Carey) >> Technical background report: Using a Social Accounting Matrix to Evaluate the Development and Poverty Reduction Capacity of Nature-based Tourism in Lao PDR (prepared by Swisscontact and led by Frédéric Thomas) >> Policy Note: Protected Area Management and Nature-based Tourism in Lao PDR (prepared by World Bank and led by George Henry Stirrett) x Foreword Bay Owl Phodilus badius in Nam Et Phou Louey National Park. Photo credit: Tiger Trail Laos Adventures xi Executive Summary 1 The Lao People’s Democratic Republic (PDR) has a great opportunity to create greener economic growth and good jobs by developing its tourism sector, especially nature-based tourism (NBT). With over half of Lao PDR’s total wealth found in natural capital, the country’s comparative advantage in tourism is its conservation landscapes and the wildlife and people dependent on them. Nearly a fifth of the country’s land area is in protected areas (PAs) set within larger attractive landscapes. This endowment supports globally significant biodiversity and forest cover of 58 percent of the country’s total area. Internationally important biodiversity comprises outstanding natural ecosystems such as the wet evergreen forest tracts within the Annamites mountain range, the Indochinese karst formations of the southern central region, and the montane forests of Xieng Khouang and Bolikhamxay Provinces. These unique biodiversity values are further augmented by world-class caves, rivers, and waterfalls. This wealth can be mobilized for green growth with NBT. Lao PDR prioritized NBT in its 2030 National Green Growth Strategy (NGGS) approved in 2019. 2 There is a large regional market on Lao PDR’s doorstep. In 2018, tourism to Asia grew by 8 percent, a significant increase in comparison with the global average of 6 percent, while inter-Asian tourism grew by an even greater number of 10 percent. China was a major driver of growth in the region (+13 percent) and is projected to continue its importance for Lao PDR tourism with the opening of China-Lao PDR Railway soon. Thai tourists continue to be the largest market for Lao PDR, especially its many waterfall attractions in the south. In the future, the Malaysian market also holds potential, with increasing flight and rail connectivity. The millennial market, which has a 40 percent global share and an above-average share of female travelers, is another important market both regionally and globally. In line with greener forms of growth, this assessment focuses mainly on regional markets, since (a) Lao is already part of a regional tourism circuit and (b) regional markets can increasingly provide longer-term economic sustainability with rising regional incomes. 3 Tourism has the potential to become the number one foreign exchange (FX) earner and NBT the biggest rural employer in Lao PDR. With the right strategy in place, NBT has the potential to be a major driver of socially and environmentally sustainable development, especially in landscapes with a specific natural asset or experience to offer. A survey of selected comparison destinations indicates that heritage-rich destinations that adopt tourism as a priority can achieve significant and sustainable economic development—a view that is backed with a quantitative case study in southern Lao PDR that shows clear poverty reduction impact from well-managed visits to a national protected area (NPA); see Chapter 5. 4 Tourism in Lao PDR contributed 4.2 percent of gross domestic product (GDP) in 2018, compared to 10.4 percent globally, and directly supports 3.5 percent of jobs, compared to 9.9 percent globally. This gap indicates there is room for growth of tourism overall and of NBT in particular, which has remained relatively underdeveloped in comparison to the country’s traditional attractions. This assessment considers three growth scenarios for tourism: xii Executive Summary >> Base scenario. There is an unimproved enabling environment and unimproved PA system. Visitor numbers remain flat or decline due to continued resource degradation, and revenues also remain flat or decline. >> Support scenario. There is a public commitment to NBT that results in some policy initiatives and regulatory clarifications that reduce the barriers to investment, enhanced coordination between different departments and levels of government, and improved PA management. >> Transform scenario. Lao PDR implements a transformative policy to achieve green growth from NBT as a priority sector and greatest FX earner, including marketing efforts in regional markets; a one-stop shop created to support responsible international investors; well-protected forests, PAs, and waterbodies; and substantially reduced illegal logging, hunting of endangered species, and inappropriate development in and around PAs. Kuangsi waterfall, Luang Prabang. Photo credit: Adri Berger for Forest Carbon Partnership Facility 5 These three scenarios would have very different economic impacts. After 10 years, annual revenue in the four priority NBT clusters would grow by US$10 million in the Base scenario (or could be less or decline), US$17 million (+67 percent) in the Support scenario, or US$51 million (+399 percent) in the Transform scenario. Given that the economic multiplier for tourism in Lao PDR is 3.3 (generating 13.7 percent or US$2 billion of total GDP), this indicates that the economic benefit from NBT alone, in just these four clusters, would be over US$600 million over 10 years, based on relatively conservative estimates. This estimate does not include growth in associated sectors such as hospitality, aviation, and retail. With investments and improvements in NBT due to the right policies, the direct contribution of tourism to the GDP of Lao PDR could double to at least 8.4 percent over the next 10 years, based on regional comparisons. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR xiii Barriers to growing nature-based tourism 6 NBT potential in Lao PDR has been restricted by significant barriers to business investment and an under-prioritization of PAs and other natural attractions for tourism. Despite recognition of the potential, some stakeholders have been reluctant to invest in the development of NBT products and markets. Key barriers include (a) basic services; (b) legal framework, procedures, and transparency; (c) weak (but strengthening) PA management and financing; (d) institutional and human capacity; and (e) tourism product and offer. Without significantly simplifying the business environment for the private sector, investment to develop demand-led tourism activities is likely to remain limited. It would limit entry of new actors as well as competition in the industry, negatively affecting quality, diversity, and pricing of the tourism services offered and affecting the overall development of the tourism sector. Recommendations for growing nature-based tourism 7 Implementing a plan that mobilizes incentives, information, and institutions can help unlock investment. This investment can in turn enable jobs to be created, livelihoods to be secured, poverty to be reduced, and development to take place while natural assets can be better protected. There are several key recommendations grouped into thematic and institutional categories. 8 Enabling environment for NBT investment and businesses (Responsible agencies: Ministry of Agriculture and Forestry [MAF], Ministry of Planning and Investment [MPI], Ministry of Industry and Commerce [MOIC], Ministry of Information, Culture and Tourism [MOICT], Prime Minister’s Office [PMO]): >> Reduce barriers related to business investment in Lao PDR and specifically tourism businesses. This includes fully implementing the recently simplified business registration process, streamlining regulatory requirements and procedures for obtaining and renewing operating licenses, removing restriction on foreign direct investment (FDI) such as investment licenses that were recently introduced, revising tax incentives, and making it easier to secure land for foreign investments. Implementation of relevant reforms should be broad based to improve the overall business operating environment and would contribute to achieving the Prime Minister’s objective of significantly improving Lao PDR’s ranking in the World Bank’s Ease of Doing Business Report. Improving inter-ministerial coordination, such as the one-stop service delivery for investors would further help facilitate business operations. >> Review the justification, objectives, and requirements for all tourism-related operating licenses and simplify or remove them where they do not serve a relevant regulatory purpose. Regulations for the tourism sector should be restricted to ensure they protect public health (for example, for restaurants) and the environment without creating undue burden for companies that would like to operate in the sector. Review the documentary requirements for application (such as business plans submission for approval) and remove all unnecessary or duplicative requirements. These reviews could be undertaken using simplified regulatory impact assessments. >> Reduce informal barriers to investment in tourism business by ensuring coherent application of existing rules and regulations across all jurisdictions. This will be critical to ensure that reforms have actual impact on the situation for investors and tourists. This will include increasing transparency by publishing and keeping up-to-date step-by-step guides on business registration, forms, and templates; establishing and empowering an ombudsman to investigate reports of malpractice and corruption in business process and regulation; and establishing an efficient mechanism for investor xiv Executive Summary aftercare to strengthen compliance and reduce opportunities for individual interpretation of rules and the extraction of rents. Strengthening skills, knowledge, and abilities among relevant officials will also be important. >> Establish regulations and procedures for tourism concessions in PAs and other natural landscapes that provide clear steps and incentives for businesses to invest in NBT as well as an investment protection mechanism. The concessions in PAs’ regulations should apply to different types of concessions, including public-private partnerships (PPPs), private-community agreements, and public-private-community partnerships. 9 Tourism policy and planning for NBT (Responsible agency: MOICT) >> Create a new National NBT and Ecotourism Master Plan for 2020–2025, superseding and integrating other existing plans. Clarify roles and responsibilities of different stakeholders, providing greater roles for the private sector in marketing and developing NBT and for PAs in managing site- specific tourism. >> Revise tourism laws related to community-based tourism (CBT) and ecotourism to decentralize pricing and management of community tourism products and services and reduce barriers for innovation. Policies could better promote the capacity building and use of local guides and support local people to set up NBT businesses. 10 Sustainability and environmental policy and regulations for NBT (Responsible agency: Ministry of Natural Resources and Environment [MONRE] and Ministry of Public Works and Transport [MPWT]) >> MONRE could devise a more appropriate range of environmental impact assessment regulations tailored for the tourism industry that promote key international standards, make complying with such regulations more efficient and beneficial, and provide incentives for investments to follow regulations and innovate. >> MPWT and municipalities, working with the private sector, could build waste disposal and recycling centers in key locations in NBT tourism clusters, and work with PAs, districts, communities, and businesses to devise systems for proper waste disposal and recycling in tourism centers. 11 Management of tourism in PAs and the broader conservation landscape (Responsible agency: MAF, working closely with MPWT and provinces) >> Continue to develop a Master Plan for NPAs (2020–2025) to guide the development of PAs and tourism within the emerging national parks (NPs) and other preserves. >> Continue to assess individual PAs for designations of their status and opportunities. The remaining 21 NPAs would benefit from assessments to support consideration of possible re- designation as NPs, including montane forests in Xieng Khouang and Bolikhamxay Provinces. As part of this work, consider pursuing additional natural heritage designation processes over the next five years, including World and Association of Southeast Asian Nations (ASEAN) Heritage Sites, but only if the cost justifies the potential benefits. Continue the designation process for Hin Nam No NPA to be designated as a natural World Heritage Site representative of Indochinese karst. The PAs containing significant tracts of wet evergreen forest in the Annamites landscape (comprising Nakai Nam Theun Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR xv NP, Khoun Xe Nongma Provincial Conservation Forest, Laving Laverne NPA, and Xe Sap NPA) could be evaluated to be designated as a possible serial natural World Heritage Site. To complement, Phou Hin Poun NPA, Laving Laverne NPA, and Xe Pian NPA could be assessed for possible ASEAN Heritage Site designation. >> Continue to enhance the knowledge, skills, and abilities of MAF’s Protected Area Management Division (PAMD) under the Department of Forestry (DOF) which has the mandate to oversee all activities within NPAs including Lao PDR’s two new NPs. As part of this mandate, within the context of maintaining the ecological integrity of PAs, work with private operators and stakeholder working groups to identify possible investment and concession opportunities in and around PAs. Continue to finalize the Master Plan for NPAs 2020–2025. >> Create tourism stakeholder working groups for PAs, where tourism is being developed, to help review and improve tourism development using consultation and feedback mechanisms. These groups would include community associations, private operators, local government, among others. >> Establish a transparent system for entrance fees, concession fees, and proper use of revenues for conservation and livelihoods in and adjacent to PAs, as well as an investment protection mechanism, with agreement and regular oversight by a tourism stakeholders’ group. Community Conservation Agreements between the NPA authorities and communities within or adjacent to NPAs have been a useful tool in some settings in Lao PDR. >> Coordinate the financing of last-mile tourism infrastructure in and around NPAs in priority conservation landscapes for NBT development. There are three main sources of domestic public funding: (a) through the MPWT and its provincial agencies which manage the country’s limited Road Fund, following the Provincial Road Maintenance System; (b) through the provincial Governors’ offices which manage provincial budget for small local infrastructure; and (c) within NPAs, the NPA budget that prioritizes needed infrastructure within the PA which would include green and grey infrastructure like trails, lodges, and so on. Private sector concessions in NPAs and partnerships with communities could be leveraged to extend precious public funding for infrastructure. Such funding should also support protection of natural assets by using low-impact sustainable construction and maintenance methods. 12 NBT product innovation and business support (Responsible agency: Private Sector Associations) >> Support the private sector to market and promote a national NBT brand through private sector associations or a private sector NBT promotion group. Marketing should also encourage foreign investment in NBT in Lao PDR and improve links between domestic NBT businesses and international NBT businesses. >> Devise and deliver courses on NBT product innovation, market development, and hospitality for private sector tourism and CBT businesses, to realize market potential and tackle perceptions of market size and seasonality constraints, including training for local guides and accommodation providers. >> Provide funding, through a new or existing window, to finance private sector tourism concessions in NPAs with a focus on creating best practice concessions that include programs to support wildlife protection. xvi Executive Summary >> Encourage the adoption of voluntary sustainability practices by the private sector by supporting private sector-led solutions, including internationally recognized certifications such as Travelife or Earthcheck, or providing technical services on how to implement and monitor sustainability measures. 13 NBT can become a driver of inclusive green growth and sustainable development in Lao PDR. Lao PDR’s comparative advantage in tourism is its conservation landscapes and the wildlife and people dependent on them. Overall, Lao PDR has good assets, tourist demand, safety, new policy reforms, investor interest, and a small number of models that could be scaled up. While there is demand for NBT in Lao PDR, source markets are not fully aware of just how much Lao PDR has to offer. However, improvements are needed in the enabling environment for business investment and specifically for tourism in and around NPAs and other natural sites, by streamlining business licensing and regulations for investment in PAs and partnerships with communities combined with good ecosystem and visitor experience management within conservation landscapes and PAs. The government can help make this happen by relying on a demand-led approach to NBT that attracts quality business investment suitable to developing NBT in cooperation with communities that have the ability and vision to deliver long-term benefits without requiring ongoing support by projects and the government. Providing investors with secure opportunities for long-term investment in or around PAs would need to be supported by clear regulations and procedures for concessions and land-use, sufficient PA management capacity, last-mile infrastructure, and good enforcement of environmental and sustainability regulations. Carrying out these actions in a coordinated way can put tourism development and growth on a sustainable path that fosters green growth, environmental protection, biodiversity conservation, community benefits, jobs, livelihoods, revenues, and poverty reduction. New Green Discovery nature tourism site located in the karst limestone landscape in Khammouane Province, 2019. Photo credit: Green Discovery. 1 1 Introduction: Lao PDR and the New Green Forest Economy 1 Lao PDR faces a great opportunity to develop its tourism sector, in particular nature-based tourism (NBT), to create greener, more resilient economic growth and good jobs from its attractive landscapes1 and wildlife. Throughout the world, NBT is the fastest growing segment of tourism; demand is growing as the urban middle class expands, particularly in Asia. There is an opportunity for less established destinations with rich natural and cultural heritage to contribute to sustainable social and economic development, especially in rural areas and particularly for the benefit of women and young people, who can often be marginalized in socially and economically disadvantaged areas. However, there have been several examples globally, and in Lao PDR, where communities with modest attractions and difficult accessibility were promised large numbers of tourists and resulting incomes, with nothing materializing. This report seeks to assess the potential for NBT, identify barriers to sustainable NBT development, and formulate potential solutions and actions that contribute to the country’s green growth ambitions. The Assam macaque is the most common macaque found in evergreen forests in hills and mountains. Photo credit: George Stirrett 1 The term ‘landscape’ has permeated discussions regarding forest and conservation management during the past few decades, and climate change action more recently. A landscape is often defined as a geographical area that includes not only biophysical features but also its cultural and institutional attributes. A landscape is not necessarily defined by its size; rather, it is defined by an interacting mosaic of land cover and land-use types relevant to the processes or services being considered or managed. Examples of forest landscapes can range from large tracts of forests used for multiple purposes to mosaics of forests, PAs, home gardens, rice terraces, villages, wetlands, and waterbodies. Multiple uses and benefits accrue from landscapes including production, conservation, cultural, spiritual, recreational, environmental services, flood risk reduction, and so on. 2 Introduction: Lao PDR and the New Green Forest Economy 1 .1 Capturing nature-based tourism potential 2 The GoL and World Bank Group have engaged in analytical and advisory services (ASA) on NBT (see Box 1 for definition) to help answer three key questions facing Lao PDR decision makers: >> Can NBT be a driver of green and inclusive growth? >> Is there enough demand for NBT? >> If so, what can the government do to take advantage of it? 3 Ecotourism (see Box 1 for definition) is a term that has been used officially in tourism development in Lao PDR for quite some time but is a term that is perceived internationally as a niche or exclusive form of nature tourism that carries some misunderstood connotations and is not well matched for conveying a country-level strategy, which must be broad and nonexclusive. Nature-based tourism2, on the other hand, is a broader term that has a similar focus as ecotourism but captures better the overall goals of tourism in developing countries which must focus on creating revenue-generating and job-creating tourism (as sustainably as possible) and helping visitors (and their hosts) partake in increasingly environmentally and socially responsible tourism experiences while capitalizing on ecotourism’s opportunity to educate a wide range of local and international visitors. BOX 1 ECOTOURISM VS NATURE-BASED TOURISM Ecotourism is well defined, although it is a term that is sometimes misunderstood and even misused. The International Ecotourism Society defines ecotourism as “responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and education” (http://www.ecotourism.org/what-is-ecotourism). Ecotourism has been associated at times with limited revenue because it stresses low-impact tourism, which can translate into either nonluxury, low-value products or high-value, low volume products. However, ecotourism can be designed to be high-end, high-value, as demonstrated by the many luxury ecolodges around the world. Nature-based tourism (NBT) is a broader term that includes all tourism activities and products that require or depend on nature, which includes but is not limited to ecotourism. NBT is sometimes used synonymously with ecotourism. However, NBT products can include highly active activities such as trekking, kayaking, climbing, and mountain biking or passive activities such as landscape viewing and birdwatching, as well as cultural heritage associated with nature and the human experience of the rural landscape. Unlike ecotourism, NBT can include mass tourism activities and a range of services and products that appeal to a broader range of markets than ecotourism. NBT is a less exclusive and, therefore, more appropriate term to use for describing a country’s nature tourism development strategy. 2 https://comdev.osu.edu/programs/economic-development/ohio-tourism-toolbox/topics-of-interest/nature---based-tourism. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 3 4 Lao PDR has remarkable natural landscapes, a necessity for authentic tourism experiences. Seventeen percent (38,582 km2) of its area is already protected,3 and the GoL has recently declared the country’s first two NPs, Nakai Nam Theun and Nam Et-Phou Louey—the two largest protected areas (PAs) in Indochina. Lao PDR is rich in biodiversity4 with an estimated 10,000 species of flowering plants, 166 reported species of reptiles and amphibians, 700–800 species of birds, at least 90 species of bats, and more than 100 species of large mammals. However, to have sustainable value through tourism or other non-consumptive uses, this heritage needs protection and interpretation, which in turn requires effective visitor surveys5 and monitoring and environmental and social sustainability policies that are enforced. The extraordinarily rich and diverse cultural heritage (both tangible and intangible) enhances and is very much part of the natural heritage, adding meaning and significance sufficient to create imaginative experiential tourism products that are highly marketable and can compete with world-class NBT products regionally and in other parts of the world. 5 The long-term potential exists for Lao PDR to eventually compete6 with Sub-Saharan Africa and South Asia for wildlife tourism based on charismatic large predators if progress on conservation is sustained. Due to sustained hunting pressure and wildlife trade, Lao PDR’s key species and birdlife have become depleted in recent years. However, the country does have many natural attractions that hold great potential for tourism growth and jobs. Perhaps most notable is the Annamite Mountain Range and karst landscape that is the natural barrier between Lao PDR and Vietnam and is one of the world’s 32 biodiversity hot spots, which has produced newly discovered mammals including the Saola, Giant Muntjac, Annamite Striped Rabbit, and the Kha Ngou (Laotian Rock Rat). In addition to these new species, the country still has many other iconic species, including leopards and Indochina tigers,7 Gaur, Banteng, bears, gibbons, and Asian elephant, which if well protected and interpreted, could become strong NBT attractions in the future. Formerly the Land of a Million Elephants (Lanexang), Lao PDR’s mahout culture and population of domestic elephants have been parlayed into attractions that are not always sustainable. A handful of enterprises are taking a more sustainable approach, where visitors can learn about elephants (see Box 2), and a new international certification (Elephant Camp Animal Welfare and Sustainability Standard and Assessment Initiative by Travelife) has been recently introduced in Lao PDR. The country’s cave network is world class, with caves such as the Xebangfai—located in Hin Nam Ho NPA, slated to become the country’s first natural United Nations Educational, Scientific, and Cultural Organization (UNESCO) World Heritage Site—and Kong Lor known internationally for their extraordinarily long river passes; large rooms; spectacular formations; and rare species of fish, reptiles, and amphibians. Lao PDR is blessed with some of the world’s most impressive waterfalls, including the iconic Tad Kwangsi in Luang Prabang and Khonephapheng Falls in the south, the largest waterfall by volume in the region. Lao PDR has two RAMSAR wetland sites, the Xe Champhone which is home to the last viable population of Siamese crocodile in the country, and Bueng Kiet Ngong in Xe Pian NPA, 3 The World Database on Protected Areas maintained by Protected Planet. This compares with 19 percent for the whole terrestrial territory of the Asia Pacific region and Lao PDR’s neighbors—Cambodia (26 percent), Thailand (19 percent), China (16 percent), Vietnam (8 percent), and Myanmar (6 percent). 4 International Union for Conservation of Nature (IUCN). 5 As part of best practice PA management, the NBT surveys would include the consistent collection of detailed visitor statistics (market profile, activity, motivation, and spend). 6 With similar ecology and less population pressure compared to South Asia, scientists consistently argue that in fact Lao PDR could in the medium to long term compete with other NBT destinations in South Asia, even though it has lost more biodiversity than the other South Asian countries. As a comparator, Rwanda, which lost much of its wildlife during the Genocide and Civil War, is a useful African case study, as it has reintroduced a number of iconic species from southern Africa and is now establishing itself as a contender in high-value wildlife tourism. 7 Although there is evidence of only a handful of tigers left in Lao PDR, resulting from the combination of habitat loss and poaching for Chinese medicine, viable populations of endangered species have been successfully reestablished elsewhere through strong enforcement against illegal trade and poaching and careful reintroductions from neighboring countries. 