Investor Presentaiton
FINANCING SUSTAINABLE TOURISM IN KHYBER PAKHTUNKHWA
1.1
Growth of Tourism in
Khyber Pakhtunkhwa
Khyber Pakhtunkhwa (KP) is richly endowed
with natural beauty, has an ancient history and
a diverse cultural heritage making it an
attractive destination for both international
and domestic tourism. The province is also the
gateway to the northern areas of Pakistan,
which have historically attracted adventure
tourists and professional mountaineers from
world over. KP itself boasts some of the most
spectacular natural resorts in the country such
as Swat, Chitral, Kaghan, Naran and the Galliyat
region. Improved security environment in the
province and better road connectivity, has
resulted in a surge of domestic tourism to KP
and the northern areas in the last five years.
Despite international travel restrictions
because of Covid-19, the easing of lockdowns in
the country since last year has led to an
unprecedented rise in domestic tourists
particularly in the summer season. Estimates
range from 2 to 3 million tourists visiting KP and
the northern areas during the Eid holidays in
2021, generating an estimated Rs 4 billion in
revenue for the province¹.
Rs.
3mn tourists in
KP generated
4br
L
Revenue in 2021
This phenomenal growth in domestic tourism
has resulted in the creation of much needed
economic opportunities in the region and
provided a welcome boost to the hospitality
sector and tourism related services in these
areas. However, the surge in tourist numbers
has put forward a new set of challenges for
the provincial government. Despite improved
roads and highways, tourist hotspots of KP
lack basic infrastructure facilities such as
solid waste disposal systems, adequate
hotel and toilet facilities, clean drinking
water, internet connectivity, hospitals, and
emergency response services etc. These areas,
therefore, are often unable to cope with large
influx of tourists especially during peak
seasons. Moreover, there are no effective
mechanisms in place to monitor and control
the degradation of the fragile environment and
ecosystem of the natural resorts caused by
unregulated commercial activity and large
tourist inflows.
To effectively address such challenges there is a
need to promote sustainable tourism and
development systems in KP, as in the rest
of the country. One way that has been
successfully employed by other countries is to
create a system that entails self-sustaining
revenue mobilization and expenditure
mechanisms through which resources
generated in tourist destinations are used
specifically for the development and
¹Buneri, (2021). KP earns an estimated Rs4bn tourism revenue during Eid holidays
maintenance of tourism infrastructure and
service delivery at the source of revenue. Local
taxes on tourism and hospitality services, tolls
and user charges that can be applied flexibly
and adjusted readily, can be potential
instruments for revenue collection. These taxes
can be hypothecated i.e., structured in a way
that the revenue raised is ring fenced for
specific types of use within that geographical
location instead of going into the provincial
revenue pool. Studies have shown that local tax
collection which is earmarked for specific
public good or service provision within that
area, creates incentives to pay which otherwise
might be weak or absent in a centralized tax
collection and expenditure system.
Lack of tourism infrastructure
in KP leading to
No proper
solid waste
disposal
management
missed
opportunities
Absence of
good quality
hotels &
toilets
Lack of proper
hospitals &
emergency
responses
Scarcity of
clean water
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