Palau should attract more high-spending tourists to sustain its strong economic growth, according to an Asian Development Bank (ADB) report released yesterday at the 4th Economic Symposium.

“Figures showing GDP growth of 5.3% in 2014 and 8.2% in 2015 do not capture the risks that increased tourism numbers bring to popular tourist sites,” said Liliana Warid, Private Sector Development Specialist with ADB’s Pacific Liaison and Coordination Office.


“To sustain economic growth and build on the success of earlier business environment reforms, Palau should seek to reduce overall tourist numbers while increasing individual tourist spending.”

The report also highlighted challenges that Palau faces despite a robust economic growth.

The report, Private Sector Assessment for Palau: Policies for Sustainable Growth cautioned Palau on attracting low-end visitors at it poses risks to its pristine environment.

“Low-end tourism detracts from developing an effective marketing campaign based on “Pristine Paradise Palau.” While this is an attractive concept, until the volume of low-end tourists declines, the campaign cannot be effective because sheer visitor numbers degrade the high-end tourism experience,” the report stated.

It noted that a “longer-term strategy is necessary to generate greater financial and employment benefits from the tourism industry.”

The report not only calls for the creation of a comprehensive national tourism policy but also building of infrastructure that will encourage high-end tourism.

It warned that as investment in facilities and services that cater to low-end tourists continues to expand, resistance will grow exponentially to policies aimed at reducing the size of this market segment.

“Palau may find it increasingly difficult to change course, and this is a further reason to immediately deal with the current influx of low-end tourists.”

It also recommends business laws be amended so an online business registry can be established and a modern business licensing system developed.

It also stated that enforcement of the laws is a big issue in Palau. It also warned the government on vanishing front businesses as they have been providing services.

Other recommendations in Private Sector Assessment for Palau include further reforms to the finance sector to build the capacity of the National Development Bank of Palau and reducing the financial burden of inefficient state-owned enterprises by having them operate on commercial principles. The report also suggests measures to promote women’s equal access to economic opportunities.

The report highlights improved financial regulation, the establishment of a secured transactions framework, and the formation of the Economic Advisory Group comprised of senior government and private sector representatives as particular achievements.

ADB stated that research for the report was gathered from in-depth consultations with a broad selection of government and private sector representatives. [/restrict]