ALIDE – ASOCIACION DE ALIDE – ASOCIACION DE INSTITUCIONES FINANCIERAS PARA INSTITUCIONES FINANCIERAS PARA

EL DESARROLLO DE LATINO EL DESARROLLO DE LATINO AMERICANA Y EL CARIBBEAN AMERICANA Y EL CARIBBEAN

52 UNWTO Commission -Technical Seminar on Tourism Investments in the Americas

Asuncion, Paraguay17 – 18 May 2011

AN INTEGRATED APPROACH TO AN INTEGRATED APPROACH TO BUILDING A SUSTAINABLE FUTURE BUILDING A SUSTAINABLE FUTURE

FOR GENERATIONS TO COME!FOR GENERATIONS TO COME!

Presented by Donald O. Charles

General Manager – ABDBChairman, ALIDE Tourism

Technical Committee

103 Banks with 17,333 branches - Multisectoral: 62 - Vivienda: 10 - PyME: 9 - Agricola: 9 - Comercio Ext / Inversion Productiva; Agropecuario y Acuicola; Ejercito;

Desarrolo Rural; Ed. Sal. Otros S; Energia: 13

Total Assets: 2007: 688,678.7 million US Dollars

2008: 880,035.3 million US Dollars

2009: 1,183,606.4 million US Dollars (est.)

THE FUNDAMENTALS

To form one of the pillars of self-sustaining economic activity To generate productive employment, earn foreign exchange and play an integral role in the socioeconomic development of national economies To create viable opportunities for investment projects in new and appealing touristic destinations with high tourism potential

To generate revenue to pay for infrastructure investments in airports, sanitation and transportation, as well as related investments in touristic MSMEs, purchase or modernization of enterprises, marketing, etc To create linkages between the various economic sectors Deepen social and cultural integration of the LAC Region

Modern tourism has become a key driver for socio-economic progress through the creation of jobs and enterprises, infrastructure development and the export revenues earned Need to reverse urban migration by developing rural areas with the resultant creation of jobs Need to reverse and equalize economic exclusion

There is the need for a stable economic & financial climate with growth potential to engender and attract investments and credit Most stable countries exhibit the following:- - efficient state institutions; sound economic performance and policies; rare instances of political violence; low levels of social, ethnic and religious tensions; infrequent disasters

Factors affecting inward and outward tourism in 1999 that undercut regional economic & export prospects as well as job creation capacity:- - slow world economic & financial recovery - government spending cutbacks - increased energy costs - exchange and interest rate uncertainty - commodity price volatility - raising international protectionist pressures

Key Tourism Highlights – UNWTO 2010 Report

Periods of Faster Growth Periods of Slower Growth

-

2004 to 2007

-

2000

-

1996

1995

2008 & 2009

-

2001 to 2003

-

1997 to 1999

-

-

Key Tourism Highlights – UNWTO Report

Tourism Receipts - USD

2000 2008 2009 2009 – per arrival

Americas 188.1 B 165.2 B 1,170.00

North America 138.9 B 118.9 B 1,290.00

Caribbean 23.6 B 22.2 B 1,140.00

Central America 6.4 B 5.9 B 770.00

South America 19.2 B 18.2 B 850.00

Key Tourism Highlights – UNWTO Report

Arrivals 1990 2000 2008 2009

Americas 92,804 M 128,120 M 147,830 M 140,679 M

Argentine 1.93 M 2.91 M 4.70 M 4.33 M

Brazil 1.09 M 5.31 M 5.05 M 4.81 M

Colombia 813 K 557 K 2.17 M -

Costa Rica 435 K 1.09 M 2.09 M 1.92 M

Cuba 327 K 1.74 M 2.32 M 2.41 M

El Salvador 194 K 795 K 1.39 M 1.09 M

Mexico 17,172 M

20, 641 M 22,637 M 21,454 M

Venezuela 525 K 469 K 744 K -

Jamaica 989 K 1.32 M 1.77 M 1.83 M

OPENING COMMENTS BY MEETING OPENING COMMENTS BY MEETING CHAIRMAN – DONALD CHARLESCHAIRMAN – DONALD CHARLES

o That international arrivals are expected to reach nearly 1.6 billion of which 1.2 billion will be intra-regional and 0.4 billion long haul

