Linkages between tourism and energy sector in Bangladesh

Sakib Amin, Foqoruddin Al Kabir and Farhan Khan | Published: July 10, 2018 21:25:27 | Updated: July 13, 2018 21:46:18

United Nations has recently declared Bangladesh as a lower middle-income country with a per capita income of US$ 1610. The country has made significant progress over last few years from socio-economic standpoint such as increased per capita income level, life expectancy, literacy rate, self-sufficiency in food production, poverty reduction, etc. and is now known as the "Asian Tiger" for its remarkable development. For example, Bangladesh's economy grew by 7.1 per cent in 2016, the fastest expansion in 30 years reducing poverty from 44.2 per cent in 1991 to 13.8 per cent in 2016-17 (ADB, 2016). It was also the sixth year in a row that gross domestic product (GDP) growth was higher than 6.0 per cent and it has an expectation of this run to continue.

With an aspiration to become an upper middle-income country by 2021 and high-income country by 2041, Bangladesh now needs to focus on export diversification. Export concentration is not a new phenomenon for Bangladesh. For many decades before the emergence of ready-made garment (RMG) exports, Bangladesh was heavily dependent on jute and jute-related products exports. However, any negative market shock can have a severe adverse effect on Bangladesh economy.

To avoid the trap of being the mono-product export dependency, tourism industry can be considered as a vehicle for export diversification in Bangladesh. The tourism industry is already proved as an effective channel for creating employment, reducing poverty, attracting foreign investment and earning foreign exchange in many countries in the world. Substantial empirical evidence has already been provided by many researchers on the fact that tourism contributes to three high priority goals of the developing and emerging countries: the generation of income, employment, and foreign exchange earnings. The importance of the tourism industry can further be reflected in recent statistics of the World Travel & Tourism Council. In 2017, tourism contributed 10.4 per cent of global GDP which is equal to US$ 8272.3 billion and 3.8 per cent of the total employment (equal to 108741000 jobs).

Bangladesh offers the rare beauty of enjoying sunrise and sunset in fascinating Kuakata, the rare beauty of the Sundarbans having the biggest mangrove forest area in the world and the abode of Royal Bengal Tigers, world's largest sandy sea beach in Cox's Bazar, many old archaeological sites across the country and many more attractions. According to Bangladesh Parjatan Corporation, with having such natural resources and friendly tourism environment, investment in tourism sector can be three times more profitable to its initial investment. Moreover, the tourism industry is a composite of activities, services, and industries that deliver transportation, accommodations, and food, shopping, entertainment and hospitality services available for individuals or groups who are away from home. Thus, tourism can play a very crucial role for future socio-economic progress in Bangladesh through the creation of jobs and enterprises, infrastructure development, and the export revenues earned.

However, the tourism industry in Bangladesh is yet to be developed. According to World Travel and Tourism Council 2017, tourism contributed only 2.2 per cent of total GDP and 1.8 per cent of the total employment in 2017 which is far below than the world standards.

The development of tourism industry implies higher demand for energy and the importance of energy for the tourism sector is inevitable. Tourism-related activities are complex and composite and require a significant amount of energy at different stages. Robust literature finds that the tourist experience itself is only one component of energy demand and many direct business activities may be relevant to a full understanding of energy use in the sector. These include, for example, running an office, marketing the product, and transport. It is very worth noting that both tourism and energy industries are related to sustainability. Tourism industry needs to be considered from the viewpoint of energy usage and environmental aspects. For example, a major environmental impact from tourism expansion is the emission of greenhouse gases as a result of energy use, mainly through the combustion of fuels. So, the prospects of tourism industry also depend on the smooth flow of energy supply. 

The energy sector in Bangladesh will be required to cope up with the changes of the industrial structure as part of tourism-related development activities. Bangladesh has achieved a huge success in the energy sector in the last decade. Among others the electricity generation capacity has increased by 145 per cent since 2006, dependency on natural gas in generating electricity has also decreased by 30 per cent in the last 10 years. However, the government should now put more emphasis on the development of energy sector for not only for future energy security but also for economic security by providing an uninterrupted supply of energy to the tourism industry.

Given the importance and linkages of tourism and energy industry, Bangladesh government should put more emphasis on initiating coordinated and sustainable policies and strategies for the development of tourism industry as part of export diversification process. Tourism Board should expand the tourism industry to new areas, involve the private companies and local communities, and strengthen the marketing policy and promotional activities. To ensure flawless clean energy supply for the tourism industry energy-related public utilities should also come forward with relevant sustainable tourism-friendly policies by increasing energy efficiency and promoting renewables in the tourism areas.

Sakib B. Amin, Ph.D. (Durham, UK) is Assistant Professor (on leave), School of Business and Economics, North South University Dhaka, Bangladesh;Foqoruddin Al Kabir and Farhan Khan are BS.  Graduate Students, Department of Economics, North South University, Dhaka, Bangladesh.

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