4 Introduction: Lao PDR and the New Green Forest Economy BOX 2 ELEPHANT CONSERVATION CENTER (ECC), XAYABOURY PROVINCE This scientific research and rehabilitation center attracts about 3,000 tourists per year to stay overnight and learn more about the rehabilitation of Asian elephants in captivity. In 2018, a year that saw overall tourism visits decline in Lao PDR, visits to the ECC went up, reflecting interest in science-based interpretation of the iconic species. In contrast to many unsustainable elephant camps, there are no elephant rides, feeding, or washing at the ECC. BOX 3 GIBBON EXPERIENCE, BOKEO PROVINCE The Gibbon Experience is Lao PDR’s first and most popular zipline and treehouse experience in the country. The program revolutionized tourism in the country and the region with its breath- taking accommodation in the high forest canopies of the Nam Khan NPA, which was upgraded from a provincial PA due to the success of the project. The tours are operated by local staff from the surrounding villages, and funds from the tours are used to support 25 forest rangers to protect the area. As a result, the Gibbon Experience was able to protect the last population of the black-crested gibbon in Lao PDR, a critically endangered species. which is important for birdlife. Lao PDR’s mountainous landscape is a potential paradise for trekkers, and in recent years, its karst formations have become popular for rock climbers. Zip lining has quickly become one of the country’s key NBT activities, with the opening of the country’s first internationally recognized site, the Gibbon Experience (see Box 3). Lao PDR’s river network is extensive and has long been popular for kayaking, rafting, tubing, and boat travel. However, this iconic activity is also under threat due to the onslaught of dam projects that have recently closed off many rivers. The country’s low population, beautiful landscape, and extensive road network of its north-south geography provide excellent routes for various forms of biking and motorbiking, setting it apart from its population- and vehicle-dense neighbors. Nearly all NBT attractions in Lao PDR also have a cultural and/or historical component to the attraction, such as ethnic villages along trekking routes in Nam Ha NPA or Phongsaly Province in the north, adding to the uniqueness and personality of Lao landscapes and creating a natural link for tourism to support communities, poverty reduction, and livelihoods as well as landscape and wildlife conservation. 6 Community benefit is not a primary motivation for most visitors. However, the more communities are involved in creating and managing tourism products, the more authentic and sustainable the destination will be. Authenticity and sustainability contribute to the marketability of NBT. NBT products can involve partnerships with the public and private sectors, and such partnerships are often desirable in terms of building local management capacity and marketing channels. Products developed without community participation are unlikely to succeed and often exclude and alienate the very communities that NBT is intended to support. 7 Rural tourism generally, and NBT in particular, can therefore be an important component of an emerging new green economy in Lao PDR as long as there is strong cooperation between the public and private sectors and a focus on community participation and benefit. An absence of cooperation and a lack of leadership to promote sustainable forms of tourism can be a major barrier to development. As much interest as the private sector might have in tourism, investors will not have the confidence to invest in the sector without a clear commitment from the government nor within a complex and murky business environment. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 5 Nature-based tourism: A priority for Lao PDR’s green growth and 1.2  development plans 8 In 2019, the GoL adopted a National Green Growth Strategy (NGGS) for 2030 that, along with its eighth National Socioeconomic Development Plan (NSEDP) 2016–2020, identified tourism as a priority sector to deliver greener and more resilient economic growth, especially for women and young people in rural areas. It is anticipated that the ninth NSEDP will also prioritize NBT. NBT is an opportunity to productively and sustainably monetize the country’s natural heritage and assets in a way that generates economic benefits while contributing to conservation. One of the challenges for an emerging NBT destination is that stakeholders may underestimate (or overestimate) just how valuable their natural heritage is for tourism and how much potential it has to drive sustainable social and economic growth from tourism development. Lao PDR has the potential to transform its tourism sector based on its extensive natural heritage and lessons from neighboring countries and NBT destinations in other parts of the world. 1.3 Methodology and organization of this assessment 9 This report summarizes the findings from several technical background reports8 and discussions among actors to provide information and recommendations that help address the questions posed earlier. The report is organized into eight chapters and annexes: >> Chapter 1 provides an introductory context and summarizes the scope of the report. >> Chapter 2 analyzes the current situation of NBT in Lao PDR within an international framework. >> Chapter 3 evaluates market demand, especially regional markets, and presents opportunities. >> Chapter 4 assesses barriers to investment and development of businesses for NBT. >> Chapter 5 summarizes research on the economic impacts of NBT associated with PAs in Lao PDR, including community-level impacts. >> Chapter 6 presents three scenarios for developing NBT in Lao PDR. >> Chapter 7 proposes high-priority recommendations for action. >> Annexes provide details on implementing actions, market research, and assessments of four specific landscape clusters for NBT development. 8 These are (a) Baseline Report for the Development of Nature-based Tourism and Ecotourism in Lao PDR, (b) Barrier Analysis of Private Sector-Led Investment in NBT in Lao PDR, (c) Using a Social Accounting Matrix to Evaluate the Development and Poverty Reduction Capacity of NBT in Lao PDR, (iv) Policy Note on Protected Area Management and NBT in Lao PDR. 6 Introduction: Lao PDR and the New Green Forest Economy 10 The methods used for carrying out the assessment include a combination of field surveys, the development of a social accounting matrix (SAM), a literature review including direct experience with relevant investment operations, and consultations with a wide variety of stakeholders including government officials, tourists, business operators, and nongovernmental organizations (NGOs). The assessment had an original focus on markets within a 4-hour flight time from Lao PDR, to support regional tourism development that could reduce global carbon footprint and promote regional cooperation. For the sake of green growth both regionally and globally, it is important to take measures to reduce the overall carbon footprint of travelers, which is one reason why the study was designed to focus on regional markets. The Lao government and other donors have also been taking measures to integrate the Lao economy into the Association of Southeast Asian Nations (ASEAN), which is yet another reason for focusing on regional markets. Recently, the government has focused more on working together with neighboring countries to build regional cooperation through tourism development, which not only helps promote peace, prosperity, and more resilient economic development in the region but also can have positive implications for protecting biodiversity and biospheres that straddle more than one country. Examples of regional tourism cooperation with Lao PDR include the Golden Triangle (Lao PDR, Thailand, Myanmar); Lane Xang-Loei Quadrangle (Luang Prabang, Sayabouri, Loei, and Nan Provinces); Emerald Triangle (Lao PDR, Cambodia, Thailand); and North-South and East-West Corridors connecting Lao PDR with Thailand-China/Vietnam. Some examples of areas with potential for cross-border protection of biodiversity and promotion of NBT include the Annamites and Phong Nha-Ke Bang National Park (NP)- Hin Nam No NPA (Lao PDR and Vietnam); Irrawaddy dolphins and the Mekong River Discovery Trail (Lao PDR and Cambodia); and Asian elephants in Nam Ha NPA in Lao PDR and Xishuangbanna National Nature Reserve.9 11 While it is desirable to focus on relatively closer source markets instead of long-haul travelers, it can be argued that this radius is too restrictive for Lao PDR’s tourism development prospects, at least in the short to medium term, for two reasons: a. There are few direct flights to Lao PDR’s three active international airports and regional flight times to Lao PDR are typically longer than four hours due to the need to stopover in Bangkok or Hanoi. This means that many potential markets would be excluded. b. There are some important emerging markets with direct flights either currently operating or being planned that are just outside the 4-hour radius. These include the large markets of Japan and South Korea10 (three direct flights per day) and also urban markets of Hong Kong SAR, China and Singapore. 12 Stakeholder consultations indicated that these Asian markets should also be included in the assessment, which was adapted to include them. Therefore, this study focuses both on regional markets and markets from around the Asia region, with less attention to the ‘usual’ markets of non-Asian/ Western groups. 9 http://www.xinhuanet.com//english/2017-11/14/c_136752177.htm. 10 Throughout this report, ‘Korea’ refers to the Republic of Korea, popularly known as South Korea. 7 2 State of NBT in Lao PDR 13 Tourism accounts for 10.4 percent of the global GDP,11 supports 9.9 percent of jobs worldwide,12 and is now consistently growing by 4 percent globally.13 In the most established destinations, tourism directly contributes at least 10 percent of GDP and supports 10 percent of jobs. 14 In Lao PDR, tourism contributes 4.2 percent (US$ 614 million) of GDP14 and directly supports 3.5 percent of jobs,15 a contribution that has been less than expected, with the recent decreases in the volume of tourism arrivals of 9.5 percent in 2016 and an additional 8.7 percent in 2017 and a predicted recovery rate of just 3.2 percent year-on-year in 2018.16 15 On the positive side, the multiplier effect of tourism in Lao PDR, which indicates the overall impact on the economy for every tourism dollar earned, is relatively high at 3.28 (generating 13.7 percent or US$2 billion of total GDP), compared to 2.43 percent for Southeast Asia and 3.2217 for the world average. The multiplier and overall impact of tourism on the economy is relatively high in Lao PDR due to its higher-than-average share of human resources, other inputs to the industry being sourced locally, and a large share of ownership by local people. This means that tourism income in Lao PDR generates significant economic impact for the greater economy as a whole and justifies tourism as a high priority sector in the 2030 NGGS and NSEDP. In the next 10 years, with the right policies and effective implementation, the direct contribution of tourism to the GDP of Lao PDR could double to at least 8.4 percent based on regional comparisons, which would have extremely high, positive multiplier impacts for the entire economy. If tourism is well managed, it can also contribute to Lao PDR’s environmental objectives and help drive the ‘circular economy’ articulated in the NGGS. 2.1 NBT assets 16 NBT has no substitute for quality nature attractions. NBT is limited in Lao PDR by the poor condition and weak, but improving, management of its conservation landscapes. There have been many tourism projects in Lao PDR that do very good work but ultimately underperform because the conservation issue has not been sufficiently addressed. For example, forests along tourist trails are degraded, burned, or clear-cut; wildlife advertised in brochures cannot be seen due to heavy hunting; or rivers promoted for kayaking are no longer navigable due to dams. 11 World Travel and Tourism Council (WTTC) (2018): data for 2017. 12 Ibid. 13 WTM (2018): data for 2012–2016. 14 WTTC, op. cit. 15 Ibid. 16 MOICT. 17 WTTC, op. cit. 8 State of NBT in Lao PDR 17 With some of the largest PAs and one of the world’s 32 biodiversity hotspots, the Annamites Mountain Range, scientists and wildlife NGOs consulted during this assessment report stated that Lao PDR has an exceptional range of natural landscapes. Many leading tourism operators consulted are convinced of the country’s potential as an NBT destination if these attractions are well protected and managed. Furthermore, NBT assets frequently lack interpretation, accessibility, and private sector investment in tourism services and infrastructure. 18 Lao PDR has three ecosystems of international biodiversity significance, which provide a strong basis for developing NBT. These are described in the following paragraphs: >> Wet evergreen forest: The most important areas of wet evergreen forest comprise Nakai-Nam Theun NP, Khouan Xe Nongma Provincial Conservation Forest, Laving Laverne NPA, Xe Sap NPA, and forest areas of Xe Kong in Kaleun District to the south of Xe Sap NPA. All of these areas of wet evergreen forest have very high significance for the global conservation of wet evergreen forest biodiversity internationally. All of these areas should be considered of the highest biodiversity conservation significance in Lao PDR. The wet evergreen forest ecosystem arguably has by far the highest significance and biodiversity importance and priority in Lao PDR than any Lao forest ecosystem, simply because of four factors: (a) wet evergreen forest ecosystems are particularly rich with high proportions of phylogenetically distinctive taxa; (b) the wet evergreen forest ecosystem have very minor representation globally with a very small total global area; (c) Lao PDR accounts for a highly significant proportion of the global range of wet evergreen forest (only Vietnam is more important); and (d) wet evergreen forest ecosystems are under tremendous threats. >> Indochina karst: The second ecosystem of high global biodiversity importance that occurs in Lao PDR includes the massive karst formations of Central Lao, best represented in Hin Nam No NPA and Phou Hin Poun NPA. The western dryer karst are ecologically different from the wetter eastern karst. Their rugged terrain gives them a degree of protection. >> Montane forests: Another significant forest ecosystem occurring in the Greater Annamites is montane forests. This ecosystem has somewhat lower priority because the threats are somewhat lower in general, but their significance to global biodiversity conservation is high because they in general have high representation of species with restricted ranges. The most important montane areas are those on the border with Vietnam in Xieng Khouang Province and those to the south of Xe Sap NPA in Xe Kong Province, although other important montane areas occur in Nakai Nam Theun NP and Xe Sap NPA. 19 The natural landscapes of Lao PDR are so attractive and extensive that it can be argued that every province of Lao PDR has the potential to be an NBT destination. However, to be more realistic, a development strategy should be selective, and so target landscape clusters have been selected based on three primary criteria: heritage, disadvantage, and potential, along with several secondary criteria, following consideration of all NPAs across the country. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 9 FIGURE 1: LOCATIONS RESEARCHED FOR THE ASSESSMENT Phou Hiphi Nam Ha Nam Et-Phou Louey National Park Xam Neua Nam Xam Phonsavan Luang Prabang Vang Vieng Nakai Nam Theun National Park Phou Hin Poun Vientiane Hin Nam No Phou Khao Khouay N Savannakhet Target NPAs Pakse Comparator NPAs Additional NBT locations and/or main tourism hubs Dong Hua Sao visited Xe Pian Source MAF Forest Inventory and Planning Department (FIPD) 2018. 10 State of NBT in Lao PDR 2.2 Lao PDR’s Conservation Landscapes: the NPA network 20 Lao PDR’s 23 NPAs and provincial PAs.18 In 2018, the Government of Lao PDR (GoL) carried out policy reforms that centralized management of the NPA system, a substantive change that is in line with global good practice. The Protected Area Management Division (PAMD) under the Department of Forestry (DOF) of the Ministry of Agriculture and Forestry (MAF) has the legal mandate to manage this system, and efforts continue to raise the knowledge, skills, and abilities of the division.19 The MAF has approved and continues to produce several policies and detailed regulations to govern this system and manage individual NPA units. Several NGOs and other development partners are active in other NPAs, most notably the Wildlife Conservation Society (WCS), World Wide Fund for Nature, and Lao Wildlife Conservation Association, and there would be merit in building on some of this activity to add value to and avoid duplication and/or dilution of effort. 21 A positive change in policy and practice has been observed over the past five years in favor of conservation. The 2018 moratorium on dam building, the ban on timber exports (Prime Minister Order 15), and strengthened illegal wildlife trade law enforcement (Prime Minister Order 5) have created valuable political will to provide space for developing a strategic NBT approach. The new political will for conservation and NBT development is also demonstrated through the newly decreed establishment, on February 15, 2019, of Lao PDR’s first two NPs, Nam Et-Phou Louey and Nakai Nam Theun—the two largest PAs in Indochina. Nakai Nam Theun NP has also recently been independently assessed in 2019 as having achieved highly satisfactory level of management. In the past five years, the GoL cancelled two hydropower projects that would have affected Nam Et-Phou Louey NP and put strict conditions on a reservoir that would flood 5 percent of the area of Dong Hua Sao NPA. These developments are highly encouraging for the development of tourism based on Lao PDR’s natural heritage. While there are challenges in balancing infrastructure development, extractive industries, and conservation in and around PAs, there is some recent progress in applying Environmental and Social Impact Assessment (ESIA) and in strengthening conservation designations and management in some NPAs. In some cases, NPA designation has resulted in a significant reduction in the rate of deforestation compared to other land-use designations. Respondents reported that construction and extraction by the Ministry of National Defense remains a challenge in some NPAs, such as Xe Pian. Although the consensus is that overall there has been a growing commitment to conservation, political support for conservation is fragile and financing is predominately external. 22 As part of the assessment, many existing and potential NBT sites were visited to better understand the situation on the ground and determine the optimum mix of target landscape clusters for NBT. 18 Nam Et and Phou Louey counted as one unit. These 23 NPAs also include Lao PDR’s first two NPs which were upgraded from NPA status. 19 The World Bank is currently investing in DOF’s centralized mandate and in the management of 11 PAs through the Second Lao Environment and Social Project (LENS2) Project. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 11 TABLE 1: AREA OF LAO PDR NPAs Name Area ha Name Area ha Phou Daen Din 222,000 Laving-Laverne 86,000 Nam Ha 222,400 Xe Sap 133,000 Nam Khan 136,000 Dong Ampham 200,000 Phou Hiphi 87,350 Phou Phanang 70,000 Nam Et Phou Louey NP 410,720 Phou Khao Khouay 200,000 Nam Kading 169,000 Nam Xam 70,000 Phou Xang He 109,000 Phousabot Poung Chong 149,030 Dong Phou Vieng 197,000 Nam Poui 191,200 Xe Bang Nouan 150,000 Phou Hin Poun 180,000 Phou Xieng Thong 120,000 Nakai Nam Theun NP 353,200 Dong Hua Sao 110,000 Hin Nam No 82,000 Xe Pian 240,000 Note Aqua = target NPAs; Orange = comparator NPAs. 23 Four target NBT landscape clusters20 were selected to achieve a mix of destinations that are remote/ accessible, are established/emerging, and have different kinds of heritage value. The four clusters are as follows, selected based on a range of criteria summarized in Table 2: >> Northeast Heritage including Nam Et-Phou Louey NP and Nam Xam NPA >> Capital Nature including Phou Khao Khouay and Nam Kading NPAs >> Central Loop including Nakai Nam Theun NP, Hin Nam No NPA, and Phou Hin Poun NPA >> Southern Lao PDR including Dong Hua Sao and Xe Pian NPAs TABLE 2: NBT LANDSCAPE CLUSTER SELECTION CONSIDERATIONS 1. Primary/essential 2. Secondary/optional  BT potential with identifiable national heritage value (natural, 1.1 N 2.1 Accessibility cultural, historical) 2.2 Alignment with aid-funded development programs 1.2 Human resources with socioeconomic disadvantage 2.3 Established product with existing market flows  ommunity/political commitment with realistic expectations 1.3 C 2.4 Identifiable sources of finance/investment and alignment with provincial priorities and PA conservation 20 Use of the term ‘landscape cluster’ reflects a demand-led approach to marketing and product development, where a cluster implies a more coordinated and strategic approach to destination management involving a range of attractions and stakeholders (including landowners, product managers, and other suppliers) that are natural competitors and who at the same time cooperate for mutual benefit by presenting an integrated range of visitor choices and experiences within an identifiable and marketable geographic area (that is, a landscape). 12 State of NBT in Lao PDR 2.3 Structure of tourism in Lao PDR 24 Tourism in Lao PDR is led by the private sector with a handful of larger operators dominating the market. Most of these are owned by Vientiane-based Lao entrepreneurs or experienced tourism investors from the wider Greater Mekong Subregion (GMS) with a good understanding of the business environment in Lao PDR. There are many small operators and agencies with tremendous local knowledge but with a lack of scale to be sustainable or significant players. Several regional companies operating out of Thailand and Vietnam have good market distribution but often lack local knowledge and tend to treat Lao PDR as an ‘add-on’ destination, as part of a multicountry itinerary, restricting visitor impact and growth in the country. Several international NGOs (INGOs) are active in tourism with a focus on encouraging community-based tourism (CBT). Although there are some outstanding examples of good practice, more often than not they do not include the private sector and focus almost exclusively on building the capacity of community stakeholders, limiting opportunities for sustainable social and economic development. 25 A growing number of international hotel brands have entered the market, with some major international brands investing in accommodations in Luang Prabang and, more recently, in Vientiane. The hotel and hospitality sector is limited by a lack of skilled staff, especially in the mid- range and lower end of the market. There are, however, a considerable number of Lao and international investors that have identified opportunities at the top end of the market, operating on margins that allow them to invest in staff training and development. 26 There is a lack of competition between international airlines on routes to Lao PDR mainly because they perceive a lack of market opportunity compared to other destinations in the region. 27 Online booking agents such as Airbnb are operating with an increasing presence in Lao PDR, as local businesses gain greater ability to take advantage of such sales and marketing platforms. However, much of the growth is in Luang Prabang, as the current small size of the market and perception that it is not an easy place to do business means that most of the country is not considered a target for many companies to invest in. 2.4 Current tourism markets for Lao PDR 28 With two years of contraction in 2016–2017 and (according to current data) only modest recovery in 2018, following several years of strong, double-digit growth, tourism to Lao PDR has plateaued at around 4 million arrivals per year since 2014, with approximately half of these visitors from Thailand. The decline in tourist numbers in the south of Lao PDR has been blamed by local stakeholders on a decline in Thai tourists resulting from increasing fees at the border. Some blame the overall decline on tourist numbers in Lao PDR on the political situation in Thailand, which has seen a slowing of growth in recent years and major increases mainly among visitors from China, while many stakeholders feel that the decline is due to poor marketing of Lao PDR and superior marketing by competitor destinations, such as newer destinations like Myanmar. Accommodation provision had been expanding, albeit with a concentration in Luang Prabang, Pakse, and other urban centers with growth in tourism. Occupancy levels have been hovering just above 50 percent on average across the country, reflecting a lack of innovation and investment to attract visitors to new destinations. The number of room nights sold, which is a strong indicator of tourism revenue, fell by 1.4 million in 2016, a significant drop. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 13 TABLE 3: VISITORS, REVENUE,21 ACCOMMODATION AND OCCUPANCY (2012–2017) 2012 2013 2014 2015 2016 2017 Visitors 3,330,072 3,779,490 4,158,719 4,684,429 4,239,047 3,868,838 Change YOY +13.5% +10.0% +12.6% -9.5% -8.7% Rooms 35,857 37,808 44,714 48,386 46,513 50,600 Change YOY +5.4% +18.3% +8.2% -3.9% +8.8% Occupancy 57% 55% 54% 57% 51% 54% Room nights (m) 7.5 7.6 8.8 10.1 8.7 10.0 Change YOY +1.5% +16.1% +14.2% -13.8% +14.9% Revenue (USDm) $506.0 $595.0 $641.6 $725.4 $724.2 $648.1 Change YOY +17.8% +7.7% +13.0% -0.2% -10.5% RevPAR (USD) $39 $43 $39 $41 $43 $35 Change YOT +12.0% -9.0% +4.5% +3.6% -17.5% Source MOICT; YOY = year-on-year. TABLE 4: AVERAGE LENGTH OF STAY (2012–2017) 2012 2013 2014 2015 2016 2017 “Regional tourists” (GMS) 2.0 2.0 2.0 2.0 2.0 2.0 “International tourists” (ROW) 7.2 8.4 7.9 7.50 7.57 8.39 Total 4.6 5.2 4.9 4.75 4.78 5.20 ROW: rest of world Source MOICT. 29 The vast majority of regional visitors come on business or to visit friends and relatives and only stay a couple of nights. Most international visitors come for at least a week. The opportunity for the growth of regional tourism in Lao PDR is to expand and evolve the number of regional visitors into aspirational tourists wanting to stay longer and spend more. 30 Research conducted for this assessment found poor performance by accommodation providers on average, as indicated by low-level occupancy (hovering only slightly above 50 percent).22 Low occupancy is primarily a result of low demand in the green (rainy) season,23 both in Lao PDR and the region. Marketing efforts have not been adequate to raise awareness by visitors of improved road conditions and facilities previously too poor to allow access to the country’s attractions during the rainy season. High-end accommodation providers in Luang Prabang seem to be doing the best during the rainy season, with some generating significant business all year round. There are some ecolux developments that stand out, but these are too few to represent the national standard. Overall, marketing for many areas and attractions in Lao PDR is hampered by low quality guesthouses and hotels that are not online and not active in finding customers and promoting their areas. Homestays have the lowest occupancy rates of all accommodation categories, even during the high season. This is may be due to poor marketing 21 RevPAR (revenue per available room) is normally calculated as the total revenue achieved across all accommodation units divided by the number of rooms available throughout the year. However, because a figure for total accommodation revenue is not available, the reported total direct revenue from tourism has been used as a consistent proxy instead. 22 The decline in occupancy during the rainy season is lower than the overall decline in total visitors as many regional visitors (Thailand, Vietnam) do not stay overnight. 23 The green season refers to the rainy season, typically March–September, which all Southeast Asian destinations are trying to promote with varying degrees of success to reduce the negative impacts of ‘seasonality’, especially in relation to employment and local supply chains. 14 State of NBT in Lao PDR (a result of a CBT-focused instead of a small business-focused mode of development). Arguably however, this is due to the (perceived24) overregulation of homestay prices, making them seem too cheap and not generating revenue for investment in quality improvement, leaving them unappealing to visitors. 31 Figure 2 shows that there is marked seasonality with a particular peak in February in the two most important markets, Asia Pacific (92 percent, 3.9 million) and Europe (5.2 percent, 222,000), although it is more pronounced in the smaller European market. FIGURE 2: VISITOR ARRIVAL NUMBERS (JANUARY–DECEMBER 2016) 500,00 Africa/MidEast 400,000 Americas Europe Asia Pacific 300,000 200,000 100,000 0 J n F b M r Apr M Jun Jul Au S p Oct Nov D c Source MOICT. 