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A Study on the Effectiveness of Investment in Tourism Infrastructure Development Project

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A Study on the Effectiveness of Investment in Tourism Infrastructure Development Project A STUDY ON THE EFFECTIVENESS OF INVESTMENT IN TOURISM INFRASTRUCTURE DEVELOPMENT PROJECT FINAL REPORT SUBWTTEDTO CENTRAL MONlTORING AND EVALUATION DIVISION NATIONAL PLANNING COMMISSION SECRETARIAT SINGHA DARBAR, KATHMANDU CENTRAL DEPARTIvlENT OF ECONO:rvrrCS TRlBHUVAN UNIVERSITY, KIRTIPUR KATHMANDU JULy 2000 ACKNOWLEDGEMENT Central Department of Economics, Tribhuvan University, is highly privileged to have this opportunity to undertake the study ofthe "Effectiveness of Investment in Tourism Infrastructure Development Project Phase I". The Department, therefore, wishes to place on record its sincere gratitude to National Planning Commission for entrusting us this important study. We believe that the results and the suggestions made in the report will be very helpful in carrying out similar projects in futme. The Study Team wishes to express its sincere thanks to Dr. Shanker Shanna, Honorable Member, NPC for his valuable comments on the draft report. Thanks are also due to Mr. Hira Lal Singh Dangol, Mr. Vaidya Nath Mallik, both Joint Secretary, NPC and Dr Chitra Deo Bhatia, Advisor, NPC for their valuable and constructive comments and suggestions. The study team gratefully acknowledges the support and cooperation extended by Mr. Ganesh Rai, Under Secretary, NPC and Mr. Shekhar Babu Karki, Section Officer, C:rvIED at various stages ofthe study. Mr. Karki's support and cooperation during the fieldwork is also duly acknowledged. We also express our sincere thanks to Mr. Devendra N. Gongat Project Manager, TIDP II for sharing his experience about various aspects ofthe TIDP I. Thanks are also due to the President of HAN Pokhara Chapter, president of the Boat Owners Association for sharing their views and concern about tourism development in Pokhara. We are also very much indebted to all the officials of the implementing agencies for their cooperation in providing required infonnation concerning the project. Special mention should be made about the untiring support extended by local community of Gorkha and Pokhara by sparing their valuable time in responding our questions and participating in the group discussion. Without their cooperation the study would have remained incomplete. We are thankful to Account Officer of the Department Mr Ram Mani Khanal for his prompt attention and service to the Study Team members. We are equally thankful to Mr Kancha Ram Mahatjan and Mr.Kushu Ghale for their excellent secretarial services. Central Department of Economics Tribhuvan University STUDY TEAM Prof Vishnu P. Shanna Study Coordinator Mr. Ram Dev. Singh Economist Dr. Devendra P. Shrestha Economist Mr. Shekhal' Babu Karki Liaison Officer, CMED, NPC Assistant Nft'. Gyanendra Mallik Research Assistant 11 ACRONYMS ACAP Annapurna Conservation Area Project .ADB Asian Development Bank ATC Air Traffic Control RME Benefit Monitoring and Evaluation CMED Central Monitoring Evaluation Division DCA Depal1ment of Civil Aviation DHUD Department of Housing and Urban Development DOA Department of Archaeology DOR Department ofRoads DOT Department ofTourism EIDCTP Eco-tourism Deve10pment and Circuit Trekking Project FGD FOCU'l Group Discussion GCAP Gorkha Conservation Area Project GDP Gross Domestic Product GOs Government Organisations HAN Hotel Association Nepal HMTTC Hotel:Management and Tourism Training Center IUCN IUCN- The World Conservation Union KlVITNC King Ivlahendra Trust for Nature Conservation MOCTCA Ivlinistry of Culture, Tourism and Civil Aviation :rvIOF Ministry ofFinance NATI-llvI Nepal Academy ofTourism and Hotel Management NGOs Non-government Organisations NPC National Planning Commission NTB Nepal Tourism Board OIM Operation and Maintenance PCAIP Pokhara Conservation Area hnprovement Project PIvlU Project Management Unit PTDC Pokhara Tourism Development Committee RNAC Royal Nepal Airlines Corporation SWC Social Welfare Council TIA Tribhuvan International Airport TIDP Tourism Infrastructure Development Project US United States UNDP United Nations Development Project VDC Village Development Committee iii TABLE OF CONTENTS Acknow1edgement 1 Study Team u Acronyms iii Table ofContents iv-v List of Table VI lVrap ofthe Study Area vii Executive Summary viii-xiv Chapter Page 1. INTRODUCTION 1 - 10 1.1 The Context 1 1.2 Rational ofthe Study 1 1.3 Objectives 1 1.4 Area ofthe Study 2 1.5 Approach and Methodology 2 1.6 Research Instruments 4 1.7 Field Work 5 1.8 Field Performance 6 1.9 Data Management 10 1.10 Method ofAnalysis 10 1.11 Limitation ofthe Study 10 1.12 Organization of the Study 10 2. TOURISM INFRASTRUCTIJRE DEVELOPMENT PROJECT Al'ID OVERVIEW 11 14 2.1 Prqject Background 11 2.2 Project Cost 11 2.3 project Objectives 11 2. 