Tourism Sector Faces Investment Decline Due to Unimplemented Policies, Stakeholders Warn

Kathmandu. Stakeholders have stated that the practice of policies being formulated but not implemented in Nepal's tourism sector is reducing investor confidence and putting the tourism economy at risk. Leaders from the tourism and civil aviation sectors raised questions about the government's working style and legal complexities at a program organized by the Confederation of Nepalese Industries (CNI).

Deepak Raj Joshi, former Chief Executive Officer (CEO) of the Nepal Tourism Board, said that Nepal has had to pay a huge price due to the zero implementation of programs announced in the budget. He stated that although one of the important agendas of the Civil Aviation Authority of Nepal (CANA) is related to the budget, its implementation is zero.

He mentioned that Nepal has lost a huge 'value-driven' market by not being able to establish direct air connectivity with Europe for the past 14 years. He presented the fact that out of 53-54 domestic airports across the country, only 30 are fully or partially operational, and about 22 are completely closed. Joshi said that the idea of allowing the private sector to operate the non-operational airports as 'air sports activities' or flight training schools, which was included in the budget, could not be implemented.

He estimates that if that policy had been implemented, new possibilities would have been created today in places like Mahendranagar, Tikapur, Meghuli, and Dharan. He said that due to the non-implementation of electricity concessions (incentives) for the hotel sector and the hotel occupancy being limited to about 40 percent, future investors are not gaining confidence. Although the Government of Nepal has set a target of bringing in 1.5 million tourists this year, he projected that only about 1.35 million might be reached due to 3-4 events such as natural disasters, Gen Z movements, and elections.

Tek Bahadur Mahat, CEO of the Hotel Association Nepal (HAN), commented that the pace of tourism development in Nepal is slow. He said that while about 400,000 tourists visited Nepal during the 'Visit Nepal' campaign in 2055-56 BS (1998-99 AD), the fact that this number has only tripled to 1.2 million in 28 years raises a serious question about where tourism is heading.

He concluded that a powerful 'Tourism Authority' or special structure is needed to easily 'steer' the tourism sector during small and large crises and to fully take the private sector into confidence. Mahat mentioned that although the Nepal Tourism Board showed more activity and spent about 72 percent of last year's budget on publicity, the sustainability of tourism is not possible without a mechanism to guide the long-term direction and path of tourism.

Subash Sapkota, Vice President of the Airline Operators Association and CEO of Yeti Airlines, said that the problem is exacerbated by the lack of policy to bring in aircraft even though airports are built. He claimed that the provision that aircraft older than 15 years cannot be purchased has led to the emptying of airports in hilly regions, and due to high aircraft costs and limited demand, aircraft have decreased in areas other than the main 'trunk routes'. He warned that if this situation continues, there may come a time in the next 5 years when aircraft flying to hilly areas like Lukla will not be available in Nepal.

He shared the ironic situation where, due to the increase in fuel prices, airfares have increased, leading to a 40 percent decrease in air demand on main routes, and in some cases, it is more economically beneficial to cancel flights than to operate them. Sapkota expressed hope that this situation will be temporary and the situation will normalize in the next two to four months.

Pampa Dhamala, Coordinator of the Tourism Committee of the Confederation of Nepalese Industries (CNI), said that adding new 'products' and new destinations is essential for the growth of the tourism sector. She suggested that new attractions need to be created as tourists do not come to the same destination repeatedly. She mentioned that if connectivity with the two giant neighboring markets like India and China can be increased and effectively promoted, there is a possibility of tourists coming to Nepal to an extent that it cannot handle.

She expressed confidence that if Nepal is removed from the European Union's (EU) blacklist, international flights will increase, which will have a positive impact on tourism. Participants emphasized the need for programs in the upcoming budget that can be implemented, stating that the number of tourists will definitely increase next year if the government implements the policies and commitments it has spoken about in practice.