United News of Bangladesh

Soaring fuel prices and global disruptions linked to the Iran war are putting pressure on tourism-dependent economies across Southeast Asia, just as the region heads into its peak travel season. Countries such as Thailand, Vietnam and Cambodia are facing weaker travel demand, higher airfares and flight disruptions driven by rising jet fuel costs and uncertainty over the conflict’s impact on global energy supplies. Tourism in Asia is still recovering from the COVID-19 pandemic, but officials say the new shock is hitting the sector before it fully stabilises. Higher transport and living costs are also prompting many families to cut back on travel. “With fuel prices going up and tourists declining, how can we earn?” said Siv Pech, a 58-year-old tuk-tuk driver near Cambodia’s famous Angkor Wat temple complex in Siem Reap. Tourism plays a key role in many Southeast Asian economies, accounting for nearly 13% of GDP in Thailand, around 9% in Vietnam, and supporting millions of jobs in Cambodia. It is also a major source of foreign currency for import-reliant countries such as the Philippines and Nepal. The conflict has pushed up global oil prices, raising transport costs across the region, particularly for countries dependent on fuel imports that previously relied on stable shipping routes through the Strait of Hormuz. Industry experts warn that the combined impact of the pandemic and the war is creating a difficult environment for recovery. “This, coming within five years of the pandemic, is devastating for tourism,” said Jitsai Santaputra of energy consultancy The Lantau Group. Airlines cut flights as fuel costs surge Higher jet fuel prices and supply pressures have forced several airlines, including Vietnam Airlines, AirAsia and Cathay Pacific, to reduce flights or adjust schedules. Airspace restrictions in parts of the Persian Gulf and longer flight routes have also increased operating costs for carriers flying between Europe and Asia. As a result, ticket prices have risen sharply. Cathay Pacific, for example, has significantly increased fuel surcharges for both medium- and long-haul flights. Company officials say jet fuel costs remain elevated, adding further pressure on pricing. Travelers are also booking later than usual, reflecting uncertainty over travel conditions. Travel plans disrupted For many travellers, the rising costs are forcing difficult decisions. Freelance travel writer Sandra Awodele had planned a long-awaited trip to Thailand this summer but abandoned her plans after checking flight prices. “I looked at the fares and that was the end of it,” she said. Local workers feel the strain The impact is also being felt on the ground across Southeast Asia, where tourism supports millions of small businesses and informal workers. In Cambodia’s Siem Reap, tuk-tuk driver Siv Pech said his income has fallen sharply. He now earns as little as $5 a day, down from about $20 previously, with fuel costs taking up most of his earnings. “Some days I don’t earn anything at all,” he said. Restaurants and small businesses are also under pressure as rising gas and food prices squeeze profits. Weak outlook for regional tourism Tourism accounts for a significant share of economic activity across Southeast Asia, with the industry contributing nearly 11% of GDP in ASEAN countries before the pandemic. Economists warn the Iran conflict could slow growth across Asia-Pacific by reducing travel demand and increasing costs for businesses and consumers. “Higher prices and weaker demand will weigh on tourism and overall growth,” said Albert Park, chief economist at the Asian Development Bank. In Vietnam, hotel operators say travellers are increasingly choosing cheaper accommodation options or cutting back on trips altogether. “This will affect the entire tourism chain,” said hotel operator Le Tuyet Lan. Thailand sees drop in arrivals Thailand, one of the region’s top tourist destinations, has already recorded a decline in visitor numbers. Official data show an overall 7% drop in April, with sharp declines from Europe and the Middle East. In Cambodia, tourism officials also report a steep fall in arrivals to Siem Reap, home to the Angkor Wat temple complex. Business owners say rising energy and food costs are adding further pressure, making it harder to stay profitable. “We are worried about inflation and rising costs,” said restaurant owner Sokha Sambo, who employs 14 staff in Siem Reap.