4 Proj~ct Components 12 3. TOURISM DEVELOPMENT POLICY: AN OVERVIEW 15 ~ 20 3.1 Background 15 3.2 Policy Adopted in the Eighth Plan 15 3.3 Achievements ofthe Eighth Plan 16 3.4 Tourism Policy in the Ninth Plan 17 3.5 Public Sector Investment in Tourism DeVelopment 18 4. EFFECTIVENESS OF TOURISM INFRASTRUCTIJRE DEVELOPMENT PROJECT 21- 52 4.1 Pokhara Airport Upgrading 21 4.2 Sarangkot Access Road 28 4.3 Pokhara Conservation Area Improvements 31 4.4 Lakeside Footpath and Garden 36 4.5 Eco-tourism Development and Circuit Trekking 37 iv Chapter Page 4.6 Tourism Support Services, htstitutional Development and Implementation Assistance 41 4.7 Improvements in GOl'kha Conservation Area project 44 4.8 Upgrading ofPhysical Facilities ofNATIiM 46 4.9 Project Schedule 49 4.10 Overall Impact ofthe Project 49 4.11 Public Private Linkages in Tourism Sector 51 4.12 Potentialities Created by the Project 52 5. ENVIRONMENTAL IMPACT ASSESS:MENT 53 - 54 6. SUGGESTIONS 55- 58 BIBLIOGRAPHY 59 - 60 RESEARCH INS1RUMENT ANNEXES List ofhtstitution, Name ofPersons Interviewed v LIST OF TABLE Table No. Title Page 1.1 Field Performance 6 2.1 Swrunary ofProject Cost and Actual Expenses 11 3.1 Trends in GDP, Development Expenditure and Tourism Sector Development Expenditure, Nepal 1990/91-1998/1999 19 3.2 Share ofTourism Sector in GDP and Total Development Expenditure, Nepal, 1990/91-1989/99 20 4.1 Flight Movement, Passenger and Cargo Handled in Pokhara Airport, 1990-1998 23 4.2 Revenue ofPokhara Airport by Major Sources 24 4.3 Tourist Arrival in Pokhara by Mode ofTransport, 1990-1999 25 4.4 Average Annual Growth Rate ofTourist in Pokhara by Mode ofTransport 25 4.5 Number ofHotels, Their Rooms and Beds in Pokhara, 1990-1999 26 4.6 Number ofTrekking and Travel Agents in Pokhara 1990-1999 26 vi ,~___,_,_,__"._._,...--7-·------· . 84 0 E .. " . .ri '1 NEPAL' ~. TOURisM'u,i'FRASTRUCTUREbEVj:fop'MENT PROJECT 2?<)N­ ProjeC'llocation r~:- /Lj.. 'L, / II., " FAA~WEsTEnN ~ ~ REGION ,.J \ __. / ",_~ I.IIO\'lES1ERIl r \ \'"", . ,I ~ REGION,f' "~"j '~ ') VlEsrtRlI ..... ~~\ l ...., .i flEGOW {f,;titfli;m-;'/"'.('-"""-<.1 '..,.. ......... -1. .... ..",..' '. ,; "-., r"~f",_, COltriAL {... EASWifj - WESTERN REGION \. i.. REGIOII i flfGl'.'H . A nnapu rna '--..... '....1 ~ J _....."'11..-,,_"'._ .... r".J ( o HAW A LAG I R I ',) Macll/l"p~c.hi"r.. ...... Baglu"9 ~\. e A fll> AK I .0 I Joril!l.llh lUJ , I'~'~ A."',....,p-, ''-., , t I " \ { .....) I ..... ----~ ; l \ J \ I RE plo N / '­ , \ 27"N '­ . // ;: ;t\f\i _.­ HetAuda '; ,./ t . ' .........----, \ . ) 1.-...... ..... ? o SlndhuUm.di I ..~ o 10;10 40 (.0 ~ ,.i--j i \ ~.("lIon\nh~f\ ~ LEGEND: I .J ® Project Towns o Towns "-1 ( .../\ l........ ......r I • Et> International AlfPJrt + DomestJc. AlrPol'l A Peak - ~~'-'-c-.".~ __ Roads ______._ Zone Boundary ......, _"_"_ Regional Boun03r'1 '-. international Or: UUd.)fY (not nec:e:l>'!">arlly at:thorJtative) aGoE \ .----~--------------------- ! '-­ vii EXECUTIVESUMMARY 1.1 The Context Following the recommendations ofa study commissioned by Asian Development Bank in 1990 to suggest measures for tourism promotion in the country the Tourism Infi'astructure Development Project Phase I was launched in 1992 with the loan assistance of ADB and completed in December 1997. The main objective of the project was to support the government's strategy to develop tourism sector and thereby increase the foreign. exchange earnings. Three years have passed since the completion of the Phase I of the project It is, therefore, timely that a study be carried out to assess the effectiveness of investment made in the Project in terms of the attainment of the goaJs. The present study is an outcome of the need to document strengths and weakness ofthe project and sUgge.lJt measures for improvements . 1.2 Objectives of the Study The overall objective of the study is to assess the effectiveness of investment in Tourism Infrastructure Development Project The specific objectives ofthe study are: • to examine issues concerning the effectiveness and impact ofthe Project; • to compare the changes in the length of stay and flow of tourist in the area before and after the completion ofthe project; • to identify the potentialities created for developing the new projects; • to assess the strengths and weakness of the project by studying the targeted and actual facilities developed; • to assess the private sector involvement in the project by studying tourism entrepreneur benefitted, • to examine the extent of participation and involvement of tourism entrepreneurs, women, and the commWlity at large in the project activities and .. to solicit their views about the effectiveness and usefulness ofthe Project. The Project covered selected areas on three districts of the country viz; Kathmandu, Gorkha and Kaski. 1.3 Approach & Methodology The study is a desk work-cum-field based study. Both secondary and primary
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