32 Seasonality currently predominates. Stakeholders reported that occupancy is effectively 100 percent in the high season (November to April) and typically less than 25 percent the rest of the year. Lao PDR has made great strides in promoting the green season, which is extremely positive, but it lacks product innovation and targeted marketing to achieve growth during the low season. As travel during the rainy season can take more time and be less predictable, there is a need to specifically target those market segments interested in (or at least not hesitant toward) a more adventurous experience. The benefits of low-season volume are potentially significant due to lower input costs and higher margins higher, as well as good word-of-mouth marketing due to a natural and cultural landscape that is just as, if not more, spectacular. 33 Figure 3 shows the seasonal profile of Lao PDR’s four largest source markets (Thailand 47.4 percent, Vietnam 23.6 percent, China 12.9 percent, Republic of Korea25 4.1 percent), compared to the total European market (5.2 percent). The profiles for China and Vietnam are relatively flat and quite closely aligned. Thailand, however, has its own unique profile, which is highly seasonal. The implication is that Lao PDR is failing to engage the Thai market during the green season, and, consequently, there is significant capacity and opportunity to grow tourism in Lao PDR during this period. 24 Community homestay operators and many NGOs are under the mistaken impression that there is strict regulation of homestay prices. In fact, local authorities can permit variation on request. However, because even some public sector officials are not aware that this flexibility is allowed and give incorrect advice, most homestays are priced without a margin for investment, resulting in a lack of innovation and differentiation and leading to market failure. 25 Throughout this report, ‘Korea’ refers to the Republic of Korea, popularly known as South Korea. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 15 FIGURE 3: VISITOR ARRIVAL NUMBERS FOR KEY MARKETS (JANUARY–DECEMBER 2016) 225000 200000 China 175000 Korea 150000 Thailand 125000 Vietnam Europe 100000 75000 50000 25000 0 J n F b M r Apr M Jun Jul Au S p Oct Nov D c Source MOICT. 34 In 2016, 84 percent (3.6 million) of all international visitors to Lao PDR came from the five neighboring countries of Thailand (47 percent: 2.0 million), Vietnam (24 percent: 1.0 million), China (13 percent: 0.5 million), Cambodia (4 percent: 17,000) and Myanmar (1 percent: 4,000). Other significant Asian markets in 2016 were Korea (4 percent: 173,000), Japan (1 percent: 49,000), and Malaysia (0.6 percent: 24,000). Their respective market penetration factors26 were more modest, reflecting the lower profile of Lao PDR as a destination for those respective regional markets. TABLE 5: MARKET PENETRATION OF INTERNATIONAL VISITORS International visitors Market penetration Thailand 29.2 Vietnam 10.6 Korea 3.4 Cambodia 1.0 Malaysia 0.8 China 0.390 Japan 0.385 Myanmar <0.1 Source MOICT. 35 It is already clear that Thailand and Vietnam are key markets for Lao PDR in both absolute and relative terms because their market penetration factors are of a different order of magnitude compared to the national average for all of the Lao tourism markets, which is just 0.6. This table also indicates that there is clear demand for visiting Lao PDR in Korea and that Lao PDR has achieved significantly greater penetration in Malaysia than in Japan. This indicates that there is immediate opportunity and potential for Lao PDR to grow the Malaysian market while sustaining the Korean market—with tailor-made marketing aligned to each individual market segment characteristics. China has also been increasing its importance 26 A statistic that indicates a destination’s penetration of a particular market (normally a country) by calculating the number of visits in a year, in this case expressed per thousand population. 16 State of NBT in Lao PDR in Lao tourism, with Luang Prabang and other destinations in the north becoming popular with both large group tours, as well as with free, independent travelers coming over the border with their own vehicles. The Chinese market is anticipated to boom with the opening of the China-Lao Railway in December 2021.27 36 Lao PDR has points of entry through four international airports and 22 border crossings. The international airports are Wattay (Vientiane), Luang Prabang, Pakse, and Savannakhet. The land entry points comprise eleven locations with Thailand, eight with Vietnam, two with China, and one with Cambodia. There is no official entry point on the border with Myanmar. Lao PDR is very well connected to its neighbors through the border crossings, many of which have been upgraded with bridges, better roads, and improved visa on arrival services. Connectivity by air is still a major issue, however. Despite more international airlines and routes with Cambodia, China, Korea, Singapore, Thailand, and Vietnam, and improvements to many of its international and domestic airports, flights to and within Lao PDR are still expensive, are not convenient, and may not be regarded as safe or reliable. 37 Tourism in Lao PDR is often associated with arrivals by air, but in fact only 14 percent (579,000) visitors arrive by air, who typically access two international airports, Vientiane and Luang Prabang, as shown in Table 6. Meanwhile, these arrivals are dwarfed by the vast majority (86 percent, 3.7 million) of visitors who arrive through land borders. The vast majority of land arrivals from neighboring countries are small traders visiting on short business trips, while others are visiting friends and relatives, with insignificant differences in average expenditure per person. Although business travelers and friends and relatives are not a focus of the MOICT’s tourism strategies, the data are relevant for tourism and consistent with the definition of a tourist by the United Nations World Tourism Organization (UNWTO). TABLE 6: KEY INTERNATIONAL MARKETS ARRIVING BY AIR Airport Int’l pax Share of air market (%) Key international markets for each airport (% share) Korea (31%), China (18%), Thailand (9.0%), Japan Vientiane/Wattay 422,000 73 (5.8%), Vietnam (5.7%) China (9.2%), Thailand (8.5%), United States (8.1%), Luang Prabang 141,000 24 United Kingdom (7.9%), Germany (7.6%) Pakse 13,000 2.2 France (18%), Vietnam (11%), United States (9.3%) Savannakhet 3,000 0.5 Thailand (35%) Source MOICT. 38 There is market potential among the large visitor volumes entering Lao PDR at land borders. As the populations of neighboring countries become more affluent, holidays will no longer be perceived as a luxury or out of reach. As a result, activities centered on NBT aimed at the growing middle class in neighboring countries will become more desirable and marketable. 27 https://www.npr.org/2019/04/26/707091267/in-Lao PDR-a-chinese-funded-railway-sparks-hope-for-growth-and-fears-of-debt. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 17 FIGURE 4: BORDER CROSSINGS (INCLUDING INTERNATIONAL AIRPORTS) Savannakhet Airpot Thanaleng Railway Station Larn Tuai Pakse Airport Lam Tuai Phou dou Nam Souy Pakxan Nong Nok Khian Vietnam Thakhek Boten Pang Hok Nam Heuang Bridge Pang Hok La Lay Nam Ngeun Phou Keua Nam Kanh Nam Souy Luang Prabang Airport Naphao Houei Xay Luang Prabang Airport Mittha phab Bridge III Namphao Houei Xay Nam Ngeum Nam Kanh Vang Tao Dane Savanh Wattay Airport Boten Mittha phab Bridge II Mittha phab Bridge I Pakxan Phou dou Namphao Wattay Airport Namphao Nam Heuang Bridge Mittha phab Bridge I Thakhek Mittha phab Bridge III New railroad linking China, Thanaleng Laos and Thailand Railway Station La Lay Mittha phab Bridge II Thailand Pakse Airport Vang Tao Phou Keu N Nong Nok Khian Cambodia Source MOICT. 18 State of NBT in Lao PDR 39 The Chinese market, which is already the largest in the world, is growing for Lao PDR, and this growth is expected to accelerate with the railway link scheduled to begin operations from December 2021, with initial estimated annual capacity of 1 million Chinese visitors.28 This clearly represents a significant economic opportunity for Lao PDR, especially in the north, where Chinese tourism is already quite significant in Luang Prabang, Luang Namtha, Oudomxay and Bokeo. Some worry that it is also a major challenge for Lao PDR in terms of managing attractions and destinations with a sudden spike in visitors, posing a high risk of negative social and environmental impacts. There is a large potential market for NBT with certain segments of the Chinese market, based on experiences in other well-known NBT destinations, including China’s own Yunnan Province or global destinations such as New Zealand, a leading NBT destination, where Chinese visitors are second only to Australia in total visitors to the country.29 Hence, well-managed NBT can both reduce impacts on the main tourism destinations in Lao PDR and generate benefits for local people by attracting Chinese visitors interested in NBT. 40 The lack of easy access to many of Lao PDR’s NPAs is a challenge, according to some of the stakeholders and visitors consulted. Many of the country’s best NBT attractions and NPAs remain difficult to access, with unpaved roads that are inaccessible during the rainy season and undesirable to travel during the dry season. Most operators of tours and resorts in PAs complain of rate access as a top issue. The cost of private transportation in Lao PDR remains quite high relative to transportation costs in neighboring countries, which is partly a reflection of the road conditions but also likely pricing regulations by the government. Costs for the transport of goods (affecting tourism operations) are also high compared to other countries as a result of limited competition.30 Although a couple of operators have recently been exploring opportunities to develop small, high-end NBT lodges in remote areas and NPAs, with access options ranging from private 4x4 transfers to helicopter charters, better access will be necessary to attract the required, significant level of private sector investment for NBT to become a transformative sector. The perception of Lao PDR as a country with poor roads and transportation infrastructure remains a marketing challenge and investment barrier despite many improvements in roads, bridges, and airports. 2.5 Comparison countries 41 Useful comparisons can be made with comparable NBT destinations in other countries. The main criteria for consideration in this assessment include having substantial NBT potential and being landlocked. Secondary criteria include economic and political dimensions and the destination being treated by the market as an add-on destination. 42 Some key lessons for NBT sustainable development in Lao PDR emerge from an analysis of these selected, comparator landlocked destinations: >> Destination development and marketing is not only for tourism promotion but is all about showcasing a country as an investment prospect: a place to invest, live, study, and work (Best practice country examples from Bhutan, Lesotho, Paraguay, Rwanda, Tajikistan). >> Political leadership is critical for coordination across sectors (Armenia, Bolivia, Rwanda). 28 With an initial plan for two return trains (capacity 750 each) between China and Lao PDR every day, total capacity for individual movements is 2.2 million and return journeys 1.1 million. It is anticipated that the vast majority of travelers will be Chinese rather than Lao. 29 https://www.tourismnewzealand.com/markets-stats/. 30 For a discussion, see World Bank. 2018. Transport Costs and Prices in Lao PDR - Unlocking the Potential of an Idle Fleet. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 19 BOX 4 THE CASE OF RWANDA Rwanda is a particularly good example of how political leadership can be transformational to use natural landscapes for tourism development and economic growth. The country has seen high growth in high-value, community-led NBT (beyond its famous gorilla tourism, which was already saturated and has not been harmed by a 1000 percent increase in the cost of permits), including eco-lux resorts, canopy walks, and adventure tourism. The government recognized the potential of tourism to become the country’s number one foreign currency earner and deliver sustainable development, especially in rural areas, particularly for women and young people. This led to good coordination and communication among government institutions and service providers, easing of the business environment with the introduction of a one-stop shop for investors, encouragement of partnerships with destination communities, and active encouragement of foreign investment with zero tolerance for corrupt practices. Destination marketing is seen not only as a means to attract high spending tourists for as long as possible but also as a way to showcase the country as an efficient gateway to doing business in East Africa and beyond and as an investment prospect for conferences, incentives, and business development in every sector. >> A national tourism strategy gives direction to everyone (Kyrgyz Republic, Rwanda). >> Product development needs to be demand-led (Rwanda, Uganda). >> To be sustainable, community participation must be a genuine component of CBT, especially in a natural heritage environment (Bolivia, Kyrgyz Republic, Rwanda). >> Pricing must be liberalized (not centralized) to encourage innovation and diversification (Nepal). >> Flight connectivity is desirable (Ethiopia, Rwanda). >> Marketing must be strategic and targeted; otherwise the cost (time and money) is wasted. >> Visa liberalization is a great public relations (PR) exercise and can be the foundation of a very effective marketing campaign (Kazakhstan, Rwanda). >> Big events can also be powerful PR exercises, but they can be very expensive (Azerbaijan). >> If well designed and managed, study tours and press trips can be low-cost and high-impact marketing tools (Armenia, Kyrgyz Republic, Rwanda). 43 Similarly, several useful lessons can be drawn from a comparison with other tourism destinations within the ASEAN region, where tourism has doubled since 2005, from 49 million to over 100 million people in 2016. Both Thailand and Malaysia have demonstrated strong national marketing campaigns coupled with strong private sector-driven tourism industries and relatively well-maintained NP systems and other natural sites within attractive landscapes. 20 State of NBT in Lao PDR 44 Table 8 summarizes international visitor arrivals in the ASEAN region during 2005–2016. Thailand leads the region with a 29.5 percent share, and Malaysia is a close second with 24.2 percent. Indonesia and Vietnam have both performed well, attracting nearly 10 percent each of ASEAN’s total tourism arrivals, both with strong private sectors driving the tourism industry. The number of visitor arrivals to Lao PDR has grown more rapidly than those to Malaysia and Thailand, but its relative size today is a reflection and function of a lack of proactive marketing and strategic direction for tourism responsive to market demand. TABLE 8: INTERNATIONAL VISITOR ARRIVALS, 2005–2016 (‘000) ASEAN Member 2005 2010 2014 2015 2016 2015/16 Growth Rate (%) 2016 ASEAN Share (%) Brunei Darussalam 126 214 201 218 219 0.5 0.2 Cambodia 1,333 2,508 4,503 4,775 5,012 5.0 4.5 Indonesia 5,000 7,003 9,435 9,729 10,811 11.1 9.8 Lao PDR 672 1,670 3,164 3,543 3,315 −6.4 3.0 Malaysia 16,431 24,577 27,437 25,721 26,757 4.0 24.2 Myanmar 660 792 3,081 4,681 2,900 −38.0 2.6 Philippines 2,623 3,520 4,883 5,361 5,967 11.3 5.4 Singapore 7,079 9,161 11,864 12,052 12,913 7.1 11.7 Thailand 11,567 15,936 24,810 29,923 32,588 8.9 29.5 Vietnam 3,478 5,050 7,960 7,944 10,013 26.0 9.1 Total ASEAN 48,969 70,431 97,338 103,947 107,595 3.5 100.0 Source UNWTO, World Tourism Barometer. 45 ASEAN tourism is largely captured by Thailand and Malaysia. Figure 5 illustrates the large scale of Thailand and Malaysia tourism as a share of ASEAN tourism, between them sharing 55 percent of all arrivals in 2016, which is closely followed by a second group of Singapore, Indonesia and Vietnam. The position of Lao PDR in the lowest group is, therefore, all the more remarkable, given that it has such cultural and natural with potential as a major NBT destination and could perform at a much higher level if given the opportunity. FIGURE 5: ASEAN SHARES OF INBOUND TOURISM (2016) 2.6% 0.2% 3.0% 4.5% 29.5% Thailand 5.4% Malaysia Singapore Indonesia 9.1% Vietnam Philippines Cambodia Lao PDR Myanmar 9.8% Brunei Darussalam 24.2% 11.7% Source UNWTO, World Tourism Barometer. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 21 46 Lao PDR and Myanmar were the only ASEAN countries to see a contraction in tourism in 2016. ASEAN countries are displayed in Figure 6 in the same sequence and colors as in Figure 5. Unfortunately, this pattern has continued, confirming serious capacity for tourism growth Lao PDR. FIGURE 6: ANNUAL GROWTH (2016 VERSUS 2015) IN ASEAN INBOUND TOURISM 26.0% 30.0% Thailand 20.0% 11.3% Malaysia 11.1% 8.9% 7.1% 10.0% 5.0% Singapore 4.0% 0.5% Indonesia 0.09% Vietnam Philippines -10.0% -6.4% Cambodia -20.0% Lao PDR Myanmar -30.0% Brunei Darussalam -40.0% -38.0% Source UNWTO, World Tourism Barometer. 47 ASEAN countries generated 42 percent of all arrivals to the region, and Lao PDR can capture a significant part of this market. Countries that generated notable outbound tourism demand include Singapore (16.0 million trips), Malaysia (6.7 million trips), Indonesia (6.6 million trips), and Thailand (5.4 million trips). An analysis of outbound demand from ASEAN countries shows results in these key points: >> There is a strong affinity between majority Muslim countries (Indonesia, Malaysia), indicating an opportunity for Lao PDR to attract these markets by addressing specific needs. >> Singapore is the region’s most important outbound market and deserves greater attention. >> Cambodia and Myanmar are relatively small markets and at this stage do not justify prioritization. >> Thailand and Vietnam are the most important neighboring ASEAN markets, but their development requires careful segmentation. 22 State of NBT in Lao PDR 2.6 Visa regime 48 An important element of tourism competitiveness is respective visa policies, which can be a barrier to tourism expansion particularly when acquisition of entry permission is complicated, costs are high, and processes onerous. The Travel and Tourism Competitiveness Index (TTCI) ranks visa openness in which several countries in ASEAN have improved during 2013 to 2017. Notably, Indonesia has moved from 100 to 2 in the index following the liberalization of visa requirements for 169 nations. Thailand has also improved its standing in relation to visa openness, moving from 90 to 21 between 2013 and 2017. In fact, most ASEAN countries (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand) do not require a visa for visitors from a majority of countries. Vietnam is transitioning to join this group. The regional exceptions are Cambodia, Lao PDR, and Myanmar. Myanmar requires most visitors to apply in advance, online, or at an embassy, while Cambodia and Lao PDR issue visas on arrival to most visitors although e-visas are being planned. There is a potential benefit to Lao PDR from meeting the common ASEAN country practice of visa-free travel. 49 Inter-ASEAN travel is visa free, and this is relevant for key markets of Malaysia, Singapore, and Thailand. ASEAN, however, does not include important target markets of Japan and Korea, for whom the GoL should also consider providing free visas. A village in the Nam Et Phou Louey community. Photo credit: Lauren Kana Chan/Faces2Hearts/EU 23 3 Market demand and diversification 50 Natural heritage assets can have different tourist value and significance for different market segments, and the way to maximize the economic benefit of each natural heritage asset is to package it in a variety of ways and develop different activities aimed at different markets in a way that does not exclude one visitor group. 3.1 Market demand 51 Each market segment has very different wants and needs in terms of product, including a mix of NBT products, and requires specialized marketing channels addressing proposition, tone, price, and media. A useful way to explain this approach is to consider and redefine the traditional ‘4 Ps’ of marketing (Table 9). TABLE 9: THE ‘4 Ps’ AND ‘4 Cs’ OF MARKETING The 4 Ps Supply-side analysis Demand-side analysis The 4 Cs Product What product is on offer? What does the consumer want/need? Consumer Price What is the price of delivery? What is the cost and value to the consumer? Cost Is the distribution channel convenient and Place In what place is it being sold? Convenience relevant to the target consumer? What communication channels are the most Promotion How is the product being marketed? efficient and effective to get the right message Communication in the right form to the right consumer? 52 The practical case of a waterfall is presented in Table 10 to illustrate how different a development strategy can be when adopting a market demand-led approach. A waterfall exists as an asset that has a range of potential uses, including hydropower development, community water supply, and fishing. Folklore, flora, and fauna associated with the site can provide references and interpretation that contribute to the design of NBT products, including the development of accommodation, guided walks, restaurants, swimming, bird watching, yoga, and/or a high-end spa—all of which would be new dimensions that add other, non-consumptive values of the asset as NBT products. 24 Market demand and diversification TABLE 10: EXPLAINING THE ‘4 Ps’ OF MARKETING THROUGH THE EXAMPLE OF A LAO WATERFALL Demand-side analysis: The 4 Ps Supply-side analysis one or more of the following characteristics—depending on The 4 Cs the specific market segment >>Is this place worth the detour? (seems to be the most relevant question in the product context) >>Somewhere to safely park a vehicle (car, motorbike, or bicycle) >>A great viewing spot >>Somewhere to buy food and drink at a suitable price Somewhere to enjoy >>Somewhere clean to wash up or go to the toilet Product the waterfall and have Consumer >>Access to information (human guide, interpretation boards, online a picnic portal) >>Appropriate activities that can be booked in advance >>Opportunities to purchase crafts or souvenirs >>Network of good trails for forest walks, cycle tracks, and so on >>Wildlife viewing opportunities >>What makes this place worth a detour? How much does >>How easy is it to find? it cost to maintain >>Will my friends be impressed/jealous that I’ve been? Price facilities, and what >>Is the food authentic? Cost income is required to >>Can I be sure I won’t catch a disease or drown swimming in the river? meet this cost? >>Is there a risk I’ll be mugged? Is it safe to go? >>Will it be (over)crowded? >>Where can I find information about this place? >>Is it associated with other (non-tourism) products that I value? Can it be booked/ >>Can I ask questions and receive prompt responses in my own Place Convenience reserved online? language? >>Will it be a hassle trying to arrange a guide either on the spot or in advance? Is it listed in the >>Has this place been visited by a celebrity that I like? Promotion official provincial >>Am I learning about this through my own social networks? Communication tourism guide? >>Can I be confident that they understand my needs and wants? 3.2 Market segmentation 53 Segmentation is the division of markets into different parts. The number of possible segments is infinite and can overlap. One segment might be the Thai middle class, and another might be cycling enthusiasts; a potential visitor will sit in one, both, or neither of these segments. Successful destination development and marketing involves understanding the needs, motivations, interests, and everything else about each target segment to promote the right package to the right market at the right price and through the right channel. It is usually the private sector that knows these segments best and what products to offer. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 25 54 The opportunity for Lao PDR’s many tourism actors is to develop NBT in a differentiated and segmented way using these principles: >> Develop products according to the motivation and needs of specifically relevant market segments >> Link products in particular NPAs and associated NBT clusters with market segments and clear demand >> Apply the right channel and right price >> Market the right product to the right market 55 While in terms of marketing efficiency there is merit in grouping target markets according to nationality, there are important segments that transcend nationality and can be segmented by activities, profession, gender, sexuality, and religion. Activity-related segments include birders, cyclists, or rock climbers. BOX 5 NAM KAT YOLAPA, OUDOMXAY PROVINCE The Nam Kat Yolapa is a tourism resort that is a concession of the Nam Kat Provincial PA and has a range of accommodation and activities, including camping, high-end bungalows, trekking, ziplining, mountain biking, village visits, swimming pool, and more. The resort is targeting the Asian market, including Chinese tourists traveling from Yunan Province, Thai tourists, and local people. Investment was made by a local, private investor and the business currently employs the majority of the nearby village. The Nam Kat Yolapa is a good example of a Lao investment in a tourism concession in a PA with significant inclusion of the village and marketing targeting the Asian and domestic markets. 56 NBT assets can be attractive to multiple groups or market segments. One example is Cape Town, South Africa, which has had huge success embracing both the Muslim and LGBT31 (lesbian, gay, bisexual, and transgender) markets, two markets that are thought to be incompatible. Cape Town is equally well known for its food and gastronomic heritage, as well as its beaches and nightlife. A strategy to attract one segment does not need to exclude or even disadvantage other segments. 57 The biggest ‘niche’ of course is women, especially independent solo travelers. Lao PDR, however, has seen a steady decline in this key segment, as indicated by the number of international arrivals. This suggests that Lao PDR is increasingly not being perceived as an attractive destination for women travelers, although this is probably more due to a lack of available information about the country than to actually being an unsafe destination, as Lao PDR ranked in the top five safest countries in Asia in 2018 behind only Singapore, Japan, Malaysia, and Taiwan.32 Safety could be considered another tourism comparative advantage that Lao PDR has and can leverage. 31 Estimated to be worth in excess of US$218 billion globally (Out Now Consulting, 2018), the LGBT tourism market is growing rapidly as the industry recognizes the value of the ‘Pink Dollar’. 32 Global Peace Index 2018. 26 Market demand and diversification FIGURE 7: PROPORTION OF INTERNATIONAL VISITORS TO LAO PDR BY GENDER (2012–2017) 70% Female 60% Male 50% 40% 30% 2012 2013 2014 2015 2016 2017 Source Food and Agriculture Organization 2018 58 This presents an opportunity for Lao PDR: female travelers, who make up almost half of all the world’s tourists, want to feel safe. This means not being harassed. It also means having access to clean and secure facilities. Both the public sector and private sector entrepreneurs have often responded to this need by establishing women-only services, including segregated compartments on trains and buses and in restaurants, and women-only taxis and hostels. Most women employees in Lao tourism and hospitality are currently working as service staff in hotels, restaurants, and spas and managers of small restaurants and guesthouses. In several comparator destinations, enterprising women have established guiding services and other tour operations that are particularly promoted to women, especially in destinations where there have been reports of women visitors being sexually assaulted. In other countries, the government can assist by facilitating the provision of toilet facilities and well-lit waiting areas along roads and at bus stations on all tourist routes, particularly in more remote NBT clusters that are being targeted for growth. The private sector can develop products that are sensitive to the needs of women, providing additional opportunities for Lao women to participate in the growing tourism economy at all levels. It is important, however, that participation by women is seen as adding value: women need to be involved in tourism management at all levels because tourism is a key economic sector, and it needs to be inclusive if it is to be authentic and sustainable. 