o That 2 billion new members will join the global middle class by 2050. Of this total, 450 million will come from India alone. (more than all of the population of Europe added together)

o That the BRIC countries will be in the top five largest economies by 2050

o That Asia & the Pacific will have the largest concentration of wealthy people by 2013. Due to congestion and pollution in the emerging countries of Asia & Pacific, there will be an increased desire for travel abroad

Development Banks make meaningful contributions to:- - Financing of tourism development plans for the public and private sectors

- Financing of infrastructure projects useful for tourism and acquisition of fixed assets etc

- Issuing guarantees for tourism projects

- contribute significantly to the creation, growth and strengthening of productive chains - promote business and territorial development - stimulate the development of touristic MSMEs, generate new initiatives as well as to reform and modernize the tourism sector - create funds or trusts for tourism development projects in new and existing touristic space

- Also, Development Banks coordinate the structured linkage of the tourism sector with other sectors to include:- infrastructure; agriculture; micro, small & medium enterprises, carbon reduction and greening initiatives.

BANCO CIUDAD de BUENOS AIRESProvides an array of financial products to encourage tourism development to various agencies, micro-enterprises and SMEs:- - To hotel & Lodging Sector: funds for purchase of property & equipment etc or for renovation or refurbishment - To travel agencies: funds for equipment or overseas promotional activities - To MSMEs: working capital and redeemable loans - For Capital Assets Acquisition

BANCO de la NACION ARGENTIAN (BNA)Provides the following financial products:- Finance for the construction of hotels throughout the country Lines of credit for equipment, expansion and working capital for hotels Financing of productive activities in tourism to MSMEs for: - general construction, expansion, renovation of facilities, purchase of new or used equipment or goods, working capital

BANCO NACIONAL de DESENVOLVIMENTO ECONOMICO e SOCIAL (BNDES)Working closely with EMBRATUR, it provides funding that targets touristic municipalities with the following products:- To medium & large enterprises: for fixed investment and associated working capital To micro and small enterprises: for fixed investment & working capitalTo medium & large enterprises: the FINEM funding line

BANCO de NORDESTE (BNB)Acts as the financial agent for the BNDES - FINEM program. Also, manages the Constitutional Financing Fund of the North East. Offers the PROATUR program, which is a line of dedicated funding for tourism aimed at the private sector in touristic designated towns that have been certified by MINISTRY OF TOURISM and for the following purposes:- implementation, expansion, modernization and reform of enterprises in the tourism industry. finance new investments in fixed assets & for working capital

BANCO da AMAZONIA Supports the building of sustainable tourism business’ within the region to boost the economy. Also, facilitates the integration of the policies of federal & state governments for the Amazon as it relates to the Tourism Incentive program that encourage social sectors to explore the potential of the tourist routes of the Amazon. Provides loans for Amazon Tourism development to individual borrowers of up to 36 months Provides business loans for working capital and rotating lines of credit to enterprises & travel agencies up 360 days

BANCO de COMERCIO EXTERIOR de COLOMBIA (BANCOLDEX) Provides the traditional forms of credit to any size of enterprise of unlimited amounts. Also has special quota loans to finance investment projects to execute improvement plans Provides special support for MSMEs for business modernization with a reduction in the rediscount rate Its “a Progresar” program supports increased productivity and competitiveness with a reduction in the rediscount rate

BANCO NATIONAL de COSTA RICA Has a division specializing in tourism and there is a direct relationship with tourism enterprises; regional & community development agencies; associations, chambers of commerce and tourism institutions; and MSMEs. It has been established that there is the priority need to create & improve infrastructure Tourism Banking: provides funding for recreation& leisure, lodging, food and equipment Tourism Micro-enterprises: provides funding for similar purposes as stated about plus for investments, working capital and payment of liabilities financing

