DRAFT TOURISM INVESTMENT MASTER PLAN CHIEF DIRECTORATE: DESTINATION PLANNING AND INVESTMENT COORDINATION GOVERNANCE & DEVELOPMENT WORKING GROUP MEETING CITY OF MBOMBELA, 29-30 MAY 2017
Presentation Content 1. Purpose 2. Draft Tourism Investment Master Plan a. Objectives Analysis b. Draft Tourism Investment Master Plan Topic – Tourism Trends – Current Offer – Internationally Mobile Projects – Selection Criteria – Benchmark with International Competitor – Final Selection – Funding Partnership – Implementation Plan 2
Purpose of the Presentation • To present the Draft Tourism Investment Master Plan (Master Plan) to the MIPTECH Governance and Development Working Group Meeting, following consultations with key stakeholders during the previous financial year (2016/17). • Solicit inputs and comments on the Master Plan . • Encourage/promote intergovernmental integrated approach to the mobilisation of tourism investment. • Encourage planning integration amongst the three tiers/spheres of government on tourism investment-related matters. 3
Objective Analysis • The Master Plan seeks to establish a coherent national investment promotion strategy which accommodates the three tiers of government, aimed at a step-change in the achievement of national tourism investment targets. • The final Master Plan will entail the following: - – Development of a best-practice model, drawing on current practices by provinces, with varied “options” for consideration by provinces, to ensure optimum buy in, while leaving ownership with provinces; – An agreed list of tourism investment projects that is adequately categorised and prioritised, inter alia to address provincial and rural/urban spread; – An agreed ‘roadmap’ for the development and promotion of investment projects; – Agreed criteria for inclusion of projects to be promoted; – Clear actions to be undertaken by the various role-players; – Identification of possible platforms/opportunities for investment promotion; – Clear and agreed institutional arrangements and modalities; – Identification and initiation of key partnerships with relevant investor stakeholders/role-players. 4
Overview of Tourism Trends • Nationally and Internationally: o Vibrant Niche Markets linked to Responsible Travel: Adventure Tourism, Agri-Tourism, Gastronomic Tourism, Sharing Economy, and Wellness/Medical Tourism. o Key Success Factors in Each Sector: Game Lodges : Important to closely manage the whole tourist experience in order to minimise negative experiences Backpackers : A wide range of youth travel support services is important, graded bed and breakfast accommodation, discount travel, etc. Theme Parks : Need sufficient discretionary per capita income in the target customer base. • At Provincial, Municipal and Site Levels: o Some of the potential projects submitted by provinces or product owners often lack a detailed market analysis, esp. at site level. o The Department has commissioned the University of Pretoria to develop a framework for market analysis specifically focussing on municipal/site level variables. o The study will solicit the views of tourism and other related stakeholders from both the developer and investor perspective on their experiences and challenges. o To develop a product-market match framework to inform product and infrastructure development as well as investment facilitation. o The focus will be at site level while accounting for international, regional, national and municipal level. 5
Current Offer The general investment climate in South Africa : • The South Africa’s Investors Handbook (InvestSA) and the Protection of Investment Act set out the South African investment regime, i.e.: o regulatory requirements for doing business, taxation, incentives and industrial financing; basic legal conditions, safeguards for inward investors, transferability of profits, administrative burden to promote investments and clarifies the level of protection that an investor may expect in South Africa. • South Africa is also a member of the World Trade Organisation (WTO) and a signatory to the General Agreement on Trade in Services: o According to the WTO Training Manual (2010: 10), “the pillars of GATS are a set of obligations, applying to all WTO members and all services, such as the Most-Favoured Nation (MFN) treatment, which ensures non-discrimination between trading partners. o MFN treatment obligation (Article II) – treating one’s trading partners equally. o Under GATS, if a country allows foreign competition in a sector, equal opportunities should be given to service providers from all other WTO members. o Sector-specific commitments: In the majority of sectors including tourism, SA has no limitations on market access or national treatment, other than those indicated in the horizontal sector (usually focussing on the employment of personnel) o The GATS is the first multilateral agreement containing obligations on the treatment of foreign investors. o It does not cover investment policies per se, but does so to the extent that they relate to the supply of services: — It treats investment as a mode of service delivery (establishment) to which obligations of transparency, dispute settlement, MFN apply. 6
Continues… .. • Drivers of growth o Heritage and cultural tourism o Wildlife and Safari • Drivers of Growth not marketed (where SA has competitive advantage) o Medical tourism o Sports Tourism o Beach Tourism 7
Identify International Mobile Projects Funds • FDI Mobility Concentrated in few areas: Accommodation, Restaurants, and Car Rental. Limited activity in high-profile sectors: Tour Operations, Reservation Systems and Airlines. UNCTAD: Developing country investors tend to invest in their regions (vicinity) – RSA hotel groups active in the SADC region. Growing trend in South-South mergers and acquisitions (e.g. intra-BRICS investments) Project Mobility Table Activity Frequency with which FDI appear to occur Frequency Occasional Rare Hotels and similar Restaurants and similar Second homes Passenger transport rental equipment Railway passenger transport services Air passenger transport services Road passenger transport services Water passenger transport services Passenger transport supporting services Travel agencies and similar Cultural services Sports and other recreational services Source: UNCTAD
Continues….. • FDI Trends o Total FDI in 2005 stood at US$ 916 billion, with US$ 542 billion (59 per cent) received by developed countries, the highest level ever recorded. o M&A constitute a significant portion of total FDI. o The number of cross-border M&A transactions reached 6 134 in 2005 totalling US $ 716 billion in total value, which was almost 80 per cent of global FDI flows. o UNCTAD argues that the number of these transactions involving countries in the Global South (developing counties) is also on the increase. o Africa’s share of global FDI remains very low compared to other developing regions. o In Asia & Oceania FDI grew more than eight fold in 15 years (1990-2005) from US$ 191 billion to US$ 1.5 trillion, with Latin America & the Caribbean (LAC) recording almost similar rates. Fig. C.: Inward FDI stock, developed and developing economies, Africa, Latin America & the Caribbean, Asia and Oceania: 1990, 2000, 2005 (Billions of US dollars) Source: UNCTAD, FDI/TNC database 9
Selection Criteria • White Paper states that FDI will not be encouraged in small, micro-enterprises or ancillary services sector which are clearly within the reach of the local entrepreneurs and businesses. It further states that the government should encourage FDI that meets the following criteria: - Investors and companies that will develop, promote and implement responsible tourism; - Investors that invest in rural communities and less developed geographic areas; - Investors that develop products that help to diversify the tourism product e.g. cruise tourism, ecotourism, heritage tourism, Afro-tourism, etc.; - Investments that will result in the transfer of skills and technology to locals; - Joint ventures with local partners and local communities; and - Investors in tourism plant who have a proven track record in the industry. • United Nations Conference on Trade & Development (UNCTAD): Opportunities/projects to be ranked in form of priority and categorised. Criteria developed in order to select targeted projects, inter alia: - - value of the opportunity, including the potential to stimulate other investment or economic activity, community benefits; - What exclusions (e.g. in favour of local investors, SMEs) - State of readiness (pre-feasibility, feasibility/ bankability), and - What minimum/core standards for feasibility analysis, e.g. Resources required, and the difficulty/ease of accessing market. Nature/value proposition of the project – e.g. expansion of existing enterprise/activity or creation of new enterprise/activity 10
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