59 An interesting segment is scientific researchers, including biogeographers, botanists, ecologists, ethnobotanists, hydrologists, and zoologists, as well as social scientists, including anthropologists and sociologists; Lao NPAs are relevant to all these disciplines. A visiting scientist conducting field research will typically spend budget on food, accommodation, transport, and the hiring of local staff. Several PAs in comparator destinations have established themselves as field centers for world-class research, and—in addition to the scientific findings that can be made—research can also develop local scientific capacity and provide substantial marketing material for the most specialist NBT visitors, who may themselves be highly sophisticated amateur naturalists. Following a period of field research, scientists will also often take a holiday in their study destination, further contributing to the visitor economy. Through personal peer-to-peer networks, they will furthermore become extremely powerful ambassadors for the country as a formidable NBT destination. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 27 60 Natural history films and documentaries by responsible media organizations is another group that can contribute to the tourism industry through fees paid to the PAs and economic contribution to the local economy through accommodation, short-term employment of guides, and other filming costs. Of course, the filming activity can have lasting positive benefits by promoting an area—at no cost to the local government. 3.3 Regional market opportunities for NBT 61 To focus on regional markets for NBT, key entry points for visitors from neighboring countries must be examined and other Asian markets in which Lao tourism has achieved the greatest penetration be identified and analyzed. Although there is no aggregate statistics on the total size of regional markets in relation to NBT, there is a lot of evidence that the NBT segment of regional markets is significant. For example, Khao Yai NP in Thailand, the country’s top natural UNESCO World Heritage with over 1.2 million visitors annually,33 reports that over half of its visitors are from Southeast Asian countries with Singapore topping the list, accounting for nearly 40 percent of Khao Yai’s visitors.34 The majority of visitors to Khao Yai NP and other NPs in Thailand are Thai people themselves. As mentioned earlier in this report, Chinese tourists are the second largest market for New Zealand, one of the world’s premier NBT destinations. In fact, Chinese outbound nature tourism is booming across the globe, especially in African countries that area known for top-tier wildlife attractions such as Kenya.35 In Vietnam, the Phong Nha-Kẻ Bàng cave system located on the other side of Khammouane Province is now a major domestic tourism destination, with cheap tours to the main cave and more expensive small group tours to the nearby Tu Lan Caves managed by Oxalis, a specialist local caving company. Looking at current visitation to PAs in Lao PDR, stakeholders report that the majority of tourists to Dong Houa Sao NPA in the south are Thai, including not only the tourists visiting Tad Fane and Tad Nyuang waterfalls on the edge of the park but also the visitors to Green Discovery’s Tree Top Explorer ziplining and trekking program at Nong Louang Village (see Chapter 5 for an economic impact case study). The trekking product managed by the village of Nong Louang to waterfalls inside the park was started with the help of a Thai professor and popularized through Thai online marketing channels. 62 It is important to segment the markets and recognize that their needs, as motivations and preferences, are highly variable. Some characteristics reported through the respondents for the assessment are as follows: >> Lao - places to have picnics, drink beer, and sing karaoke, ideally beside a waterfall or hot spring; strong interest in adrenaline experiences (zip wire and so on); and emerging interests in national heritage and outdoor activities (including camping, trekking, and so on) that remains relatively embryonic >> Lao diaspora - visiting friends and relatives; enjoying waterfalls and hot springs; and slightly greater affinity with more active experiences, such as trekking >> Western expats - key sites, active excursions, pristine destinations, specialist nature sites, mountain biking, motorbike rides >> Western visitors in the region - bucket list sites, ‘The Loop’, traveler hubs/hangouts 33 https://en.wikipedia.org/wiki/Khao_Yai_National_Park. 34 http://www.nationmultimedia.com/detail/breakingnews/30345058. 35 http://www.xinhuanet.com/english/2018-08/29/c_137427958.htm. 28 Market demand and diversification >> Thai - activities requiring lots of kit, including road cycling, fishing, mountain-biking, camping, motorbike rides, natural heritage less spoiled than in Thailand, homestays, Thai food, or Lao food >> Chinese - large, iconic attractions of nature that are distinguishable from similar attractions in China or are world-renowned; Mandarin menus; selfie sites and scenery; authentic Lao food; and higher-end resorts and specialist adventure activities for the upper market >> Korean - comfortable natural encounters, hot springs, good food, ‘tamed nature’ >> Singapore - short transfers, comfortable escapes in a natural environment, eco-lux; Halal food as a bonus >> Hong Kong SAR, China - short transfers, comfortable escapes in a natural environment, eco-lux >> Vietnamese - shared Indochina heritage, dark history sites, motorbike rides, caves, nature, trekking, camping, group travel, and nostalgia >> Malaysian - natural encounters, activities, trekking, camping; Halal food is a bonus >> Japanese - natural encounters, activities, trekking, and camping >> Cambodian - large, iconic attractions that are easily accessible from Cambodia (for example, Khone Phaphaeng) >> Myanmar - too small to be significant. 63 The regional market for NBT in Lao PDR can be segmented many ways. The following opportunities were assessed as the most important targets and types of NBT products that best match each segment, listed in Table 11. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 29 TABLE 11: IDENTIFIED MARKET SEGMENTS AND THEIR CHARACTERISTICS Target market Motivation Marketing channels Scale (0–3) Priority (0–3) segment, NBT product opportunities marketing (B2B and B2C) (0 low, 3 high) (0 low, 3 high) characteristics proposition ‘Natural playground’: Targeted online and activities involving ‘lots of Prestige at home offline literature/press Thai middle/upper gear’, including fishing, birding, (importance of celebrity endorsements, classes and urban trekking, cycling; eco-lux and opportunities to take word-of-mouth, 3 3 elite glamping; groups and families, pictures) and toward pictures of friends and primarily arriving overland for tour group members colleagues multiple short breaks tour operators ‘Natural welcome’: As other Exploring unique middle-income aspirational Targeted online and nature while Malaysian segments but with explicit print media, trend remaining truthful to 2 2 professionals reference to availability of setters, Halal tour their own culture and ‘Halal’ products; groups and operators religion families for week-long holidays ‘Natural escapes’: activities and eco-lux; short breaks; mountain-biking, good food, High-end operators, Hong Kong Efficient relaxation in excellent accommodation; destination profiles in 2 2 professionals natural settings rapid transfers required; mainly business media professional couples and business incentive travelers ‘Natural escapes’: activities and eco-lux; short breaks; mountain- biking, good food, excellent Accessible and Endorsements by Singapore accommodation; rapid authentic encounters opinion leaders, high- 2 2 professionals transfers; ‘Halal’ certification with nature end operators also a consideration; mainly professional couples and families ‘Secret Asia’: Huge range of NBT products for ‘real insiders’, including specialist birding and wildlife watching, trekking, climbing, mountain- Relax through being biking, rafting, triathlons, active (‘soft’ like bird Online expat forums, GMS-based fishing, great coffee, simple watching, or ‘hard’ chambers of commerce, 2 3 western expats camping, glamping, and like mountain biking) affinity groups, eco-lux; organic certification a in unspoiled natural diplomatic corps draw; small groups of friends settings and colleagues, families, and couples arriving by air for short breaks and overland for bicycle and motorbike touring ‘Nature nostalgia’: Scenic Diaspora networks drives/rides and reasonable (Vietnamese living in accommodation; dark tourism Lao PDR); mainstream Vietnamese sites and other shared ‘South East Asia as it and business 3 2 middle class heritage; families, groups, and used to be’ magazines; affinity independent travelers, mainly groups (biking, cycling, arriving overland by bus and and so on) on motorbikes 30 Market demand and diversification Target market Motivation Marketing channels Scale (0–3) Priority (0–3) segment, NBT product opportunities marketing (B2B and B2C) (0 low, 3 high) (0 low, 3 high) characteristics proposition Celebrity endorsement ‘Nature Lite’: Easily (including by Thai accessed natural heritage with opinion leaders); Lao middle class entertainment; small groups, Our natural heritage 3 1 business and couples, and families, mainly affinity groups; party daytrips and overnight publications ‘Natural home’: pride in Lao Business magazines PDR as a world-class NBT and forums; exclusive Lao elite destination with outstanding Asia’s best 2 3 affinity groups; opinion assets and high-quality leaders product; multiple short breaks ‘Natural encounters’: Scenic views, hot springs, landscape Celebrity endorsement; South Korean Undiscovered Asia; walks; small groups and Korean tour operators 1 2 middle class ‘Our Secret’ professional couples arriving and investors by air for week-long breaks ‘Natural encounters’: Trekking, wildlife, foraging, Our Buddhist Japanese tour Japanese middle rafting; small groups, brethren; unspoilt operators; trendsetting 1 2 class professional couples arriving Asia magazines by air for week-long breaks ‘Natural heritage experiences’: Selfie sites, Prestige at home, Chinese middle strong heritage interpretation, learning and Social media campaigns class from 2 2 Mandarin menus, groups expanding their on Chinese platforms Yunnan (small and large) for short horizons breaks ‘Lao PDR’: Resurgent Traveling away destination for adventurous, Social media (including quick Western visitors responsible, and independent campaigns, bloggers escape from) the to other GMS travelers (including LGBT) and vloggers, online 2 1 ‘typical path’, travel destinations wanting to experience ‘natural travel forums, affinity safety only indirect Asia’ without packaging or groups motivation in NBT limitation Specialist segments, including railway Specialist operators Specialist products linked enthusiasts, World-class products and travel media, 1 0.5 incidentally to NBT assets cruise mainstream media passengers, dark36 tourists Note B2B = Business-to-Business; B2C = Business-to-Customer. 36 ‘Dark Tourism’ is the phenomenon of visiting sites that represent the worst of human heritage, for example, Auschwitz in Poland, Ground Zero in the United States, Kibeho in Rwanda, and the Killing Fields of Cambodia. The sector requires careful and sensitive interpretation, but there is a widespread view that humanity has a responsibility to educate people about such dark events and perhaps contribute to reconciliation through revenue generation and common understanding. Photo credit: Wildlife Conservation Society 32 4 Barriers to investment and NBT businesses 64 Overall, the business environment remains complex and opaque. Lao PDR ranks 154 out of 190 economies in the World Bank Group’s 2019 Ease of Doing Business Index and is characterized by ‘deals’ rather than the consistent application of existing rules, and in particular, lower-level regulations are often not publicly available despite this being a requirement for effectiveness according to the Law on Law Making. The Prime Minister’s Order No. 2 from February 2018 that aims to improve the overall business environment demonstrates the commitment at the highest level of the government but has yet to be fully implemented. Poorly targeted tax incentives and the absence of one-window service for business registration and operational licensing are some of the key issues that remain unaddressed. 65 According to surveys and interviews conducted as part of the assessment (see technical background report), Lao PDR has outstanding NBT potential, but investors lack confidence because a perception persists in the market that the government is not yet sufficiently serious about NBT as a priority sector. Many of the barriers identified are not exclusively tourism related but are valid for any private sector investment in Lao PDR and are part of the general business environment. 66 There has been a lack of continuous, long-term focus on and commitment to alleviating these barriers to sustainable tourism investment, which prevents the necessary coordination across government (between various government ministries and agencies and between different levels of government) and cooperation between the public and private sectors and civil society organizations. 4.1 Regional context of barriers to investment 67 It is important to compare perceived barriers for Lao PDR with perceived barriers for regional competitors, as this will influence whether tour operators will invest in Lao PDR tourism. 68 The ASEAN countries37 differ greatly in their level of socioeconomic development but together form a strong partnership made up of some 650 million people. There is a large disparity in poverty rates, ranging from 25.0 percent in Myanmar, 22.0 percent in Lao PDR, and 21.6 percent in the Philippines to practically none in Brunei Darussalam, Malaysia, and Singapore. The so-called ‘ease of doing business’, as defined by the World Bank’s Doing Business 2019 report, is high in Singapore (2), Malaysia (15), and Thailand (27), while Myanmar (171), Lao PDR (154), and Cambodia (138) perform poorly. Vietnam scored 69 for its business enabling environment, indicating that economic reforms are having a positive effect on private sector competitiveness. Table 12 provides a summary of key tourism, economic, and social indicators. Overall, these data show that Lao PDR is underperforming in comparison with the majority of its neighbors on most indicators, making it an unattractive target for investment. Despite being in a similar 37 The GMS (comprising Cambodia, Lao PDR, Myanmar, Thailand, Vietnam, and China’s Guangxi Zhuang Autonomous Region and Yunnan Province) provides a natural comparative framework for Lao tourism. However, due to a lack of comparable data for China’s two GMS areas, we have focused on the 10 ASEAN member states, which of course include all the GMS countries apart from China and also provide a more extensive comparative range. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 33 ‘league’ in terms of tourism arrivals as Cambodia, Myanmar, and the Philippines, Lao PDR’s tourism receipts are small due to a large number of visitors being regional day trippers with low expenditure and a low average daily expenditure for visitors traveling outside of Luang Prabang where accommodation and available activities are predominantly cheap and aimed at backpackers. This reduces tourism’s benefit to poverty reduction, as evidenced by continued high poverty rates. The ‘premier league’ of ASEAN tourism destinations (Thailand, Malaysia, and Singapore, as measured by arrivals against the size of the country’s population and/or territory) are in the top tiers for both ease of doing business and TTCI ranking, indicating a correlation and perhaps even a causal relationship. TABLE 12: KEY INDICATORS FOR ASEAN MEMBER COUNTRIES38 Key International Brunei Lao Tourism Cambodia Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam Darussalam PDR Indicators Arrivals 219 5,012 10,811 3,315 26,757 2,900 5,967 12,913 32,588 10,013 (thousands) Receipts (US$, 140 3,207 11,261 679.4 18,074 2,177 5,139 18,386 49,871 8,250 millions) Average receipt 666 1,034 192 684 984 1,389 1,489 925 US$ T&T as % of GDP 13.5 3.3 4.6 4.4 4.2 4.8 9.3 6.6 T&T Employment 1,035 3,468 123 574 1,264 158 2,402 2,782 (thousands) % of Total Jobs 12.1 2.9 3.9 4.2 3.3 4.3 6.3 5.2 TTCI ranking — 2 101 42 136 26 134 3 79 13 34 67 Outbound spend 682 451 9,668 328 9,883 185 12,495 21,701 8,683 4,360 (US$, millions) % share of GDP 4.9 2.2 1.0 2.3 3.2 0.3 3.9 7.4 2.1 2.0 HDI ranking 31 143 110 141 62 148 115 11 93 116 Ease of Doing 55 138 73 154 15 171 124 2 27 69 Business1 Population 0.4 16.2 260.5 7.1 31.0 52.1 104.3 5.5 68.4 96.2 (million) GNI/capita (US$) 37,320 1,020 3,630 1,660 11,120 1,270 3,500 55,150 5,780 1,890 GDP per capital 77,500 3,700 11,700 6,900 27,300 — 7,700 87,800 16,900 6,400 (US$) Poverty rate (%) — 13.5 10.9 22.0 0.6 25.6 21.6 2.0 2.8 11.3 Notes: — = data not available, Lao PDR = Lao People’s Democratic Republic; T&T = Travel and Tourism; HDI = Human Development Index; GNI = Gross National Income. 1. Ranking among 190 economies in ease of doing business. See: www.doingbusiness.org. 2. Brunei Darussalam was not included in the 2015 or 2017 TCCI. -- = data not available. 3. Myanmar was not included in the 2017 TCCI. Therefore, 2015 rankings are listed. 38 Sources: World Economic Forum (WEF). Travel and Tourism Competitiveness Index 2017 Edition; UNWTO, World Tourism Barometer; ADB (Asian Development Bank). Basic Statistics 2016. Manila; ADB (Asian Development Bank). Asian Development Outlook 2016. Manila; United Nations Development Programme (UNDP). Human Development Report 2015. New York; World Bank Group Doing Business 2019, Washington DC.; Central Intelligence Agency (CIA). The World Factbook. Washington, DC. 34 Barriers to investment and NBT businesses 4.2 Business environment 69 Even though the GoL has started to introduce significant investment and regulatory reforms, it has not yet achieved measurable impacts of such reforms or reaped benefits, mainly because of the slow and inconsistent implementation of existing regulations, as well as a continued inconsistency across key laws (such as the Law on Investment Promotion and the Law on Enterprises). Transparency remains an issue as well because timely public access to laws and regulations, particularly at lower administrative levels, remains challenging many are not published on the Lao Gazette, although the Law on Law Making states that legal documents are only enforceable if published on the Gazette. 70 A good indication of the challenges remaining are evident in what should be a simple process: starting a business. Reforms to promote investment and development will have little effect if the regulatory requirements and procedural steps for setting up a business are unnecessary, duplicative, unpredictable, and considered to be a source of rent-seeking. The MOIC has just undertaken potentially significant reforms to transform the Enterprise Registration Certificate (ERC) from an implicit business license to a registration document, but it is too early to assess the impact these reforms will have on actual company registration processes. The technical background report concludes that many licenses and procedural steps are unnecessary because they are duplicative and can either be eliminated or moved to either the pre- or post-formalization stage. These include processes related to (a) company name approval, (b) ERC, (c) investment licenses for key tourism sectors, (d) company seal/registration of the seal, and (e) signage approvals. 71 While there is value in a new enterprise being officially incorporated, registered for tax and social security, and obtaining relevant operating licenses where activities require regulatory oversight, the main problem in Lao PDR relates to a lack of transparency, predictability, and efficiency, which is at odds with international practice in those countries that better on ease of doing business and the TTCI ranking. The requirement for a physical company seal in the 21st century has been described by multiple consultees as not modern, and the process of establishing a business is so complicated that consultees in the public and private sectors had not realized that government approval of physical signage content at registered offices is no longer a requirement since late 2018. 72 The World Bank Doing Business report provides a good tool to measure the costs of doing business and identify the underlying barriers. In looking at the 2019 Doing Business, Lao PDR ranked 154 out of 190 (see Figure 8), falling 13 spots from its rank of 141 the previous year. The decline is mostly the result of more accurate data that were collected for the 2019 report (leading to a rebasing of Lao PDR’s position in the ranking), but it also indicates that the recent government reforms have not yet translated into measurable outputs. The key indicators include business start-up, dealing with construction permits, electricity availability, property registration, access to credit, protection of minority investors, tax payments, cross-border trade, enforcing of contracts, and insolvency resolution. 73 In addition, Lao PDR reintroduced investment licenses (in addition to operating licenses) through the 2016 Investment Promotion Law, and key tourism-related sectors require obtaining such investment licenses in addition to company registration and relevant operating licenses. PM Decree No. 3 from January 2019 lists the following tourism-related activities as requiring special investment licenses that are granted by the Investment Promotion and Supervision Committee in a rather nontransparent process: silviculture and forestry activities (which explicitly includes eco-tourism activities) and hotels and resorts with four stars or more. Such duplicative requirements are at odds with making it easier to set up and operate companies in Lao PDR. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 35 FIGURE 8: EASE OF DOING BUSINESS RANKING AND INDICATORS FOR THE LAO PDR (2019) Lao PDR East Asia & Pacific GNI per capita (US4) 2,270 Ease of doing business Ease of doing business 154 51.26 Population 6,858,160 rank (1-190) score (0-100) Starting a business (rank) 180 Getting credit (rank) 73 Trading across borders (rank) 76 Score for starting a business Score for getting credit (0-100) 60.00 Score for trading across borders 60.93 78.12 (0-100) Strenght of legal rights index (0-100) 6 Procedures (number) 10 (0-12) Time to export Time (days) 174 Depth of credit information index Documentary compliance (hours) 60 6 Cost (% of income per capita) 6.6 (0-18) Border compliance (hours) 9 Credit bureau coverage Minimum capital 0.0 Cost to export 0.0 (% of adults) (% of income per capita) Documentary compliance (US$) 235 Credit registry coverage 14.5 Border compliance (US$) 140 (% of adults) Dealing with construction Time to import 99 permits (rank) Documentary compliance (hours) 60 Protecting minority investors Score for dealing with 174 67.94 (rank) Border compliance (hours) 11 construction permits (0-100) Score for protecting minority Cost to import Procedures (number) 12 31.67 investors (0-100) Documentary compliance (US$) 115 Time (days) 92 Extent of disclosure index (0-100) 6 Border compliance (US$) 224 Cost (% of warehose value) 4.9 Extent of director liability index 1 Building quality control index (0-100) 6.5 Enforcing contracts (rank) 162 (0-15) Ease of shareholder suits index 3 Scoring for enforcing contracts (0-10) 41.99 (0-100) Getting electricity (rank) 156 Extent of shareholder rights index 4 Time (days) 828 (0-10) Score for getting electricity 52.77 Extent of ownership and control Cost (% of claim value) 31.6 (0-100) 4 index (0-10) Quality of judicial processes Procedures (numbers) 7 3.5 Extent of corporate transparency index (0-18) Time (days) 105 1 index (0-10) Cost (% of income per capita) 763.4 Resolving insolvency Reliability of supply and 168 2 Paying taxes (rank) 155 (rank) transparency of tariffs index (0-8) Score for resolving Score for paying taxes (0-100) 54.22 0.00 insolvency (0-100) Payments (number per year) 35 Registering property (rank) 85 no Time (hours per year) 362 Time (years) Score for registering property practice 64.93 Total tax and contribution rate (% (0-100) 24.1 no of profit) Cost (% of estate) Procedures (number) 6 practice Postfiling index (0-100) 18.57 Recovery rate (cents on the Time (days) 28 0.0 dollar) Cost (% or property value) 3.1 Strength of insolvency Quality of land administration 0.0 10.5 framework index (0-16) (0-30) Source WBG Doing Business 2019 (October 2018). 36 Barriers to investment and NBT businesses 74 Lao PDR performs below standard with regard to (a) starting a business; (b) getting electricity; (c) dealing with construction permits; and (d) to some degree, registering property. Other issues include enforcing contracts and protecting minority investors and efficient and transparent tax collection. Consultations carried out as part of this assessment indicated that the GoL is actively trying to address these problems, but there is currently no effective channel to showcase this to potential investors. Therefore, even though the government has committed to and started making progress in improving the business environment, negative perceptions of Lao PDR as a place to invest and do business remain a barrier to investment. 75 Key constraints identified from stakeholder consultations include the following: >> Foreign direct investment (FDI) restrictions >> Low level of competitiveness >> Perception of high level of corruption >> Competition from the informal sector of informal practices of formal firms >> Payment (or nonpayment) of taxes >> Lack of access to electricity >> Lack of access to land >> Lack of qualified labor force >> Lack of access to finance >> Lack of investment-friendly image and reputation >> Cumbersome regulations in the tourism sector >> The absence of an effective mechanism for seeking redress 76 A major barrier to investment is a lack of certainty over national policy. This is illustrated by apparent conflicting interests and the perception of an unclear policy framework, as noted in Box 6. 4.3 Barriers specific to tourism 77 The regulatory environment for tourism faces several challenges. Unnecessary procedures for setting up a tourism business were identified. The tourism sector is characterized by a large number of operating licenses that are difficult to obtain (and burdensome to annually renew) and nontransparent allocation of public resource to private interests that are detrimental to tourism’s growth. The development of NBT tourism potential in particular is being held back by these factors: >> A complex, opaque, and costly business environment Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 37 BOX 6 CONFLICTING INTERESTS Nationally, there is a conflict between the opportunities of non-tourism development in or near PAs, rivers, and other natural assets and NBT development or NPA management more generally. The lack of consistent policy implementation is a barrier to investment and tourism development, and NBT in particular. A key tool that could help is Strategic Environmental Assessment. Since 2016, there has been a satisfactory legal framework in place for carrying out Strategic Environmental Assessment, which was strengthened in 2018. There are also frequent accounts of illegal logging and wildlife trade activities going on, which provide big substantial short-term financial gains but clash with slower and more sustainable tourism activities. Some private companies are known to have taken advantage of poorly educated rural communities, such as purchasing land for cell towers at a low price, reducing the economic benefit of development, and the opportunity for meaningful participation and growth. There may be opportunities for the government to strengthen its role in providing regulatory oversight, for example, by providing guidelines that protect communities from abuse and encourage innovative collaboration. >> Specific restrictions on foreign investment in the tourism sector (ownership and equity restrictions as well as minimum capital requirements) >> Weak regulatory frameworks for conservation-oriented tourism, such as weak licensing and concession management despite recent NPA management system framework improvements >> A thin labor market to support tourism businesses >> Limited availability of support services >> A weak but improving institutional capacity for protected area management and wildlife law enforcement >> A low number of specific tourism products (although there are good examples in Lao PDR) >> Complex, lengthy, and duplicative processes for obtaining and (annually) renewing operating licenses >> Additional regulatory requirements, for example, the permission from the tourism police before bringing in tour groups (especially in remote areas that are new to tourism development). 