Myanmar tackles zero-dollar trap

YANGON, 14 June 2019: So-called zero-dollar tourism is starting to upset the travel industry in Myanmar.

While local tour operators and to some extent hotel owners welcome the increase in Chinese tour groups they wonder why the financial benefits slip through their fingers. 

Myanmar Times in a report, earlier this week, claims Chinese nationals are now controlling the entire travel process from bookings, flights, hotels and tour arrangements.

Funds stay offshore while the industry recognises the zero-dollar tour model that once plagued Thailand has arrived in Myanmar.

Myanmar Times refers to the Thai government’s successful crackdown of zero-dollar tours. It was a costly campaign that cut into the travel arrivals and for a year and local tour operators feared the business would not return.

Other popular destinations such as Jeju, South Korea and Bali, Indonesia have also been hit by the zero-dollar game, which often involves zero-dollar tours that are sold at below cost but earn cash in the form of commissions for shopping and other services.

Chinese tour operators earn commissions on every feature of the tour including restaurant visits, tourist attractions, hotel stays, transport, shopping and sightseeing.

The newspaper argues that zero-dollar tourism started to expand after Myanmar eased visa requirements for visitors from China by allowing them to get visas on arrival valid for one year.

During the four months of this year, Myanmar welcomed 650,000 Chinese visitors up 30% according to the Ministry of Hotels and Tourism.

Responding to complaints from local tour operators, Business License Department director U Myo Win Nyunt said a tourism committee made up of regional and state governments had been formed to find a solution to the problem.

 Most of the revenue remains in China with payments made online via services such as Alipay and that is a concern for the government, which could lose tax revenue.

Chinese tour operators pay for hotels in cash to avoid tax. Usually, there are no receipts while the shops, restaurants and tourist attractions paying commission to the Chinese tour operator for supply clients are paid in cash.

The business model eliminates the local travel firms, cuts tax revenue for the government and results in minimum benefits for the local economy.  Payments are routed through Chinese digital platforms to avoid taxes.

No wonder, the country’s tourism leaders are mulling over where the revenue trail leads. For sure it doesn’t end up in the local tour operator’s wallet.

(Source: Myanmar Times)