Prime Minister’s Private Industries and Investment Advisor Salman F Rahman has said the government recognised logistics as a crucial sector and in these difficult times of major global disruption, they remain committed to be an integral part of the worldwide supply chain. He also said the government is involved in a process of formulating a ‘National Logistics Policy’, which will aid investment and cater to the need of the economy in the long run. While appreciating the white paper on ‘FDI in Logistics Sector’ at its launch on Sunday, brought out by Nordic Chamber of Commerce and Industry (NCCI), Salman F Rahman said it will benefit all the stakeholders in contributing to the policy formulation and its proper implementation. NCCI in Bangladesh hosted the online launch of its white paper, a follow up to the daylong event on the same topic hosted by the chamber in May, 2022. The event was attended by business leaders, foreign dignitaries, government stakeholders, regulatory bodies, policymakers, and advocacy coalitions. Read more: Initiative to develop logistics industry: Baby steps taken with World Bank guidance Ambassador of Denmark to Bangladesh Winnie Estrup Petersen said as Bangladesh focuses on the development of infrastructure, policies and guidelines need to be in place to get the most effective output from such infrastructural investments. “Thus, inputs from all quarters are essential for providing the best to the country,” she said while speaking on behalf of the embassies of Denmark, Norway and Sweden. While talking about the economy of Bangladesh, the ambassador highlighted that the Bangladesh economy has proven to be strong and resilient, boasting a growth even during pandemic when most economies of the world contracted. This uninterrupted trajectory of economic growth will see Bangladesh graduating from the LDC group in 2026. “To be able to be at par with the global standards, foreign direct investments (FDI) in the logistics sector is a good start. It can readily bring in the technology, skill set and dynamism that will elevate the country to a more developed arena,” said the Danish envoy. The ambassador also mentioned that to maintain and enhance the tempo of growth, the logistics sector needs to be strengthened through global connectivity, effective and efficient services guided through the long-term vision of the government. However, to attract such investments, it is important that Bangladesh further enhances a conducive business environment for foreign companies such that they are motivated to invest and do business here, she said. “A conducive general framework and a well-developed logistical infrastructure are closely connected, and it is important not to lose sight of this connection,” the Danish envoy said. Read more: No alternative to synchronised multimodal logistics management system: BUILD Ambassador Petersen applauded the effort of the NCCI in publishing the Whitepaper focused on the logistics sector terming it “timely and necessary discussion”. Speaking as special guest, Executive Member, Bangladesh Investment Development Authority (BIDA) Mohsina Yasmin said white papers are a major asset when it comes to improving business strategy, understanding the current state, and identifying potential growth areas. “It can also act as an influential document to advocate for policy changes and assist policymakers to support business and investment friendly environment,” Yasmin said. NCCI President Tahrin Aman highlighted that the logistics sector is a crucial component of the whole trading ecosystem, and major industries heavily rely on it. “So much so, that without logistics, the whole economy will come to a standstill. Therefore, even though the demand for logistics is derived, this industry plays a pivotal role in turning and improving the economic indicators, both in the micro and macro levels of the economy,” Aman said. He explained, “As we plan to grow our economy, it is imperative that we also focus on infrastructural development to support this economic expansion.” He added that the white paper has concrete recommendations for the policymakers and hoped that the policymakers and stakeholders at the higher echelon of government will consider the effort of the NCCI to inform policy decisions in the future. He reaffirmed the commitment of NCCI to assist the government in all its effort to increase investment and make Bangladesh an economic power, not just regionally but also globally. Riaz A Choudhury, acting Head of Wholesale Banking, HSBC said “The publication of white paper on ‘FDI in Logistics Sector’ is a very timely initiative from the NCCI. Digitization and modernization are inevitable game changers for the future of logistics industry. Leveraging our global expertise and digital platform, HSBC is willing to be a part of this transformation journey.” Asif Khan, Managing Partner of Edge Research and Consulting, in his address shared highlights from the Whitepaper and key policy recommendations suggested in it. Edge Research and Consulting was the research partner of the NCCI for this publication. The ‘Vote of Thanks’ was delivered by Angshuman Mitra Mustafi, Country Manager, Maersk Bangladesh Ltd and Treasurer of NCCI, on behalf of the organizers. Mashur Rahman, Executive Director of NCCI moderated the event. Read more: 'Logistics sector should be declared as thrust sector' The Whitepaper will be available for download from website of the Nordic Chamber- www.nccib.com/resources. The NCCI previously hosted a day-long event with the participation of all stakeholders, both private and government including BIDA, PPPA, 3 Port Authorities, NBR, Bangladesh Bank, Ministry of Foreign Affairs and Ministry of Commerce. Additionally, representation from Think Tanks, Academia and Research, as well as a wide cross section of private sectors actors, including service providers and users attended the event. The program emphasized Bangladesh's diverse range of opportunities, which are based on the country's economic progress since its independence. While highlighting Bangladesh as an attractive investment hub, speakers at the event discussed the need for overall logistics sector development considering Bangladesh's projected increase in trade volume in the coming decades.