78 The government has also not taken sufficiently strong steps to portray Lao PDR as committed to NBT development, which can reduce interest among investors. For example, Lao PDR has not signed the Buenos Aires Declaration,39 which, among others, commits its signatories to creating a clear framework for wildlife-based tourism that has tangible conservation outcomes and a tangible positive benefit to local communities and identifies and promotes opportunities for sustainable NBT investment in local infrastructure, human capital, and community development. 39 WTTC (2018), Travel & Tourism Declaration on Illegal Trade in Wildlife. 38 Barriers to investment and NBT businesses 4.4 Barriers specific to NBT 79 Furthermore, poor environmental performance can negatively affect the development of NBT, especially (a) pollution and contamination, including food and water safety and air quality, and (b) biodiversity assets. Both need to be well managed to attract and sustain tourism, especially high-value tourism for high-value conservation landscapes and high-value cultural heritage. 80 The well-documented loss of biodiversity in Lao PDR remains a barrier to the development of NBT. Continued reductions could easily continue to depress demand for NBT products in Lao PDR and continue to lose significant market share for NBT to competitor countries. 81 There are several constraints reducing the effectiveness of the NPA management system. The three primary constraints are >> Lack of clarity in the status of PAs in Lao PDR policy across all areas of government; >> Insufficient capacity to carry out the national mandate of the PAMD and its individual NPA units to manage the newly centralized NPA system (with some exceptions); and >> Inadequate, unsustainable financing for NPAs, resulting in degradation and limited economic development. 82 Poor management and protection of biodiversity is perhaps a key barrier for NBT in comparison to the other, more general business investment barriers. According to private sector stakeholders who have invested in NBT and tourism at PAs and other natural landscapes, one of the major complaints is a lack of protection of the natural attractions despite payments by the businesses to the government for protection through park entrance fees and concession fees. The many existing investments by high- end, international accommodation brands in Luang Prabang demonstrate that where there is opportunity investors will find a way to invest. But, the opportunity at NBT sites is still not great enough to attract high- quality international brands, which are non-existent outside Luang Prabang and Vientiane. 83 Furthermore, there is no existing framework for partnerships between the private sector, communities, and PAs or other natural attractions. Some businesses complain that communities are not honest partners in protecting the surrounding attractions, which may be one of the symptoms of no clear framework for such agreements. This situation may also be a result of tourism development projects in the past having focused on developing CBT models at NBT sites instead of addressing the barriers to private sector investment in NBT and inviting the private sector to join the projects as partners from the start. 84 Another barrier specific to NBT investment is the lack of last-mile infrastructure support for such investments, such as roads and bridges, as many investments are hampered by poor access to their sites. Most stakeholders report lack of infrastructure at sites as a major limiting factor for attracting customers and reason for high operating costs. Services for training staff in remote locations is also related to the issues of high investment and operating costs at NBT sites. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 39 85 Other barriers to NBT in Lao PDR related to the environment include lack of sufficient infrastructure for waste management, recycling, and sewage systems in most areas and unregulated building and construction that damage landscape values. The experience of leading NBT destinations throughout the world shows that good environmental management and enforcement of environmental regulations and planning controls are ingredients for NBT growth. 86 Stakeholder consultations have shown that processes are inefficient with extensive back and forth between different departments and levels of government, especially in relation to ESIAs, which have been designed for large investment activities, making them capital and labor intensive and, therefore, difficult for compliance by small businesses. It has been suggested that ESIA regulations should not in fact be applied to small businesses, but this is not the experience of most tourism enterprises. Therefore, to support NBT, which typically operates in sensitive environments including PAs, there are opportunities for MONRE to consistently apply simplified and fast-track processes special to these small enterprises. 87 Unexploded ordinance (UXO) is another barrier to NBT development, specifically in remote areas near the Lao-Vietnam border where the majority of the bombing occurred during the Secret War. Many of the country’s key PAs and NBT target landscapes and clusters would require UXO clearance before embarking on infrastructure development and opening trails. Such areas include Houaphan Province and Nam Et-Phou Louey NP; Xieng Khouang Province and the Plain of Jars; Khammouane Province and Hin Nam No NPA; Savannakhet Province and Dong Phou Vieng NPA; and Salavan and Sekong Provinces, including Xe Xap NPA. For example, before building the campsite of the Nam Nern Night Safari (see Box 7) in Nam Et-Phou Louey NP, UXO Lao, the organization responsible for UXO clearance, was employed to clear the area of UXO—an area that had been fought over during the war and was found to have exposed ammunition cannisters on first inspection. The UXO clearance process took more than three weeks for a relatively small area and required a special request from the governor’s office for approval due to the long queue for UXO clearance requests in around the province (typically for agricultural fields and sites designated for construction of new public buildings such as schools) and limited personnel and resources to meet such requests. Nam Et-Phou Louey still has areas that are off limits to tourists due to UXO dangers. The cost of removal is variable but can be up to US$3,000 per hectare. BOX 7 NAM NERN NIGHT SAFARI, HOUAPHAN PROVINCE The Nam Nern Night Safari is a tour created in Nam Et-Phou Louey NP that creates incentives for 14 villages surrounding the tour area inside the PA to protect wildlife. Tourists joining the tour are required to pay into a village fund, which is dispersed to the villages annually, based on wildlife sightings made by tourists. Village revenues are also reduced based on illegal activities reported inside the park to provide maximum incentives to reduce hunting and illegal sale of wildlife. The project won the ‘World Responsible Tourism Award for Best Responsible Wildlife Experience’ in 2013 and has continued to provide wildlife viewing experiences for visitors, despite hunting pressures in other parts of the country. Photo credit: Swisscontact 41 5 Impact of NBT on community incomes and poverty reduction 88 The economics of tourism in terms of community benefits include (a) direct benefits to those employed in the tourism sector through increased income and (b) indirect benefits to those who are able to sell more products and services to people with more disposable income employed in tourism. Figure 9 illustrates how international visitors’ expenditures flow into an economy and spread benefits throughout the economy. The value of all benefits of production and consumption links is measured using multipliers, which capture direct and indirect effects and translate changes in international tourism demand into total production and income to the local economy.40 Three types of multipliers are used in the study: >> Direct effects: Immediate income generated directly from tourism expenditures. For example, an increase in the number of tourists staying overnight in homestays would directly yield increased sales for homestay owners. >> Indirect effects: Income generated to other people in the economy as a result of re-spending tourism income for inputs to tourism, such as the homestay family spending its new earned income on supplies for the homestay from sellers in the local market. >> Induced effects: Income spent by employees working directly in tourism and indirectly in other industries benefiting from tourism, creating more benefits to others outside the immediate area where the tourism industry is located. 5 .1 Case study on benefits of NBT for community income 89 A case study was made to assess how NBT leads to income growth and poverty reduction in communities living in or around PAs in Lao PDR. The study involves a village located in the Dong Hua Sao NPA in Champasak Province with NBT. The model used was based on an SAM framework.41 Additionally, the supply of tourism-related services was divided into two categories: (a) services supplied in the village (homestay, catering, souvenirs) and (b) services supplied in the Dong Hua Sao NPA (guiding, portage, cooking, and so on). The village’s two different tourism projects were compared: >> The CBT project, as the villagers call it, is managed by the village directly and consists of taking independent travelers trekking within the NPA, with options to camp inside the NPA or overnight in homestay located in the village. This project began in the early 2000s. 40 The main endogenous accounts are divided into three blocks: production factor, institutional, and production activity blocks. 41 To remain consistent with the World Bank Group’s approach in Lao PDR, the questionnaires were based on the most recent national expenditures and consumption survey (2017) and adapted to this research’s requirements. 42 Impact of NBT on community incomes and poverty reduction FIGURE 9: CIRCULAR FLOW OF INCOME IN THE MULTIPLIER PROCESS Increase in tourism exports Direct effects Indirect effects Increase in tourism production Production linkages Tax leakage Increase in non-tourism Increase in factor incomes Government production and employment Import leakage Consumption linkages Increase in household incomes Rest of the world and consumption Source  Adapted from Breisinger, Clemens & Thomas, Marcelle and Thurlow, James. (2010). Social Accounting Matrices and Multiplier Analysis: An Introduction with Exercises. >> The Green Discovery42 project is a private partnership that is operated by a tour company with over 80 members of the village and consists of ziplines and trekking in close proximity to steep waterfalls. GD offers packages of two or three days, with the tour starting and ending in Pakse. Accommodation is in treehouses in the forest, and GD’s customers do not use any homestay facilities. This project opened in 2010. 90 Approximately, 12,000 international tourists have visited Dong Hua Sao NPA through the village of Nong Luang since 2011.43 The distribution of total visitors to the area between for CBT and Green Discovery is roughly 20 percent and 80 percent. Figure 10: summarizes the local economic impact in Nong Luang Village. 91 The case study concluded that NBT development can lead to significant increases in overall income and poverty reduction in a village adjacent to or in a PA. This effect was due to NBT activities increasing incomes of all sectors in the village; and community-private sector partnership leading to higher incomes. It is important to note that both communities have equal access rights to the PA, which was established in 1993, thus bearing no difference in income levels between the villages for the study. 42 Founded in 2001, Green Discovery is a Lao-owned private travel agency which now operates in six provinces of Lao PDR (https://www. greendiscoveryLao PDR.com/about-gdl/company-profile). 43 Tourists can also visit Dong Houa Sao NPA from two waterfalls, Tad Fane and Tad Nyuang. These waterfalls are managed as private concessions with no benefits to Nong Louang Village. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 43 FIGURE 10: DIRECT LOCAL ECONOMIC IMPACT: PUBLIC-PRIVATE PARTNERSHIPS VERSUS COMMUNITY SUPPLIED SERVICES Tourism in Nong Luang Village (2017) Total Direct Local Economic Impact = LAK 583,929,003 (US$ 65-70,000) Public-private partnership Community supplied services (Green Discovery) (homestay + guiding services) 100 people involved 18 people involved (incl. 18 from CBT) Direct Local Economic Impact Direct Local Economic Impact = LAK 429,699,003 = LAK 154,230,000 Salaries Other incl. VDF Services/salaries Homestay Other incl. VDF LAK 305,324,586 LAK 124,374,417 LAK 93,291,000 LAK 51,324,000 LAK 9,615,000 Note VDF = Village Development Fund. 92 In Nong Luang village, 65 out of 116 households (56 percent) obtain revenues from tourism activities, which together represents 14.5 percent of all the village’s salaries and revenues. Despite the existence of a few families that control some of the revenues from homestay-related tourism in the village, any increase in tourist arrivals and expenditures still helps the poor access job opportunities in the tourism sector and increase their earnings, including those with the highest incidence of poverty (multiplier effect). TABLE 13: POVERTY HEADCOUNT IN NONG LUANG VILLAGE BY ECONOMIC ACTIVITIES44 Share of poor people Nong Luang (with tourism revenues) 26.2% Nong Luang (without tourism revenues) 39.2% 93 Additionally, the observation of the average level of salaries for people involved in tourism activities confirms that tourism can contribute to improving the living conditions of the poor.45 Table 14 confirms that tourism has a significant positive impact on the living conditions of the poor. Indeed, the average salary level is higher for poor people involved in tourism than for those not working in the sector. 44 Per capita consumption was collected by interviewing households with detailed questions about how much their household consumes (both in terms of money spent buying goods or services, and cash-equivalent values of own-produced consumption) and dividing the total by the number of people living in this specific household. This consumption estimates was compared against the national poverty line for Lao PDR. 45  Poverty cannot be reduced to monetary values only. In this assessment, the consumption estimate for each household was compared against the national poverty line for Lao PDR. For the World Bank poverty is pronounced deprivation in well-being and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life (Haughton, Jonathan; Khandker, Shahidur R.. 2009. Handbook on poverty and inequality. Washington, DC: World Bank. 44 Impact of NBT on community incomes and poverty reduction TABLE 14: AVERAGE LEVEL OF SALARIES IN NONG LUANG VILLAGE Average level of salaries Categories Nong Luang Per person General LAK 7,410,543 Per person ‘Poor’ LAK 4,363,902 Poor involved in tourism LAK 5,941,000 Poor not involved in tourism LAK 2,861,905 Per person ‘non-poor’ LAK 9,076,040 94 The public-private partnership (PPP) promotes the full and equitable participation of all individuals of the community. It also brought three times more revenues to the village (75 percent versus 25 percent) than the CBT project generated over the last seven years. In 2017, Green Discovery brought two-and-a- half times more income to the village than did the CBT activities. 95 The number of beneficiaries of the Green Discovery partnership is higher than those involved in CBT. As it is controlled by a few families only, the number of beneficiaries of CBT (homestay and trekking) is significantly smaller (only 18 local people are involved as local guides and porters) compared to those involved or having a direct link with the private sector company (about 100 people which includes the 18 working on the CBT). 96 Increasing tourism in Nong Luang has triggered increased direct, indirect, and induced effects, as measured by the multipliers. Table 15 shows the estimation of how a one-unit increase in tourism affects the final demand for all the local economy’s outputs by sector. In addition, it indicates the total effects on the payment to each of the production factors (payroll effect). For example, for every LAK 100,000 spent by a tourist and received by the village, villagers working in agriculture would receive a benefit of LAK 6,900, while other, non-tourism related businesses, such as shops selling soap and other supplies, would receive a benefit of LAK 35,900. Poor households in the village would benefit by just LAK 19,200, while rich households would get a larger benefit of LAK 80,700. Most benefits in the village would earned for local people’s labor (LAK 80,900), as opposed to renting or purchasing equipment (LAK 15,900). TABLE 15: SAM TOURISM LOCAL MULTIPLIERS Categories Activities Multipliers Production activities Tourism 1.000 Agriculture / forestry / fishery products 0.069 Other businesses 0.359 Factors Labor 0.809 Capital 0.159 Households Poor 0.192 Rich 0.807 Accumulation Savings 0.196 Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 45 97 The increase of earnings from tourism allows villagers to be more resilient to climate hazards and diversifies the source of revenues (for example, the coffee market price). The testimonies received from villagers also reinforce the quantitative findings. The villagers claimed that tourism has decreased the vulnerability of the households to exogenous shocks, and it has also allowed many of them to build a new house, some of which were verified during fieldwork. For the last two years especially, with the bad weather conditions, the villagers stated that the income from tourism has helped them cope with both the dramatically poor harvests and the fall in coffee prices. 98 However, the village did not derive any incomes from sales of food or souvenirs. This analytical research has shown that they do not produce any food due to inadequate weather conditions for horticultural activities. Moreover, being a village that consists of Lao people who resettled there several decades ago for the purpose of producing coffee beans, the villagers have neither developed nor maintained any souvenir production or traditional knowledge, except for the sale of bags of locally produced coffee to interested visitors. 99 The estimate for an incremental increase in visitor numbers (as an example, 2,500 additional visitors over five years) could correspond to an additional LAK 500 million in the village of Nong Luang. With the absence of small industries and local production of fruits and vegetables in the study village, the district town of Paksong will additionally benefit from this increase in tourist arrivals. Purchases outside of the village of Nong Luang constitute about 75 percent of expenditures from all households and small businesses. In terms of numbers, a total of 12 households,46 representing 65 individuals, would exit relative poverty, reducing the poverty headcount from 35.3 percent to 21.6 percent in the village of Nong Luang. 5.2 Policy implications of the case study 100 Although the case study has limited national application, certain lessons and findings have policy relevance for NBT development in Lao PDR. For example, for NBT to help reduce poverty reduction, improved access and visibility of NPAs could be beneficial. The share of international tourists visiting the inner part of the Dong Hua Sao NPA is rather limited compared to the number of visitors to the surrounding areas, as a result of poor accessibility. In addition, products and services can better match visitors’ needs and to market Lao PDR’s conservation landscapes more effectively internationally. Internet usage by local suppliers is very low and more efforts should be made to have more adoption of technology for marketing and product development purposes which is currently a limiting factor for the CBT project activities. 101 Whatever markets are developed in the future, identifying products and services that are or could be supplied by poor communities and for which there is demand by tourists, could help integrate local people into the tourism value chain and generate income for the poor. Research shows that development of a visitor economy in rural areas does not usually harm the agricultural economy and, in fact, will often enhance it by creating valuable new markets for agricultural production in hotels and restaurants. Also, the agricultural day is typically concentrated in the morning, which means that there is little competition for workforce availability. Opportunities in the visitor economy are generally incremental. Similarly, the experience of emerging NBT destinations shows that perhaps the greatest opportunity is for young people who might otherwise have migrated to cities for education and remained there for work but instead can return to rural areas to take up employment in the rural visitor economy, bringing new skills and an entrepreneurial spirit. 46 The average additional income from an increase of tourism revenues was added to each individual based on the status (poor / non-poor) and the new poverty headcount was then compared to the poverty line. 46 Impact of NBT on community incomes and poverty reduction 102 Above all, community-led activities and initiatives have been shown to bring fewer income gains and to be less equitable in sharing the benefits among villagers from tourism than PPPs. Financial incentives alone, however, are not enough to attract socially and environmentally responsible investors, who are more likely to impact on poverty rates. Investments in infrastructure (for example, mostly accessibility to NPAs) are as important as ensuring biodiversity preservation. The endowments of natural resources and their preservation are important for the villagers, and tourism would not be an important poverty reduction tool without the involvement of private companies to promote these endowments, while at the same time encouraging these businesses to adopt a more localized input link orientation. Tourism development—when and where a transparent and effective PPP is established—can be an effective strategy in reducing poverty, as shown in a variety of developing countries. Instead of simply making donations to a community school or clinic, which is nevertheless welcome, the opportunity for private sector partners is to develop local skills and expertise and maximize benefits through appropriate site development and marketing. 103 However, the impact of increasing tourism on PA assets needs to be closely evaluated to mitigate potential negative impact. While the number of visitors to Dong Hua Sao NPA appears generally not high enough to pose a threat to the ecological integrity of the PAs, the lack of a limit on the number of visitors that may visit the park at any one day poses potential damage. For example, reportedly, in August 2018, more than 300 independent tourists arrived in Nong Luang over a period of three days and went trekking in the NPA, which would have a large impact of overloading park personnel and local communities, potentially disturb natural habitats, or overwhelm the limited existing capacity for waste management. It can be important to assess the carrying capacity of the PA, or certain sensitive locations within a PA, and set limitations to visitor numbers accordingly. As large visitor volumes become the norm, PA management may also adjust the level of the entrance fee to control visitor numbers. Additionally, placement of multiple well-designed and maintained trails in different parts of the park may distribute the pressure, as well as investing in PA services and facilities and the surrounding communities. 104 Similarly, an additional, unintended consequence of the increased tourism and wealth may be increased collection by service providers of nontimber forest products from the forest for household use or for sale to tourists. For example, village markets located next to Dong Hua Sao’s waterfall attractions, Tad Nyeuang and Tad Fane, were selling wild orchids to visitors up until such sales were recently banned by the GoL. 5.3 Tourism, concessions, and communities in PAs 105 Currently, tourism concessions in Lao PAs are insufficiently transparent, negotiated on a case-by- case basis with few benefits to the state, and complicate the business environment. If done well, concessions can be an important component of tourism development and management in PAs and other natural landscapes, as can be seen from the case study presented earlier in this chapter. In Lao PDR, concession fees, regulations, and procedures are inconsistent or have gaps. They do not always require transparency in the use of revenues especially for conservation in PAs. Concessions also generally do not currently include an investments protection mechanism. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 47 106 A number of measures can contribute to the successful development of private sector partnerships with communities. Successes in other countries include the following: >> Collaborative management of NPAs that includes community support, incentives/benefits, a sufficient process and structure, sufficient resources, and a good relationship and communication management.47 >> Communities involved in tourism are operating through a recognized legal structure, whether a conventional private enterprise or a form of cooperative society, giving them easier access to capital and attracting more effective partners and investors that can add value and generate greater returns. >> The government has a clear policy and strategy for awarding tourism and wildlife concessions on public land, especially within designated PAs. >> Destination communities are permitted and empowered to have first refusal over key concessions and can themselves decide whether or not to enter into partnerships with private sector operators from outside the community. >> Transparent competition through an open tender process delivering more commercial viability and more sustainable returns for the destination communities. >> Investors being patient and respectful to their prospective community partners, who will often have less commercial experience but the necessary local expertise to deliver an authentic product and customer experience. >> In addition to a clear legal structure, communities need strong leadership and a full understanding of the business proposal; they should never assume prospective private sector partners are benign and share their interests, although they should approach negotiations with an open mind. BOX 8 TOURISM CONCESSIONS IN PAs IN NAMIBIA A recent analysis of tourism concessions in PAs in Namibia shows that transparent and well-managed concessions granted to communities and community-led partnerships can deliver significant value. Nineteen tourism concessions across 23 PAs have in total contributed US$505 million to the Government of Namibia and, in 2017 alone, generated US$9.7 million in net cash income for communities, with 309 full-time permanent jobs, of which 137 (44 percent) were taken by women. In addition to profitable operations and a high return on investment (ROI) for private sector partners, there are multiple and considerable benefits for both government, communities, and conservation. Source  Spenceley, Snyman, and Eagles (2017) Guidelines for tourism partnerships and concessions for protected areas: Generating sustainable revenues for conservation and development. Report to the Convention on Biological Diversity and the International Union for the Conservation of Nature. 47 Van Hal, Marlies (2008). “Collaborative Management in National Parks: The Case of Retezat National Park, Romania.” In Landscape, Leisure and Tourism, edited by Henk de Haan and Rene van der Duim, 199–214. Delft, Netherlands: Eburon. 