US embassy cable - 05RANGOON1355

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 001355 
 
SIPDIS 
 
STATE FOR EAP/MLS; PACOM FOR FPA 
 
E.O. 12958: DECL: 11/21/2015 
TAGS: ECON, ETRD, PGOV, SENV, BM, CACS, Economy 
SUBJECT: TOURISM IN BURMA DOWN THIS SEASON 
 
Classified By: Econoff TLManlowe for reasons 1.4 (b,d) 
 
1. (SBU) Summary: Projected tourist arrivals for Burma's 
November-March high season have dropped from last year. 
Despite the regime's and the tourism industry's efforts to 
make vacationing in Burma more attractive and less 
bureaucratic, overseas campaigns by exiles to discourage 
travel to Burma, coupled with the GOB's clumsy marketing and 
the logistical difficulties of traveling in a wholly cash 
economy, still keep many tourists away.  Corruption and 
bureaucracy constrain private tour companies.  Burma offers 
rich tourism potential, but until it has decent governance, 
the potential will not be realized  End Summary. 
 
2. (SBU) On November 17, the general managers of Rangoon's 
top hotels and travel agencies met with econoff and conoff 
for a briefing on our American Citizen Services, and about 
the effect of sanctions on their American tourist clients. 
The GMs said that reservations were down about 3 to 4 percent 
from last year.  All of the hotel general managers complained 
about the negative impact of U.S. sanctions on their 
businesses, but acknowledged they had learned to live with 
the difficulties, and they expressed appreciation for the 
briefing. 
 
3. (U) According to official GOB statistics, there were 
650,000 tourist arrivals in 2004.  This figure is inflated by 
over 400,000 visitors who cross into Burma on day trips from 
Thailand and China, and who spend little money while here. 
The GOB has mounted campaigns to attract tourists, 
particularly through the Myanmar Marketing Committee, a group 
of expatriate hotel managers with good connections to the 
current regime.  Their efforts include overseas websites that 
allow visitors to book their rooms using credit cards, which 
reduces the need for tourists to carry large amounts of cash, 
and bypasses U.S. restrictions on the transfer of financial 
services. 
 
4. (U) The Ministry of Hotels and Tourism claims that 250,000 
international travelers arrive at Rangoon airport annually, 
less than 2% of Thailand's annual visitor totals and less 
than 10% of Vietnam's numbers.  This figure also inflates 
actual tourists arrivals because it counts every 
international arrival at Rangoon's airport, which includes 
business and diplomatic travelers. 
 
The Americans: More Students, Fewer Wealthy Retirees 
--------------------------------------------- ------- 
5. (SBU) According to official figures, Americans constitute 
approximately 16,000 tourists each year.  That number may 
show an increase in 2005 because 750 students and teachers 
from the Semester-At-Sea program visited Burma for a week in 
November during the ship's maiden port call in Rangoon.  Half 
of the guests who stay at the country's most expensive hotel, 
the historic Strand in downtown Rangoon, are Americans, 
according to the General Manager (who admits an occupancy 
rate of 10-20%).  Tour operators who handle American clients 
describe the average US tourist as older, professional or 
retired, and wealthy.  When asked why they come, a tour 
operator said most answer, "I've always wanted to come to 
Burma, and now, finally can." 
 
6. (SBU) Some of the most prestigious American travelers 
visit Burma on tours organized by the Smithsonian 
Institution, the NY Museum of Natural History and Stanford 
University Alumni.  These three groups will not come to Burma 
this season.  Pressure on these institutions from anti-Burma 
groups in the U.S. forced them to cancel their planned trips, 
according to the directors of New Horizons, the local travel 
agency that handled these groups in the past. 
 
Taxing Travel 
------------- 
7. (SBU) Along with natural gas, gem and timber exports, 
tourism is one of the few Burmese industries that brings in 
coveted hard currency, but the GOB has taken minimal steps 
since its failed "Visit Myanmar Year 1996" campaign to 
develop the sector further.  For example, private travel 
firms must cover all costs for GOB officials to represent the 
country at tourism promotion events overseas.  Tour company 
expenses are also high.  The government takes 7% of gross 
payments from foreigners as tax, plus an additional 30% 
profit tax, making it difficult for tour companies to 
survive, especially since most already operate with slim 
profit margins and face rising inflation. 
 
8. (C) Official GOB permits are needed to take tourists to 
some sites, such as Mount Victoria in southern Chin State, 
and also for tour operators to travel abroad for their work. 
Tourism industry reps recounted their repeated difficulties 
in getting the permits.  A certificate showing current tax 
payments is necessary, and, in order to get them, tour 
operators must often bribe tax officials to accept their tax 
returns and payments and to issue the required paperwork. 
Some tour operators try to speed the process by making 
advance tax payments, which requires payment of another 
"fee".  The Deputy Minister of Hotels and Tourism must also 
approve all permits, and since he recently moved to the new 
administrative capital in Pyinmana, tour agents communicate 
with him by fax, (with a Rangoon exchange number).  "Please 
contact me," he told one travel agency. "I have nothing else 
to do up here." 
 
The GOB Rarely Listens to Business 
---------------------------------- 
9. (SBU) In a very rare instance of the GOB responding to the 
needs of its own private sector, we learned from the industry 
that the GOB recently postponed plans to upgrade the airport 
runway at Ngapoli, Burma's leading beach resort town, in 
January 2006, at the peak of tourist season.  The GOB had 
allocated $10,000 in this year's budget for the repairs, and 
the project has to be completed by March 31, the end of the 
fiscal year.  Tourism industry representatives, working 
through the Tourism Ministry, persuaded the government that 
it would lose ten times as much in tax revenue if the airport 
were closed in peak season.  The GOB agreed to delay the work 
until late February.  However, the tourist agencies also 
emphasized that this incident reflected the general ignorance 
of officials of how the tourism industry works with packages 
planned well in advance.  Last minute official announcements 
with no advance consultations hinder agencies' ability to 
plan reliable itineraries for their clients. 
 
The Green Pot Of Gold 
--------------------- 
10. (SBU) Despite environmental stresses of excessive 
logging, unregulated development and encroachment into 
preserved areas, much of Burma remains undeveloped and offers 
significant eco-tourism potential.  Ten years ago, hoping to 
attract foreign investment, the GOB opened fifteen of the 
nation's nature reserves and wildlife preservation areas to 
eco-tourism development.  To date the eco-tourism projects 
are modest, but relatively successful, attracting wealthy 
visitors from both the West and Japan.  A group of 
environmentalists, business reps, academicians and scientists 
has formed a new association to ensure that eco-tourism 
development benefits the local communities and does not 
destroy the environment.  The chairman of a leading 
environmental NGO surmised that the GOB doesn't really want 
foreigners in the country at all, just the hard currency they 
bring along. 
 
Comment: Good Governance A Prerequisite 
--------------------------------------- 
11. (SBU)  Burma has enormous potential for cultural, 
historic, religious, recreational, scientific and 
environmental tourism, but the regime's corruption, 
repression and negative image discourage tourists. We see 
little likelihood that Burma can realize its rich potential 
for tourism, along with economic development in general, 
until it has decent governance.  End comment. 
VILLAROSA