48 Impact of NBT on community incomes and poverty reduction 107 When developing tourism concessions with communities in PAs, the following lessons should be considered: >> Partnership agreements can be complex, and communities can be at a disadvantage in negotiating with the private sector with each party often having different expectations, necessitating a trusted support service to protect and advance community interests. >> With limited commercial acumen and market intelligence, NGOs frequently do not have the capacity to effectively support tourism enterprises and the delivery of tourism projects. >> The benefits of tourism flows will not immediately translate into a reduction in poaching and other illegal activities in PAs, especially if tourism is limited to a small group and not for the inclusive benefit of the wider community. Tourism, therefore, requires time and an inclusive approach to achieve a meaningful ROI and deliver a shift in relation to biodiversity conservation and heritage protection. Visitors at camp on the Nam Nern Night Safari. Photo credit: Wildlife Conservation Society 49 6 Scenarios for future growth and economic impacts from NBT 108 This assessment uses three broad scenarios for tourism development to estimate the potential impacts of NBT. The scenarios are composite sketches of possible trajectories that the tourism sector and NBT could take depending on actions and different levels of commitment and coordination from the government and other stakeholders. The three scenarios are described in this chapter. 6.1 Scenarios 109 The ‘Base’ (no change) scenario: Under this scenario, tourism to Lao PDR continues to flatline or even contract48 and high-value tourism opportunities remain undeveloped, which means that, without any changes in policy and the enabling environment for NBT, visitor volume and revenue are expected to remain flat in the next five years, and the country will miss out on the economic benefits of the growth estimated in the other two scenarios. Under this scenario, an unimproved enabling environment for tourism businesses and unimproved management of PAs, wildlife, and other assets in the conservation landscape, investors will mostly stay away from NBT. Without increases in revenue and opportunities from tourism, investors will continue to invest in activities that continue to degrade the country’s natural heritage, further closing the door on the country’s opportunity to become a high-value NBT destination in the future and turning away visitors to PAs. In this scenario, there would continue to be limited proactive leadership by tourism stakeholders in Lao PDR and little strategic marketing activity to engage target NBT markets or to attract investors for priority NBT developments, as is currently the case. Regional competitors will continue to out-compete Lao PDR in responding to the needs of NBT markets. With a continued short-term view for planning and management of tourism in natural sites, and without innovative product development, key segments of regional markets interested in NBT will not be captured, losing potential benefits from connectivity improvements such as the China-Lao Railway. Given the current trajectory of PA management, investors will continue to be unconvinced that their investments in PAs will be protected from inappropriate development, and biodiversity and NBT attractions will continue to suffer from unsustainable or illegal use, continuing to undermine the future value of NBT. The continued lack of meaningful coordination between stakeholder sectors and different levels of government would continue to result in failed NBT projects by donors, INGOs, and the private sector. Projects will continue to have suboptimal inclusion of the private sector, resulting in failed projects in which the benefits to communities continue to be less than benefits from agriculture and other sectors. 48 https://theaseanpost.com/article/laos-tourism-troubles. 50 Scenarios for future growth and economic impacts from NBT 110 The ‘Support’ scenario leads from a review of policies and legislation that identifies some policy initiatives and regulatory clarifications that reduce the barriers to investment in a range of strategic opportunities that might meet market needs. In this scenario, governance of NPAs is improved and coordination between different departments and levels of government is improved, resulting in better PA management, enhanced conservation, and some modest but limited improvements in wildlife protection and the wildlife experience in NBT sites. Marketing would still tend not to be proactive, and ultimately in rural areas, the GoL continues to prioritize large industrial projects in the national interest and green growth through NBT. To support the demand-led development of the tourism sector, the government would significantly improve the business environment by reducing inconsistencies, improving the business start- up process, and reviewing the need and requirements for business operating licenses in the tourism sector. Many stakeholders consulted believe this is the most likely scenario, and it would not provide the necessary framework for NBT to become an economic growth driver. 111 The ‘Transform’ scenario results from Lao PDR prioritizing implementation of green growth through a multisector, demand- and market-based effort to develop NBT. The GoL shifts its focus from large, extractive projects to truly make tourism a priority and number one foreign currency earner. With a clear strategy to become a leading NBT destination in Southeast Asia and the world, it would proactively target key regional Asian markets, including Japan, Malaysia, Singapore, South Korea, Thailand, and Vietnam and facilitate the development of priority products that meet market needs by proactively encouraging strategic investments. A one-stop shop would be created to support responsible international investors and connect them with strategic development opportunities. New ombudsman and investor aftercare services would be established and empowered to address bad practice and ensure coherent application of simplified rules and regulations, enforcing social and environmental safeguards, discouraging rent-seeking behavior, and giving confidence to both new and established investors. There would be efficient communication across the government and between different sectors. The GoL would ensure coordination of policy and legislation, responding to the needs of credible investors, while placing community benefits at the heart of its strategy, creating new jobs in NBT, especially for women and young people to promote rural development. The GoL would actively embrace international treaties and best practice on biodiversity, climate change, and environmental protection. This would translate into a total transformation in levels of wildlife protection and forest conservation, effectively ending illegal logging and hunting and inappropriate development in and around PAs, which would be increasingly well managed through centralized control with a clear national strategy that provides a framework for NBT development, including priority products and strong safeguards. As part of an evidence-based national strategy, individual provinces would be empowered to drive appropriate NBT development within their areas with evidence-based zoning policies, especially in and around NPAs, and always subject to social and environmental safeguards. In the coming years, Lao PDR would overtake other NBT destinations in Southeast Asia and new air routes would open up, not only due to liberalization policies but primarily because leading airlines would recognize that Lao PDR had become serious about sustainable tourism and is open for business, rapidly becoming a regional powerhouse for green growth through NBT and stronger conservation across diverse landscapes. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 51 6.2 Economic forecasts based on the three scenarios 112 Analysis indicates a range of results across the three scenarios. These assume that there will be growth in target markets with new visitor infrastructure being developed to meet their needs. There is a conservative assumption that the Average Length of Stay (ALOS) will remain static, which is primarily to allow a simpler comparison between the scenarios by reducing the variables used in the analysis.49 However, doubling the ALOS for NBT visitors for example, which is achievable over the next decade, would also double NBT’s economic contribution. 113 The forecasts prepared as part of this analytical work show that a focus on NBT in the Transform scenario will increase the economic contribution of NBT by a factor of 5. However, because estimates have only been made for the four target clusters, the benefit is likely to be even greater nationally, as NBT begins to emerge in additional NPAs elsewhere in Lao PDR, following the model demonstrated in the target clusters. Given the economic multiplier for tourism in Lao PDR is 3.28, this indicates an economic benefit from NBT over US$600 million over 10 years from NBT alone, based on conservative estimates. This does not include growth in associated sectors of tourism, hospitality, aviation, and retail—and in other NBT clusters that emerge in future. 114 For simplicity of comparison with national tourism statistics, forecast data represent total revenues to the tourism industry rather than cost-benefit or marginal revenues net of investment costs. However, based on these revenue estimates, the break-even points of investment can be estimated for the Support and Transform scenarios (that is, the maximum total investments for PA management, tourism development and marketing, and last-mile infrastructure that would yield no net loss), which are US$3.4 million and US$18.3 million per year for 10 years respectively or US$0.9 million and US$4.6 million per cluster annually. Based on estimates and experiences in managing PAs50 and implementation costs for tourism development and last-mile infrastructure projects in Lao PDR,51 the Transform scenario break- even point would indicate potential for generating overall net benefits. Furthermore, the sustained benefits of the Transform scenario after the 10-year period after investments were made would yield a long-term stream of significant benefits, even if annual costs of 15–25 percent of total revenue for continued PA management, marketing, and product improvements and training were assumed. It is also important to note that public sector investments may not be radically different between the scenarios, and in fact may even be cheaper for the Transform scenario in the long term. Public sector investment would reallocate and reprioritize funds toward PA management and last-mile infrastructure for the Transform scenario, 49 Base scenario forecast calculations assume that incremental growth of NBT in Lao PDR keeps pace with UNWTO worldwide projected growth (average 3–4 percent per year over the next 10 years). This assumption may be considered a conservative estimate given the MOICT’s reported growth of 8.2 percent for 2018 (http://asean.travel/2019/04/27/renewed-growth-for-laos-tourism-in-2018/). Support scenario forecast calculations are based on using different ALOS figures for different product profiles in the four clusters ranging from 2 to 4 (against the MOICT’s constant of ‘2’ for all international visitors) and different average daily spend figures ranging from US$18.83 for budget to US$142 for high end, reflecting visitor surveys conducted in 2018. In the Support scenario, the ALOS and daily spend are forecast to grow by 10 percent (compound equivalent to annualized average growth of +0.96 percent) and 15 percent (+1.4 percent) respectively over the next decade, which is consistent with the performance of destinations that have administrations that are actively supportive and not obstructive of tourism development. Support scenario forecasts result in net incremental growth of 212,839 pax and incremental revenue of US$34 million over 10 years with only 40,674 additional NBT arrivals and US$7 million additional revenue in 2029.  Transform scenario forecast calculations are based on both the ALOS and daily spend growing by 40 percent (+3.4 percent per year), which is consistent with the performance of destinations that have administrations that have made tourism a key driver of growth and taken a transformative approach to enabling sustainable and inclusive growth. The Transform scenario forecast results in net incremental growth of 833,488 pax in target markets and incremental revenue of US$183 million over 10 years with 148,286 additional NBT arrivals and additional revenue of US$41 million in 2029 over and above the base scenario. 50 For example, the total budget for Nakai Nam Theun NP, one of the largest parks in the region, is US$1 million per year. 51 For example, the total budget for the ADB Tourism Infrastructure for Inclusive Growth Project (Phase I) was US$43.5 million for five years over four provinces, which is US$2.18 million per province per year. 52 Scenarios for future growth and economic impacts from NBT which would leverage private sector investment for product development, marketing, and training as well as generate sustainable financing for PA management and other recurring public recurring. In contrast, the Base scenario would continue to use the bulk of public funds for tourism development to support CBT product development and supply-side tourism development led by the government and NGOs—which has been shown to require continued investment by the public to maintain and improve sites. FIGURE 11: INCREMENTAL REVENUE PER YEAR FROM NBT SCENARIOS IN TARGET CLUSTERS $60,000,000 $50,000,000 Support Transform $40,000,000 Base $30,000,000 $20,000,000 $10,000,000 $0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 TABLE 16: INCREMENTAL REVENUE PER YEAR FROM NBT SCENARIOS IN TARGET CLUSTERS (US$) Categories Base Scenario Support Scenario Transform Scenario 2019 0 0 0 2020 716,777 1,099,864 2,412,380 2021 1,433,555 2,199,729 4,824,760 2022 2,150,332 3,299,593 7,237,141 2023 3,441,496 5,433,649 11,966,900 2024 4,732,660 7,567,705 16,696,659 2025 5,973,655 9,707,030 24,426,218 2026 7,214,650 11,846,354 32,155,776 2027 8,455,645 13,985,679 39,885,334 2028 9,386,391 15,590,172 45,682,503 2029 10,317,137 17,194,665 51,479,672 Total 53,822,297 87,924,441 236,767,344 Total increment 34,102,143 182,945,047 115 The number of NBT visitors will only grow by a factor of 3 in the Transform scenario, but the profile will evolve so that proportionately more visitors are choosing higher-end products and contributing an increasing amount to the visitor economy. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 53 FIGURE 12: INCREMENTAL NBT VISITORS PER YEAR OVER 10 YEARS IN THE FOUR TARGET CLUSTERS 250,000 200,000 Support Transform Base 150,000 100,000 50,000 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 TABLE 17: INCREMENTAL NBT VISITORS PER YEAR OVER 10 YEARS IN THE FOUR TARGET CLUSTERS Categories Base Support Transform 2019 — — — 2020 5,622 8,553 18,357 2021 11,244 17,105 36,715 2022 16,866 25,658 55,072 2023 26,245 39,950 85,608 2024 35,624 54,241 116,144 2025 44,942 68,461 140,521 2026 54,260 82,680 164,898 2027 63,578 96,900 189,275 2028 70,566 107,564 207,558 2029 77,555 118,229 225,841 Total 406,502 619,341 1,239,990 Total increment 212,839 833,488 116 These incremental visitors will require additional accommodation capacity, with at least 1,000 extra beds in 500–700 rooms across the four clusters. If, however, the ALOS for NBT visits to the target NPA clusters is doubled, then the capacity requirement will also double. 54 7 Priority recommendations 117 Lao PDR’s comparative advantage in tourism is its conservation landscapes and the wildlife and people dependent on them. Overall, Lao PDR has good assets, tourist demand, safety, new policy reforms, investor interest, and a small number of models that could be scaled up. While there is demand for NBT in Lao PDR, source markets are not fully aware of just how much Lao PDR has to offer. This is why there is an opportunity for entrepreneurs, including communities in Lao PDR to innovate, develop new products, and connect to markets where there is a demand for great NBT products. However, to take advantage of this opportunity and attract new demand-focused investors, the enabling environment for business will need to be further improved and barriers alleviated. 118 The priority recommendations in this chapter are proposed actions to support the implementation of NBT action plans for the four target landscape clusters and help achieve both the Support and Transform scenarios described in the previous chapter. The recommendations are organized according to the general responsibilities relating to key agencies that should be responsible for their implementation and are prioritized for each starting from general recommendations that are relevant for both the Support and Transform scenarios and down to the more specific recommendations that are required for the Transform scenario. A description of each agency or actor’s recommended roles and responsibilities is provided in Section 7.2. A more detailed and broader matrix of recommendations and actions relating to each key issue identified during stakeholder consultations is presented in Annex B. 7.1 Priority recommendations 119 Enabling environment for NBT investment and businesses (Responsible agencies: MAF, MPI, MOIC, MOICT, PMO) >> Reduce barriers related to business investment in Lao PDR and specifically tourism businesses. This includes fully implementing the recently simplified business registration process, streamlining regulatory requirements and procedures for obtaining and renewing operating licenses, removing restriction on FDI such as investment licenses that were recently introduced, revising tax incentives, and making it easier to secure land for foreign investments. Implementation of relevant reforms should be broad-based to improve the overall business operating environment and would contribute to achieving the Prime Minister’s objective of significantly improving Lao PDR’s ranking in the World Bank Ease of Doing Business Report. Improving inter-ministerial coordination, such as the one-stop- service delivery for investors would further help facilitate business operations. >> Review the justification, objectives, and requirements for all tourism-related operating licenses and simplify or remove them where they do not serve a relevant regulatory purpose. Regulations for the tourism sector should be restricted to ensuring they protect public health (for example, for restaurants) and the environment without creating undue burden for companies that would like to operate in the sector. Review the documentary requirements for application (such as business plans Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 55 submission for approval) and remove all unnecessary or duplicative requirements. These reviews could be undertaken using simplified regulatory impact assessments. >> Reduce informal barriers to investment in tourism business by ensuring coherent application of existing rules and regulations across all jurisdictions will be critical to ensure reforms affect the actual situation for investors and tourists in practice. This will include increasing transparency by publishing and keeping up-to-date step-by-step guides on business registration, forms, and templates; establishing and empowering an ombudsman to investigate reports of malpractice and corruption in business process and regulation; and establishing an efficient mechanism for investor aftercare will help strengthen compliance and reduce opportunities for individual interpretation of rules and the extraction of rents. Strengthening skills, knowledge, and abilities among relevant officials will also be important. >> Establish regulations and procedures for tourism concessions in PAs and other natural landscapes that provide clear steps and incentives for businesses to invest in NBT, as well as an investment protection mechanism. The concessions in PAs regulations should apply to different types of concessions, including PPPs, private-community agreements, and public-private-community partnerships. 120 Tourism policy and planning for NBT (Responsible agency: the MOICT) >> Create a new National NBT and Ecotourism Master Plan for 2020–2025, superseding and integrating other existing plans. Clarify roles and responsibilities of different stakeholders, providing greater roles for the private sector in marketing and developing NBT, and for PAs in managing site- specific tourism. >> Revise tourism laws related to community-based and ecotourism to decentralize pricing and management of community tourism products and services and reduce barriers for innovation. Policies could better promote the capacity building and use of local guides and support local people to set up NBT businesses. 121 Sustainability and environmental policy and regulations for NBT (Responsible agency: MONRE and Ministry of Public Works and Transport [MPWT]) >> MONRE could devise a more appropriate range of environmental impact assessment regulations tailored for the tourism industry that promote key international standards, make complying with such regulations more efficient and beneficial, and provide incentives for investments to follow regulations and innovate. >> The MPWT and municipalities, working with the private sector, could build waste disposal and recycling centers in key locations in NBT tourism clusters and work with PAs, districts, communities, and businesses to devise systems for proper waste disposal and recycling in tourism centers. 122 Management of tourism in PAs and the broader conservation landscape (Responsible agency: the MAF, working closely with the MPWT and provinces) >> Continue to develop a Master Plan for NPAs (2020–2025) to guide the development of PAs and tourism within the emerging NPs and other preserves. 56 Priority recommendations >> Continue to assess individual PAs for designations of their status and opportunities. The remaining 21 NPAs would benefit from assessments to support consideration of possible re-designation as NPs, including the montane forests in Xieng Khouang and Bolikhamxay Provinces. As part of this work, consider pursuing additional natural heritage designation processes over the next five years including World and ASEAN Heritage Sites but only if the cost justifies the potential benefits. Continue the designation process for Hin Nam No NPA to be designated as a natural World Heritage Site representative of Indochinese karst. The PAs containing significant tracts of wet evergreen forest in the Annamites landscape (comprising Nakai Nam Theun NP, Khoun Xe Nongma PCF, Laving Laverne NPA, and Xe Sap NPA) could be evaluated to be designated as a possible serial World Heritage Site. To complement, Phou Hin Poun NPA, Laving Laverne NPA, and Xe Pian NPA could be assessed for possible ASEAN Heritage Site designation. >> Continue to enhance the knowledge, skills, and abilities of the MAF’s PAMD under the DOF, which has the mandate to oversee all activities within NPAs including Lao PDR’s two new NPs. As part of this mandate, within the context of maintaining the ecological integrity of PAs, work with private operators and stakeholder working groups to identify possible investment and concession opportunities in and around PAs. Continue to finalize the Master Plan for NPAs 2020–2025. >> Create tourism stakeholder working groups for PAs, where tourism is being developed, to help review and improve tourism development using consultation and feedback mechanisms. These groups would include community associations, private operators, and local government, among others. >> Establish a transparent system for entrance fees, concession fees, and proper use of revenues for conservation and livelihoods in and adjacent to PAs, as well as an investment protection mechanism, with agreement and regular oversight by a tourism stakeholders’ group. Community Conservation Agreements between NPA authorities and communities within or adjacent to NPAs have been a useful tool in some settings in Lao PDR. >> Coordinate the financing of last-mile tourism infrastructure in and around NPAs in priority conservation landscapes for NBT development. There are three main sources of domestic public funding through (a) the MPWT and its provincial agencies which manage the country’s limited Road Fund, following the Provincial Road Maintenance System; (b) through the provincial governors’ offices which manage provincial budget for small local infrastructure; and (c) within NPAs, the NPA budget prioritizes the needed infrastructure within the PA which would include green and grey infrastructure like trails, lodges, and so on. Private sector concessions in NPAs and partnerships with communities could be leveraged to extend precious public funding for infrastructure. Such funding should also support protection of natural assets by using low-impact sustainable construction and maintenance methods. 123 NBT product innovation and business support (Responsible agency: private sector associations) >> Support the private sector to market and promote a national NBT brand through private sector associations or a private sector NBT promotion group. Marketing should also encourage foreign investment in NBT in Lao PDR and improve links between domestic NBT businesses and international NBT businesses. >> Devise and deliver courses on NBT product innovation, market development, and hospitality for private sector tourism and CBT businesses to realize market potential and tackle perceptions of market size and seasonality constraints, including training for local guides and accommodation providers. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 57 >> Provide funding, through a new or existing window, to finance private sector tourism concessions in NPAs with a focus on creating best practice concessions that include programs to support wildlife protection. >> Encourage the adoption of voluntary sustainability practices by the private sector by supporting private sector-led solutions, including internationally recognized certifications such as Travelife or Earthcheck, or providing technical services on how to implement and monitor sustainability measures. 7.2 Roles and responsibilities of key agencies and actors 124 The potential role of different actors is summarized in this section. Annex C also shows the range of barriers identified and grouped together to indicate how barriers might be tackled by different sectors. The public sector has a critical enabling role, which to a large extent will determine how quickly the private sector can succeed. Understanding each other’s respective needs is key to creating an effective development partnership between the public and private sectors. The key point is that nearly every stakeholder has a complementary role in delivering the objectives of the national tourism strategy, and this requires substantial coordination. 125 PMO. Leadership comes from the top. Elsewhere it has usually been through the establishment of an interdepartmental committee chaired by a senior minister or even the president that enables a step change in the management and sustainable development of tourism. While the ongoing management of such a committee can become the responsibility of a more junior official, it must remain under the patronage of a senior politician, who should receive regular reports and publicly engage with the committee’s initiatives. The existing National Green Growth Steering Committee (NGGSC) chaired by the Deputy Prime Minister, and whose secretariat is at the MPI Department of Planning (DOP), provides a framework for this level of engagement; tourism could be an agenda item because tourism is a high priority in the NSEDP and the new 2030 NGGS. Likewise, the Investment Promotion and Supervision Committee is overseeing the issuance of investment licenses and the implementation of the Prime Minister’s reform agenda to improve the business environment and is supported by the Department of Investment Promotion (IPD) at MPI. The Committee and Secretariat could take a lead in addressing the reforms aimed at making it easier to start and operate businesses. 126 MOICT and provincial and district offices. The MOICT has a wide range of responsibilities in relation to tourism. This includes developing tourism strategies and collecting and analyzing visitor data and other statistics, which must be done at the ministerial, provincial, and district levels. A tourism ministry’s responsibilities are generally concerned with policy and strategy and (in the absence of a functioning tourism board) sometimes involves accreditation, development, and marketing, while the provincial and districts are responsible for on-the-ground development, implementation of policies, and coordination with the private sector and other sectors of the government. Historically, as regulator of the tourism sector, the MOICT has been responsible for preapproving the establishment of tourism businesses in the country and is responsible for issuing and renewal of operating licenses, which is considered very cumbersome. To encourage investment in the tourism sector, enterprises involved in the visitor economy should be only regulated to the degree that they affect public health and safety, any regulatory requirements imposed should not create unnecessary burden for enterprises, and any such responsibility should be delegated to the provincial or district offices where the investments are actually being made. Licenses and regulations affecting the tourism sector should be designed and implemented using international good practices, spelling out regulatory objectives and criteria clearly. To support CBT, the MOICT should be responsible 58 Priority recommendations for creating standards for CBT but not approving the CBT business or prices, with provincial and district offices better understanding their roles as supporting rather than managing CBT businesses. Tourism marketing and advertising campaigns, including participation in international trade fairs, should be the responsibility of a private sector-led organization. There would be value in the MOICT working with the private sector to formulate a plan to create a new National Tourism Board (NTB) at the national level that streamlines all marketing efforts for the country (instead of each province or district trying to promote themselves), building substantially on the existing (but not yet fully functioning) Destination Management Network (DMN), which is best managed at the provincial or district levels to coordinate the cluster or site- specific development plans. 127 The MAF and provincial, district, and NPA offices. With a legal responsibility for wildlife and timber law enforcement, PA management, as well as production forest management, agriculture, and rural development, the ministry has not historically had a clear mandate to develop NBT. Thus, drawing on the best practice in emerging destinations that have adopted NBT as a strategic priority, the PAMD of the MAF’s DOF now has the mandate for developing NBT and all other activities within national PAs. At the same time, given the many sector interactions on which sustainable tourism development depends and the high priority given to tourism by the GoL, this mandate could be strengthened with a high-level coordinating platform located in the PMO and relying on the existing NGGSC, as mentioned earlier. The NPA and NP offices should be responsible for creating site-specific management plans for tourism in PAs and work with stakeholders to create and implement site-specific regulations for tourism within PAs, with the formation of PA tourism stakeholder working groups that include private sector and village representation and have authority for reviewing and recommending to the PA management board all things related to tourism development inside the PA. NBT sites outside of NPAs should have similar management structures with oversight and management by provincial and district offices in cooperation with other institutions and the private sector. 128 The MOIC and provincial and district offices. With the responsibility for company registration, the MOIC has an important role in delivering the country’s ambitious development strategy. Processes for registering enterprises have been challenging in the past, particularly in several sectors (including tourism) where line ministries had to provide a preapproval for establishment, effectively representing a general business license in these sectors. These establishment licenses were issued in addition to the same line ministries issuing operating licenses afterward. The approval of the MOIC Decision 0023 in January 2019 removed the preapproval step for company registration processes, but the MOIC should continue to deepen the reform agenda to simplify company registration, with the line ministries issuing operating licenses where necessary to achieve public policy objectives (see section on the MOICT). Registration should be delegated to the provincial offices with capacity to manage business registration improved. 129 MONRE and provincial and district offices. MONRE’s mandate relevant for NBT includes (a) environmental regulatory affairs including setting policy and approving ESIAs and Environmental Compliance Certificates (ECCs); (b) approval of SEAs; (c) setting of environmental quality standards for air and water; (d) enforcement of environmental law, policy, and regulations; (e) water resources planning and policy; (f) wetlands management (important for birdwatching tourism); and (g) oversight of climate change policy and dedicated climate financing. Although it has the responsibility for issuing environmental permits to businesses operating in PAs and other sensitive environments, MONRE should focus on simple guidelines and procedures for businesses to follow, which should be part of a streamlined business license approval process to encourage regulations to be followed in an efficient and transparent manner. Provincial and district offices should be trained to evaluate and monitor environmental quality standard implementation by private tourism businesses, CBT businesses, and NBT public infrastructure. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 59 130 Ministry of Education and Sports (MOES) and vocational training centers. The MOES was instrumental in establishing the seminal Lao National Institute of Tourism and Hospitality (LANITH). Future roles of the MOES might include helping to design and deliver more practical curricula and relevant courses for hospitality and tourism qualifications, including guide certification and revalidation through LANITH or the vocational training centers located around the country. Additional roles might include the design and management of a system for approving and supporting large sports tourism events, such as marathons, triathlons, bicycle and trail running races, open water swimming, sport climbing competitions, fishing contests, sailing regattas, and white-water rafting and kayaking events. 131 Ministry of Foreign Affairs (MOFA) and Ministry of Home Affairs (MOHA). With the responsibility for immigration and visa policy, including collection of statistics, there may be scope for these ministries to explore more user-friendly processes for obtaining visas for visitors, including online procedures and visa waiver schemes. Regarding visas for investors, while there might be value in creating a new ‘potential investor’ visa category with special fast-track privileges, such as the business visa-on-arrival in Cambodia, it would be preferable to simply ensure that existing processes are as transparent and efficient as possible. 132 Ministry of Defense (MOD). The roles of the military regarding PA management should be made clear, as the military has both carried out the MAF’s responsibility of managing at some NPAs and been asked by the MAF to help implement patrolling at other PAs. It is clear that without the MOD’s permission and cooperation in managing some specific NPAs such as Phou Khao Khauy outside Vientiane, NBT development will be difficult. 133 Ministry of Public Security (MOPS). The MOPS and the MOD play a crucial role in the tourism sector on the public security front. Currently, approval of each group tour is needed in advance as required by the MOPS, which is an additional layer of approval for tour companies and an issue raised many times at the Lao Business Forum as well as shown in the Assessment of Investment Procedures and Business Operating Procedures in 2016. This approval process increases the costs of arranging packaged tours and can be disruptive to business development. 134 MPWT. The MPWT is responsible for roads and waste management infrastructure, overseeing municipalities. The MPWT and its provincial departments are responsible for planning and prioritization of local road networks, following the provincial road maintenance system and managing the country’s Road Fund. These responsibilities are important for developing the last-mile of infrastructure needed to access NBT sites such as NPAs and waterbodies. 135 Private sector. The private sector, which includes domestic and foreign tour operators, domestic and international airlines, accommodation providers, and many other enterprises, should be left to identify, develop, and market NBT attractions, based on their understanding of market demand. Targeted incentives linked to measurable outcomes can support the private sector to play a strong role in training staff by addressing risks of training workers only to leave them to competitors. In best practice cases, private entities can also be responsible for protecting the natural attractions in cooperation with communities and agreement by the government. 60 Priority recommendations 136 Civil society. If tourism is to add value, then it is the host communities in tourism destinations that must be the ultimate beneficiaries and even business partners wherever relevant. In the case of NBT generally and community-led NBT in particular, the community also adds a critical dimension to the products in terms of authenticity, marketability, and even for things such as wildlife interpretation (for example, from ex-poachers turned rangers). Civil society organizations, including community associations and NGOs, can support and to some extent represent communities in negotiations with the public and private sectors, but it is important that they should never be confused for the communities or private sector businesses. FIGURE 13: ROLES AND RESPONSIBILITIES OF KEY AGENCIES AND STAKEHOLDERS PMO > Roadmap for reducing barriers > Define agency roles & responsibilities > Set NBT policy in NSEDP > Ensure other large infrastructure projects (dams, mines, plantations, economic zones) do not adversly affect NBT attractions MPI > Provide information to investors > Approve plans for investments in PAs according to MAF strategy > Ensure plans & large investments do not negatively affect NBT attractions MOICT MAF MOIC MONRE MPWT PRIVATE SECTOR Responsible Responsible Responsible Responsible Responsible Responsible > Coordinate DMN > Protect PA attractions > Register tourism > Set environmental > Prioritize last > Manage tourism working group on (w/military) businesses standards mile infrastructure businesses NBT > Manage and oversee for target NBT sites > Provide information > Set standards for > Set prices for tours > Create national all activities within on business managing waste at > Build and manage and services NBT strategy NPAs registration NBT sites waste management > Develop products > Set standards for > Lead NPA tourism centers in tourism > Set standards for > Train staff with NBT businesses working groups hubs outside NPAs reducing pollution help of professional (to support private and monitor company > Approve NPA tourism at NBT sites and sector waste trainers implement implementation of tourism hubs zoning, regulations & management) marketing plans standards businesses in NPAs > Recommend > Follow international > Approve national incentives to > Develop tourism best practice on marketing plan infrastructure in reduce pollution environmental > Approve operatin NPAs with private management & NBT license for tourism sector development businesses > Provide information to tourists Not Responsible Not Responsible Not Responsible Not Responsible Not Responsible Not Responsible > Approve CBT prices > Implementing > Approve areas in > Approve businesses > Develop infrastructure > Manage public > Implement nation business activities PAs for tourism > Collect waste in or around protected areas & assets marketing plan in NPA businesses areas without getting (responsible to - Tax collection input from MAF & private sector MOICT associations Photo credit Nam Kat Yorla Pa 62 APPENDIX A: Detailed action plans A.1 Target segments Having assessed the different market segments and considered the most marketable NBT clusters, of the seven most compelling prospects, the following five priority segments have been selected (in bold) with two in reserve (in italics). TABLE 18: TARGET SEGMENTS Categories Base Support Transform 2019 — — — 2020 5,622 8,553 18,357 2021 11,244 17,105 36,715 2022 16,866 25,658 55,072 2023 26,245 39,950 85,608 2024 35,624 54,241 116,144 2025 44,942 68,461 140,521 2026 54,260 82,680 164,898 2027 63,578 96,900 189,275 2028 70,566 107,564 207,558 2029 77,555 118,229 225,841 Total 406,502 619,341 1,239,990 Total increment 212,839 833,488 This approach does not preclude other market segments, which might be relevant for particular operators (especially those that are horizontally integrated across the GMS) with established and/or unusual distribution channels but provides a strategic focus for the majority of tourism stakeholders in Lao PDR. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 63 A.2 Product/market development for four selected NBT clusters Based on this analytical work’s field surveys and broad stakeholder consultations and informed by our knowledge and experience of NBT destinations in the GMS and beyond, four clusters are proposed as priorities. The additional capacity requirement for each cluster is summarized in Table 19. TABLE 19: ADDITIONAL CAPACITY REQUIREMENT FOR INCREMENTAL VISITORS TO TARGET NBT CLUSTERS Additional capacity Clusters Budget Midrange High end (‘ecolux’) requirement (rooms) Northeast Heritage 142 Secondary Secondary Primary focus Capital Nature 158 Primary focus Secondary Central Loop 204 Full range Southern Heritage 119 Secondary Primary focus Total 623 ‘Northeast Heritage’ Tourism Landscape: Nam Et – Phou Louey NP, supported by Nam 1.  Xam NPA, as well as Viengxay Caves and Plain of Jars Historic Sites Justification: Potential markets identified with likely interest in stunning landscapes, outstanding biodiversity, and heritage; superb community-focused product development by WCS with clear market orientation in its design and marketing; likely future NP (largest in Indochina) contributing to a favorable enabling environment required for long-term sustainable tourism development; and gateway from Vietnam contribute to the targeted design of marketing based on the affinity of two countries with shared history, and supported by historic sites and good hot springs relevant to and of specific interest to this potential market. Key recommendations —— 142 new rooms, primarily comprising a series of 2–3 eco-lux lodges/spas and a network of budget homestays, community-owned and private sector —— High-end helicopter transfers in the medium term —— High-end bars —— Lots of guided overnight treks and community encounter products 64 APPENDIX A: Detailed action plans TABLE 20: MARKET SEGMENTATION WITHIN THE CLUSTER IDENTIFIED IN LAO PDR’S NORTHEAST Current market Potential market Market focus Target segments Environmentally aware, adventurous middle class. Elite would Lao resident 1 3 YES in future respond to high end eco-lux with appropriate access. nationals Hot springs are a draw for all Lao. Expat residents 3 3 YES Committed naturalists, fit adventurers, escapists in GMS Cambodia — 0 (There may be an opportunity to develop products around China 1 1 heritage of ancient tea trees, but biodiversity generally too similar to Chinese PAs.) Myanmar — 0 Maybe Groups of middle-class, long-distance cyclists and motorbike riders, seeking out new activities, including sport fishing and Thailand 2 2 YES trekking. Thai elite would respond to high end eco-lux with appropriate access. Groups of mountain bikers and motorbike riders, young middle class; a key center for shared heritage and identity in terms Vietnam 1 3 YES of food and recent history; adventurous outdoor activities in superior and less spoilt landscapes. Malaysia — 0 (Pursue when enhanced access [or helicopter transfers] are Singapore — 1 Maybe available) (Pursue when enhanced access [or helicopter transfers] are Hong Kong — 2 Maybe available) Middle-class naturalists, wanting to extensively explore a less Japan 1 2 YES accessible NPA. Hot springs are a major draw. Would benefit from enhanced luxury. Middle-class naturalists, wanting to extensively explore a less Korea 1 2 YES accessible NPA but as comfortably as possible. Hot springs a major draw, especially if offered with enhanced luxury. Non-Asian Cyclists, riders, serious trekkers. Can be promoted as a center 2 3 YES visitors to GMS of world-class NBT in the region. Lao diaspora (Pursue when NPA has become more of a destination for Lao — 2 Maybe outside GMS residents) The key market opportunities for this cluster are adventurous Lao and Vietnamese middle classes, escapist expats and non-Asian visitors across the GMS and comfort-seeking Japanese and South Korean naturalists. ‘Central Loop’ Tourism Landscape: Hin Nam No NPA, Nakai Nam Theun NP and Phou Hin 2.  Poun NPA. Justification: Already with high footfall, potentially expanding markets identified for established circuit, with networks of caves and climbs; diverse management arrangements with outstanding community work by Tétraktys of specific interest to this cluster’s identified potential markets, and a range of models and development options; the likelihood of Hin Nam No becoming a UNESCO site (adjacent to Vietnam) and (Nakai Nam Theun being the second largest PA in Indochina and to be the first actual NP in Lao PDR) represents huge potential brand value and recognition attracting markets concerned about future- oriented site management and sustainability; good access to ‘The Loop’ from Thailand and Vietnam is particularly significant for bikers and cyclists. Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 65 Key recommendations —— 204 new rooms, comprising a full range of accommodation types, including community homestays and small midrange hotels on the periphery of the PAs and series of 2–3 eco-lux lodges/spas within the PAs, operated by community-private/NGO partnerships and including a training venue —— Emphasis on two-wheelers (bicycle and motorbike) —— Strong commitment to Halal tourism, but NOT universal —— Lots of guided overnight treks and community encounter products —— Zorbing and kayaking —— Focus on light weight and electric powered boats for caves TABLE 21: MARKET SEGMENTATION WITHIN THE CLUSTER IDENTIFIED IN LAO PDR’S NORTHEAST Current market Potential market Market focus Target segments Lao resident 2 3 YES Environmentally aware, adventurous middle class nationals Naturalists, cyclists, riders, and escapists wanting to explore Expat residents 2 3 YES newly opened world class natural heritage products and great in GMS food, ideally through CBT Cambodia — 0 China 1 2 Opportunities for selfies in some truly dramatic locations Myanmar — 0 Groups of mountain bicyclists, road cyclists, young middle Thailand 2 3 YES class; fishing (including spear-fishing), kayaking, climbing, motorcycling (generally activities requiring equipment) Groups of cyclists and trail bikers, campers, young middle Vietnam 1 3 YES class Adventurous and environmentally aware young middle class; Malaysia — 2 YES identification of Halal services would be an additional draw Adventurous and environmentally aware young professionals; Singapore — 1 identification of Halal services would be an additional draw; would help to have better roads (and faster transfer times) Hong Kong — 0 Middle-class naturalists, wanting to explore world class natural Japan 1 2 Maybe heritage sites Middle-class naturalists, wanting to explore world class natural Korea 1 2 Maybe heritage sites but without too much tramping along forest paths Non-Asian Scope to develop more diverse product with a greater focus on 3 3 YES visitors to GMS CBT Lao diaspora (Pursue when NPA has become more of a destination for Lao — 2 Maybe outside GMS residents) The key market opportunities for this cluster are adventurous Lao, Thai, Vietnamese, and Malaysian middle classes and escapist expats and non-Asian visitors attracted by CBT. 66 APPENDIX A: Detailed action plans ‘Capital Nature’ Tourism Landscape: Phou Khao Khouay and Phou Phanang NPAs, 3.  supported by Nam Ngum Lake Justification: Although these natural assets are significantly degraded in terms of wildlife, there is an opportunity to showcase the GoL’s commitment to reversing these trends and pursuing green growth and green lungs, lifting this cluster beyond the market needs of visitors to a transformation of national identity and environmental values; proximity to Vientiane, expats, national gateway, and Thai markets (and future rising Lao middle class) represent considerable untapped potential; on the destination management side, there is scope for an innovative partnership between Lao military, ministries, and conservation organizations; accessible from Vang Vieng and other more established hubs that are starting to suffer from overtourism, there are particular opportunities to tackle emerging overtourism through innovation and diversification. Key recommendations —— 158 new rooms, primarily budget homestays and dormitory style accommodation and serviced campsites, along with some midrange and eco-lux, mostly private and community-owned —— Focus on attracting visitors traveling by private car, public minibuses, or mountain bikes from Vientiane —— Ziplines and canopy walks —— Picnic sites and community cafes —— Lots of self-guided day treks and educational products TABLE 22: MARKET SEGMENTATION WITHIN THE CLUSTER IDENTIFIED IN LAO PDR’S NORTH/ CENTRAL Clusters Current market Potential market Market focus Target segments Lao resident 3 3 YES Environmentally aware, adventurous middle class nationals Expat residents 2 3 YES Naturalists, weekend escapists in GMS Cambodia — 0 (Investigate CBT excursion options for more environmentally China 1 2 Maybe aware casino visitors) Myanmar — 0 Groups of cyclists and trail bikers, campers, young middle Thailand 2 3 YES class Vietnam — 1 Malaysia — 0 Singapore — 0 Hong Kong — 0 Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 67 Current market Potential market Market focus Target segments Middle-class naturalists, wanting to explore an accessible and Japan 1 2 YES authentic NPA Middle-class naturalists, wanting to avoid the overcrowding of Korea 1 2 YES Vang Viang but still needing ‘comforts’—not wanting to ‘live like peasants’ Non-Asian (Pursue when products are more mature and can compete with 1 2 Maybe visitors to GMS NPAs elsewhere) Lao diaspora (Pursue when NPA has become more of a destination for Lao 2 2 Maybe outside GMS residents) The key market opportunities for this cluster are adventurous Lao and Thai middle classes, escapist expats, and comfort-seeking Japanese and South Korean naturalists. ‘Southern Lao PDR’ Tourism Landscape: Dong Hua Sao and Xe Pian NPAs 4.  Justification: With the private sector having invested heavily in infrastructure for soft NBT activities, which have been a commercial success, there is demonstrable market demand with further potential indicated by proximity to growing middle-class markets, and the Mekong is at the heart of Lao heritage, enhancing marketability. There has been a significant amount of institutional capacity building in this area, and there would be merit in continuing to build on this success. Key recommendations —— 119 new rooms, primarily midrange, private sector operated and some community-operated budget bed and breakfasts or homestays —— Cars, minibuses, and two-wheelers —— Ziplines and canopy walks —— Hot air balloon tours —— Restaurant opportunities —— Lots of self-guided interpretation, guided boat trips, and community encounter products 68 APPENDIX A: Detailed action plans TABLE 23: MARKET SEGMENTATION WITHIN THE CLUSTER IDENTIFIED IN LAO PDR’S SOUTH Current market Potential market Market focus Target segments Lao resident 2 3 YES Environmentally aware, adventurous middle class nationals Expat Naturalists, cyclists, riders, escapists wanting to explore newly residents in 2 3 YES opened world class natural heritage products and great food, GMS ideally through CBT Cambodia — 1 China 1 2 Maybe Opportunities for selfies in some truly dramatic locations Myanmar — 0 Professionals and elite; young middle class; bus tours; long- Thailand 3 3 YES distance cyclists and mountain bikers; fishing, kayaking, climbing, and activities requiring lots of kit Vietnam — 0 Adventurous and environmentally aware young middle class; Malaysia — 2 Maybe identification of Halal services would be an additional draw Adventurous and environmentally aware young professionals; Singapore — 1 identification of Halal services would be an additional draw; would help to have better roads (and faster transfer times) Hong Kong — 0 Middle-class naturalists, wanting to explore world class natural Japan — 1 heritage sites Middle-class naturalists, wanting to explore world class natural Korea 1 2 Maybe heritage sites but without too much tramping along forest paths Non-Asian Scope to develop more diverse products with a greater focus 3 3 YES visitors to GMS on CBT Lao diaspora (Pursue when NPA has become more of a destination for Lao — 2 Maybe outside GMS residents) The key market opportunities for this cluster are active and adventurous Lao and Thai middle classes and elites and escapist expats and non-Asian visitors attracted by CBT. 69 APPENDIX B: Key Issues, Recommendations, and Actions Matrix Specific actions for each recommendation are detailed in the following tables. These interventions are designed to create the right business investment to address barriers to NBT development and investment across the five categories identified: The columns on the right of the table define some key indicators for policy makers to consider. The column labelled ‘timeline’ has four values: >> 1: Immediate - complete within 1 year >> 2: Short-term - complete within 2 years >> 3: Medium-term - complete after 3–4 years >> 4: Long-term - complete after 5 years The column labelled ‘importance’ has three values: >> 1: Necessary >> 2: Desirable >> 3: Optional Business Enabling Environment for NBT Investment 70 Key Findings Key Recommendations Priority Actions Institution Timeline Importance Reducing barriers related to business investment in Lao PDR and specifically tourism businesses Establish a clear GoL road map Unclear legal and According to Prime Minister’s Order No. 2, draft and approve road map with and institutional authority to regulatory framework authority of a Prime Ministerial committee such as the Investment Promotion address barriers related to the for development of NBT, and Supervision Committee (currently tasked), ensuring coordination with the PMO 1 2 business environment to get into reducing confidence and NGGSC chaired by the Deputy Prime Minister and whose secretariat is MPI/ the top 100 of Ease of Doing discouraging investment DOP. Business. MPI DOP (lead) Establish a dedicated NBT Development Unit within MPI with direct lines with involvement of to other relevant ministries in the public sector at national and provincial MOICT, MAF/DOF/ levels, together with a roster of private sector agents (banks, law firms, tour PAMD, MONRE DOP 1 2 operators) to support development. The unit could also serve as a platform (given many relevant for policy and investment dialogue across stakeholders. departments in MONRE), and others Focus on the core function of the MOIC/ERC as a business registrar by fully implementing the new business registration process as per MOIC Notification PMO with involvement 2 2 Streamline business formalization 0023 that removes the actual pre-approval of business activities as part of the ERC for the incorporation of business. of MOICT Investment procedure according to Promotion and APPENDIX B: Key Issues, Recommendations, and Actions Matrix international best practice by Streamline the business registration process focusing on business name Management Unnecessary, duplicative, assessing the Law on Enterprises approval and registering only relevant business information, such as the Committee; MPI outdated steps for starting (2013), Law on Investment Articles of Association, company name, governance structure, shareholders, Investment Promotion 2 2 a business Promotion (2016), and related and capital, and remove other unnecessary administrative steps such as the Department; laws on starting and operating a submission of a business plan or duplicative steps such as photocopies of MOIC Enterprise business as outlined in the World passports and photos from the business approval process. Registration and Bank ‘Ease of Doing Business’. Review potential duplication ERC and registration of the articles of Management (ERM) 2 2 association with the Ministry of Finance (MOF). Assess the necessity of a company seal. 2 3 Review restrictions to business establishment such as investment licenses outlined in PM Decree No. 3 from January 2019 and based on the Law on Investment Promotion (2016), and other existing lists to ensure they are not overly restrictive and coherently applied or removed as per new legislations. They include the (a) Notification of the Ministry of Industry and Commerce on Conditioned Business Category List for Foreign Investor No. 1327 of 2 2 2015; (b) Notification of the Ministry of Industry and Commerce on Controlled Activities No. 107 of 2012; (c) Notification of the Ministry of Industry and Commerce on Reserved Business Category List for Lao People No. 1328 of 2015; and (d) Notification of the Ministry of Industry and Commerce on Prohibited Activities No. 1592 of 2013. Key Findings Key Recommendations Priority Actions Institution Timeline Importance Move social security and tax registration into the post-registration stage and strengthen capacity on cross-agency data collections and information 2 2 sharing. Improve institutional coherence on national and sub-national level. 3 1 One-Stop Service Review the actual workings of the one-stop service country-wide based Office (OSO) lacks on actual experiences and take concrete actions to make improvements Investment Promotion operationalization/ Improve one-stop service delivery where necessary. and Management decentralization and for investors. Establish a high-quality information data base, step-by-step guides on 3 1 Committee; MPI, OSO targets more substantial business registration, forms, and templates, as well as competent contact investment persons (for example, law firms) for all sectors and for the tourism sector specifically—at the national and sub-national levels. Imperfect law making/ Improve legislative quality and generic legal terms access to regulations; further, Draft/introduce specific implementing regulation, legal definitions, providing ample PMO with involvement 3 1 operationalize the Law on Law commentaries, procedures, uniform formats, and service standards. opportunity for unfettered of Ministry of Justice Making (2012). discretion and corruption Improve accessibility of laws, regulations, and processes and disseminate 3 1 them in plain/understandable language (if possible, also in English). Draft implementing guidelines, legal definitions, and develop accountable service standards for fees and processing time; implement the requirement to 3 2 introduce Regulatory Impact Assessment including public consultations. PMO with involvement Assessment of Investment of MOHA; MPI/IPD Complex/ centralized Promotion Law (2016) and Further, decentralize responsibilities/authorities to sub-national level and at national and sub- institutional setup and decentralization framework (2000) strengthen provincial Investment Promotion and Supervision Committees as national levels; MOIC/ 3 2 cross-sectoral agency and respective implementing Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR well as coordination mechanisms. ERM at national and involvement regulations and remove sub-national levels; institutional barriers. Local government PMO with Overall positive involvement of Continue with regulatory reforms, Review, develop, and/or evaluate the following selected policies and development (for example, Investment Promotion deregulation and removing FDI legislation with regard to improving investment conditions: (a) 9th NSEDP eliminating minimum and Management restrictions and investment (2021–2025), (b) Revised Law on Investment Promotion, (c) Decree on 3 1 registered capital; policy Committee; MPI; promotion; Review and, if Investment Promotion and One Window Services, (d) Decree on PPP (Draft), actions to improve Investment Promotion necessary, revise tax incentives. (e) Instruction on investment incentives. investment conditions) Department; MOIC/ ERM Advocate reviewing and changing Lack of access to basic Ensure investors are protected from compulsory purchase of their assets by procedures so (foreign) investors MPI (lead) 4 2 business services public agents and related private companies. get secure and safe access to land. 71 72 Key Findings Key Recommendations Priority Actions Institution Timeline Importance Review the justification, objectives, and requirements for all tourism-related operating licenses and simplify or remove unnecessary processes Protected and overregulated tourism sector (FDI restriction/100% foreign Assess Investment and Tourism Review restrictions and control (ideally operationalizing and implementing ownership prohibited, Policy; Law on Investment Regulatory Impact Assessment as a tool) and consider eliminating them. sectors subject to Promotion (2016), Lists of MPI (lead) with Review tourism licenses (ideally using Regulatory Impact Assessment as a additional approval conditional investment/FDI involvement of MOICT 2 2 tool) and consider eliminating them or introduce a simple notification system (passenger land transport, restrictions. List of controlled and private sector (unless qualification/service standards are assessed). accommodation, tour business/ tourism-related activities, operator, and museum and Law on Tourism (2013). Review duplicative information requirements and remove them. activities), duplicative and unnecessary sector operating licenses Assess implementation of the Law Duplicative application Introduce nationwide validity of sector-specific business licenses and ensure on Tourism (2013) at sub-national MPI (lead) with processes at sub-national administrative cohesion and removal of duplicative processes at sub-national 3 1 level and recommend measures to involvement of MOICT level level. remove duplicate processes. and private sector Reducing informal barriers to investment in tourism business Ministry of Public Security with APPENDIX B: Key Issues, Recommendations, and Actions Matrix involvement of Specifically supervise and stop the unlawful use of eliminated regulations, Remove informal barriers. Anti-corruption 1 1 such as the Telex notification system. commission, Local Informal fees, retributions, government, Informal and other unlawful justice institutions practices Establish an independent and sufficiently resourced ombudsman service with Establish and empower an full authority, legislating as soon as possible to enable a robust system of MPI (lead) with ombudsman to investigate reports 2 1 investigatory powers and remedies, including penalties, drawing on regional support from PMO of malpractice and corruption in best practice. Announce the development to investors. and involvement of business process and regulation Introduce an electronic SMS complaint system (with location/photo) reporting private sector and aftercare services. 3 2 unlawful practices. Establish regulations and procedures for tourism concessions in protected areas No guidelines for tourism concessions in PAs; Draft a tourism concessions MAF (lead) with concessions legislation Establish a taskforce to oversee the drafting of tourism concessions in PAs framework, regulations, and involvement of MPI 1 2 is designed for large policy and framework. guidelines. and MOICT industrial and agricultural projects. Key Findings Key Recommendations Priority Actions Institution Timeline Importance Review and inventory existing tourism concessions in PAs around the country and propose recommendations for improvements of existing and future 2 1 tourism concessions in PAs. Develop guidelines and regulations on tourism concessions in PAs and natural sites based on experiences around the country and international best 3 2 practice. Review and identify potential business barriers specific to Additional (unnecessary) PAs in the Law on Enterprises business permit for (2013), the Law on Investment Review the impact of the Draft Regulation on Tourism Management in operating business in Promotion (2016) including FDI Protected Forest and Protected Areas on the business formalization/licenses a PA and other natural and foreign ownership restrictions, process outlined in the Law on Tourism. 3 1 landscapes (adding them the Law on National Heritage Identify duplication and additional institutional responsibilities and streamline on top of the general (2005), the Decree on PAs (2015), the process if necessary. formalization/operation (Draft) Regulation on Tourism process Management in Protected Forest and Protected Areas, and the Law on Tourism (2011). Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR 73 Tourism Policy and Planning NBT 74 Key Findings Key Recommendations Priority Actions Institution Timeline Importance Create a new National NBT and Ecotourism Master Plan for 2020–2030 as a complement to the National Green Growth Strategy Assess 8th National Socio-Economic Development Plan (2016–2020) promoting Review plans and strategies, identify conflicts, and develop a road Conflicting policies and MOICT with input eco-tourism. the Lao PDR Tourism Strategy map for eco-tourism in PAs, which balances investment promotion, 1 1 framework c from DMN 2006–2020 promoting eco-tourism, and business development, and environmental protection. Forest Strategy (2020). Create clear roles and responsibilities of Review laws and regulations on decentralization with a focus on agencies related to NBT development and tourism management including provincial and district/municipality MOICT with input strengthen the envisaged National and Conditions on eco-tourism development tourism plans; decentralized planning and management from DMN and 1 1 Provincial assemblies overseeing approval of tourist sites/local management system. Recommend new related agencies requirements for projects with significant structures and roles and responsibilities for NBT development. adverse environmental or social impacts. Gather input from stakeholders on DMN progress and learn from A mismatch between Review and improve DMN institutional MOICT with input international DMN best practice to improve DMN’s effectiveness to regulatory responsibility and framework for more efficient and sustainable from DMN and 1 1 develop NBT, possibly establishing a new DMN structure and working capacity working. related agencies group on NBT. Include NBT in high-level strategy, planning (NSEDP-9) including Demonstrate national commitment to NBT. revised roles and responsibilities for agencies in NBT development PMO with MOICT 2 1 APPENDIX B: Key Issues, Recommendations, and Actions Matrix DMN is not as participatory (based on reviews). or as effective as required for private sector, demand- Proactively engage with private sector and Support the DMN to draft an NBT strategy through a participatory DMN (led by driven NBT development. development partners through the DMN for process that includes the needs of the private sector, including MOICT) with PS, 2 1 the elaboration process for a comprehensive priority product development and marketing targets in the target NBT MAF NBT strategy. clusters. MOICT (lead) with Outdated processing of visas Assess Law on Tourism (2013) Accelerate introduction of an electronic visa application system. 3 1 MOFA Revise tourism laws to decentralize pricing and management of community and nature-based tourism Allow villages to price products with input Adjust product pricing regulations in PAs and NBT sites to allow price Inadequate tourism product from the private sector and without approval MOICT (lead) with setting by the provider. In the meantime, emphasize variations that 2 1 and offer of authorities to encourage innovation, DMN, MAF already exist and can be agreed. viability and investment. Revise pricing at CBT sites around the Provide funding and support to private sector companies and groups DMN and Tour 3 2 country with private sector input. to work directly with CBT villages to improve products and pricing . companies Sustainability and Environmental Policy and Regulations for NBT Key Findings Key Recommendations Priority Actions Institution Timeline Importance Devise a more appropriate range of environmental regulations tailored for the tourism industry Devise a more appropriate range of Inconsistencies within environmental impact assessment and Introduce an environmental regulatory framework for smaller scale MONRE (lead) environmental laws/ management regulations commensurate with projects involving small businesses community-based NBT and with MPI, MOICT, 2 1 regulations include conflicting the different scales of investment in different including a realistic pricing structure. and MAF provisions, overlapping sectors (for example, CBT vs mining). mandates given to different Focus existing capacity development projects to implement recently ministries, and lack of revised environmental policies being led by MONRE, which are MONRE, MAF/ implementing regulations and Strengthen the capacity of staff responsible anticipated to bring greater clarity to the situation regarding ESIA DOF/PAMD, 3 1 supporting environmental for implementing environmental regulations. compliance (for example) and will need to be consistently and MOICT, Local standards effectively applied according to the 2019 Prime Minister’s Decree on governments ESIA. Build waste disposal and recycling centers in key locations in NBT tourism clusters Assess current situation with waste disposal and recycling in key NBT sites With improved understanding of the problem, devise a waste around the country and recommend 2 2 Lack of waste management management strategy including bans on trash burning. best practice solutions from within and systems throughout the outside the country. country and destruction of NBT values through Pilot private sector-led waste management and recycling programs in MPWT with excessive waste and 3 2 Work with the private sector to develop select NBT sites and tourism hubs. municipalities, pollution. waste disposal and recycling centers in key MONRE, Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR locations in NBT tourism clusters, with input Work with the private sector to provide incentives to reduce waste private sector 3 2 from communities and the public sector. and increase recycling. associations and leaders 75 Management of Tourism in PAs 76 Key Findings Key Recommendations Priority Actions Institution Timeline Importance Continue to develop a Master Plan National Protected Areas (2020-2025) MAF (lead) with Engage private and public sector stakeholders to devise an overall No direction or master plan Create an overall plan for tourism private sector, master plan for the NPAS including tourism development and 1 1 for tourism in PAs development and management in NPAs. MOICT, and other management. related agencies No information on where and MAF with private Provide information on opportunities to invest Identify concession and investment opportunities in PAs and target how to invest in PA tourism sec-tor, MOICT, 2 2 in NBT in PAs and NBT clusters. NBT clusters and produce investment prospectus for Lao NBT. concessions and MPI Continue to assess individual PAs for designations of their status and opportunities Criteria for upgrading status Review and revise national conditions for MAF (lead) with of PAs are not clear and do Gain input from national and international stakeholders on what upgrading to NP status and maintaining or private sector, not give confidence to the conditions should be necessary to upgrade status to NP or other 1 2 applying for ASEAN Park and UNESCO MOICT, and other international community higher standards. World Heritage status. related agencies about upgrades. Create incentives for provinces to upgrade Create national guidelines and procedures on how to upgrade to NP MAF (lead) with Lack of capacity in upgrading their areas to NPs and other standards status and train local authorities on procedures and processes for NP other related 2 1 status to NPs by increasing their awareness and upgrades. agencies understanding on how proceed. APPENDIX B: Key Issues, Recommendations, and Actions Matrix Continue to enhance the knowledge, skills and abilities of MAF’s Protected Area Management Division (PAMD) on tourism management Currently NPAs in single provinces are under provincial management. Ensure DOF/PAMD has direct supervision Revise MAF Decision 3822/MAF on the establishment of DOF to MAF/DOF 1 1 over all NPAs. include direct supervision of all the NPAs Enhance capacity of Tourism Section within Establish Tourism Section within PAMD and provide dedicated PAMD to supervise NBT in the national parks MAF/DOF/PAMD 1 1 tourism training Inadequate governance; Lack and NPAs of clarity in responsibility of Each NPA Management Office needs a New National Parks/PA legislation can prescribe a government seal PAs to manage tourism government seal and a raised position within MAF/DOF 1 1 and a raised position for the Director of a PA. the government provincial hierarchy. Establish NPA Supervisory Committees Only the two national parks have PA Steering Committees stipulated in all NPAs to permit strengthened in their respective Decrees. This institutional body needs to be MAF/DOF/PAMD 1 1 interagency collaboration, and monitor their prescribed in new PA legislation for all NPAs. Prepare and approve a effectiveness. Guideline on collaborative management in NPAs. New National Parks/PA legislation under preparation would clarify the Clearly designate the mandate to NPA role of PAMD and NPA Management Office to regulate all activities Management Office to regulate all activities MAF/DOF/PAMD 1 1 inside a NPA. A guideline prepared on the role and function of an inside NPA boundaries under PAMD/DOF. NPA Management Office would add value. Key Findings Key Recommendations Priority Actions Institution Timeline Importance Adopt draft guidelines for role and responsibilities of the proposed Enhance capacity of PAs for NBT Tourism Unit within NPA Management Office, proposing that tourism MAF/DOF/PAMD 1 1 management units are established in individual NPAs (including National Parks when established): Provide training to PA managers and PA tourism working groups on Enhance capacity of PAs for NBT tourism management. Deliver an ongoing series of capacity-building MAF, PA units 2 2 management. workshops for senior officials on tourism financing, especially for visitor experiences in PAs. Ensure sustainable financing through public Draft regulations that apply to all PAs with tourism that ensure MAF, MOF, MPI, budget and revenues from visitors and 2 1 sustainable financing. PA units sustainable uses. Continue to actively implement Lao law and Convention on Wildlife: Lao WEN International Trade in Endangered Species of Wild Fauna and Flora in-cludes MAF/ Inadequate governance Endorse and promote key international (CITES) obligations through wildlife law enforcement via the Lao Depart-ment of of PAs, wildlife, and other standards on environment and wildlife 2 2 Wildlife [law] Enforcement Network (Lao WEN) network in line with Forest Inspec- natural attractions protection. PM Decree 05 on illegal wildlife trade by supporting capacity building tion, Customs, for staff. Police, and so on Provide funds to PAs to ensure that PAs Enhance public management and financing for PAs. NPA provide adequate levels of government management has been centralized under MAF DOF in line with Wildlife loss is making it protection wherever private sector global good practice, and implementing regulations continue to be difficult to invest in and MAF/DOF/PAMD 2 1 investments are made until enough revenues developed for many aspects of NPA management, including, among promote NBT. can be generated directly from tourism to others, wildlife law enforcement, participatory land-use planning, and support conservation. community conservation agreements. Create tourism stakeholder working groups for protected areas Lack of stakeholder Develop tourism stakeholders working Establish a stakeholder advisory panel for each PA in NBT clusters. Led by MAF/ 1 1 Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR involvement in developing group and tourism development plan with Devise a tourism/visitor plan for each PA, with input by the DOF/PAMD in 2 2 and managing tourism stakeholder agreement for each PA, which stakeholder group. consultation with in PAs; lack of visitor is also incorporated into the five year PA Continuously monitor and improve, sharing best practice with other pri-vate sector experience plans for PAs management plan. and MOICT 3 2 clusters and learning from competitors elsewhere. Establish a transparent system for entrance fees, concession fees, and proper use of revenues for conservation and livelihoods in and around protected areas and other natural landscapes MAF with input Increased administrative Investigate local user charges, formal, Assess administrative costs through local user charges, taxes and from MOICT, DMN costs through a specific tax 2 1 informal fees. informal fees, and the proportionality of the specific tax levied in PAs. stake-holders levied in PAs working group MOICT, Overcomplicated and Streamline regulations for all NBT Devise and enforce standard regulations and safeguards for all championed by 2 1 inconsistent regulations operations. enterprises operating in PAs. PMO 77 78 Key Findings Key Recommendations Priority Actions Institution Timeline Importance Coordinate financing for last-mile tourism infrastructure in and around NPAs in priority conservation landscapes Devise a financial mechanism with private sector investors with Outside NPAs: an interest in travel and tourism to deliver and maintain ‘last-mile’ MPWT and connections (transport, trails, and utilities), with a requirement to also provincial agen- 2 1 ensure connectivity for local communities to maximize community cies, Provincial Difficulty connecting existing Provide funding to finance the ‘last mile’ of benefit. Gover-nor’s infrastructure with new infrastructure to access natural sites where Prioritize Road Fund and Provincial budgets expenditures toward Offices; private tourism developments ecologically sustainable. 2 1 priority tourism landscapes. sector Inside NPAs: Develop infrastructure investment plans as part of NPA management MAF/DOF/PAMD, 2 2 plans and include in annual budgets. pri-vate sector NBT Production Innovation and Business Support Key Findings Key Recommendations Priority Actions Institution Timeline Importance Support the private sector to market and promote a national NBT brand through private sector associations/groups Private sector Establish a private sector-led national tourist board for promotion and associa-tions/ 1 1 Engage with private sector and development investment opportunity identification APPENDIX B: Key Issues, Recommendations, and Actions Matrix groups partners to strengthen the national branding Private sector toward more nature-based tourism. Building on significant branding exercise conducted recently, work to Lack of NBT-specific associations and 2 1 extend this to include and emphasize NBT. marketing and current groups national marketing does Targeted marketing of Lao PDR as Organize investment forums and roadshows in Lao PDR and at not reflect the demand and tourism investment friendly country to regional and international events (including hotel conferences and NBT Marketing needs of the private sector selected foreign investors focusing on NBT tourism trade fairs) to showcase investment opportunities in PAs and Board or Group of investment opportunities, for instance, assistance packages. Work with national and international airlines DMN NBT Work- 3 1 through the organization of investor missions and other partners to deliver compelling study tours and press ing Group with or an improved presence at international trips for prospective operators, journalists, and other investors and MAF, MOICT trade fairs influencers. Devise and deliver courses on NBT product innovation, market development, and hospitality Support tourism sector development through demand- and market-oriented product development, in particular focusing on Introduce approval guidelines to help authorities avoid approving MAF, Tourism Insufficient tourism skills proven and innovative products not yet duplicate investments and encourage innovation and partnership, industry, in- 1 2 part of the country portfolio and including especially in emerging PAs. vestors products which support the extension of the tourism season. Key Findings Key Recommendations Priority Actions Institution Timeline Importance Devise and deliver courses on product innovation and market development for Work through DMNs, LANITH, and private sector operators to Tourism industry private sector tourism and CBT businesses, develop a program that meets the needs of smaller private sector and busi-ness- 2 1 to realize market potential and tackle tourism and CBT businesses and also to encourage partnership and oriented INGOs perceptions of market size and seasonality innovation. constraints. Devise and deliver courses on tourism business planning for project funders Develop a program of tourism business courses for business and assessors (including banks, INGOs, facilitators, including banks and lawyers, including topics covering MPI and and public sector) and develop more unique aspects of nature-based businesses such as concessions business-oriented 3 2 relevant funding criteria for the tourism in PAs and natural landscapes certifications for operators (such as INGOs sector (including a strong and appropriate guides). environmental focus). Expand work of LANITH and educational institutions to build human capital in key areas (hospitality, food and beverage, management, housekeeping, guiding, first aid, marketing) to ensure a reliable supply Implement national human resource of trained workers for the private sector. Encourage foreign investors MOES, private development strategy and strengthen to train and develop Lao nationals into management roles. Establish sector asso- 3 2 respective collaboration between award schemes to recognize excellence and encourage continuous ciations, MOICT government, training providers, and industry. professional development. Specific training programs could be provided on ecology/interpretation, guides (and safety/first aid), and other skills valuable to nature tourism operators. Provide funding, through a new or existing window, to finance private sector tourism concessions in NPAs Based on identified target areas for concessions in PAs (see MAF with input recommendations above), provide funding opportunities that support from tour-ism Lack of financial incentives to Provide funding window (new or existing) for needed infrastructure, training, and inclusion of local communities stakeholders 2 2 Developing Nature-Based Tourism as a Strategic Sector for Green Growth in Lao PDR invest in tourism in PAs private sector tourism concessions in Pas and private sector-driven protection of the attraction (wildlife, forests, working groups, rivers) MPI, MOICT Encourage the adoption of voluntary sustainability practices by the private sector Endorse and promote key international Encourage and support NBT operators to adopt international policies Private operators Lack of focus on standards on environment and wildlife on good practice in environmental management and protection such champi-oned sustainability by the private protection. 2 1 as Travelife. The GOL could consider publicly adopting the Buenos by MOICT and sector Aires Declaration. MONRE Every tourism business to appoint a designated sustainability officer 79 80 APPENDIX C: Key actors to address barriers for tourism-related private sector investments in Lao PDR More tourism specific Lack of private sector investment General business environment Non-investment Lack of friendly tourism brand reputation and recognition brand Thin market Informal sector corruption competition High cost Limited Limited structure of quality product tourism in of tourism diversification Laos infrastructure Limited NPA Limited public Cumbersome Limited and wildlife investment into business service quality management tourism sector registration and reliability capacity Limited Strong Lack of Inapproriate Insufficient Lack of Lack of Lack of diverstity in seasonality Challenging qualified Lack of institutional Lack of and unclear information access to basic public sector tourism of tourism accessibility human coordination setup & enforcement legal about business services capacities assests market resources financing framework procedures (land, electricity, internet, etc.) APPENDIX C: Key actors to address barriers for tourism-related private sector investments in Lao PDR Legal framework, Tourism product and offer Human Resources Ineffective tourism governance Basic services procedures and transparency Key focus for private sector investment Key areas for closer public-private co-operation Main focus for public sector Photo credit: Wildlife Conservation Society 82 APPENDIX C: Key actors to address barriers for tourism-related private sector investments in Lao PDR The World Bank Group Lao PDR Country Office, East Asia and Pacific Region Xieng Ngeun Village, Chao Fa Ngum Road, Chantabouly District, Vientiane, Lao PDR worldbank.org/lao This publication is printed on a mix of FSC-certified and recycled paper.