FINTUR – Bank for Financing Tourism Administers income in the tourism sector Manages development funds in the sector & gives loans to finance investments Has access to external sources of funding Its is empowered to participate in joint ventures, companies and other forms of economic partnership Provides consulting services on economic & financial matters as well as management advisory services

CORPORACION para el DESARROLLO de CURACAO (KORPODEKO) Contributes to economic & social development by providing financing to promising projects that have higher risks than normal commercial projects

FASTON – Facilidad para Creacion de Emprendimientos Program directly related to the tourism industry that provides donations to enhance assets of a business so that it can access funding

BANCO MULTISECTORIAL de INVERSIONES (BMI),Supports the tourism sector as part of a national policy of the Government by making available to tourism enterprises several programs based on financial assistance and technical training, including:- the Investment Credit Line that provides funds for working capital needs and purchase of fixed assets for projects

PROGAPE, which provides support to MSME’s by way of

guarantees to secure production credit

DEVELOPMENT BANKS have developed two programs to support the tourism sector:- Programa de Financiamiento competitivo para las MIPYMES turisticas, designed with Ministry of Tourism and NAFIN:- Provides financial resources to MSMEs for working capital, equipment etc plus access to training & technical assistance; also for the professionalization and modernization of small hotels, travel agencies, restaurants and touristic services Provides factoring lines to suppliers for receivable financing Financing for small hotels and tourism projects:- expansion, remodeling, construction, purchase of hotels, equipment etc

Programa de Financiamiento al Sector Tourism promotes increased funding to the sector in partnership with commercial banks: Supports activities of ectotourism, adventure tourism, extreme sports, accommodation facilities, camps, mobile homes, etc Covers capital needs for operating expenses, remodeling, modernization, expansion and construction of new buildings Financier de Financiamento promotes the development & strengthening of tourism in rural areas

MINTUR-BANFOANDES-SOGAMPI-BANDES CONVENTION BANFOANDES provides financing of up to US930K SOGAMPI gives bond or guarantees that provide access to financing for construction, remodeling, improvements, equipping and furnishing of hotels, lodges & camps; also, for land and sea transportation to support tourism development

MINTUR-BANFOANDES-SOGAMPI-BANDES CONVENTION BANCO de DESARROLLO ECONOMICO y SOCIAL de VENEZUELA (BANDES) provides direct credit for projects supported or endorsed by MINTUR within the designated areas for tourism development :- such as inns, hotels, tourist camps, farms, ranches, other tourism services: care, recreation & entertainment; infrastructure; transportation; information; gastronomic enterprises

Development of artisans centers along tourist routes

DEVELOPMENT FINANCE INSTITUTIONS There are many international development

finance institutions that provide funding for a variety of purposes within the LAC Region. In recent years, there has been an attempt by these institutions to take a harmonized approach to the mobilization and channeling of funds through the most effect distribution system, which is in most cases the development banks especially for projects that involve MSMEs and poverty reduction

DEVELOPMENT FINANCE INSTITUTIONS

The following are the names of Institutions that can providetourism development needs:-

WORLD BANK IDB EIB CDC – UK OFID – OPEC Fund kfw Bankengruffe - Germany

some of the more significant funding to support our

JBIC – Japan FMO – Netherlands NORFUND – Norway COFIDES – Spain AFD – France LAIF - EU

DEVELOPMENT FINANCE INSTITUTIONS

Areas of focus:-

Foster growth in sustainable SMEs and capital to invest in these businesses

Micro-financing Job creation Economic recovery and

growth Increased investments in vital

infrastructure and social services

Rural development Raising of living

standards Poverty reduction Environmental protection Renewable energy use

and carbon reduction Improving

interconnectivity within the LAC Region

IDB’S SUPPORT FOR TOURISM DEVELOPMENT The Inter-American Development Bank has a

specific Tourism Development program that offers loans and technical cooperation to finance studies and investment projects. Related requests for funding should have any of the following objectives:-

To attract international tourism as well as promoting and facilitating national tourism

Developing areas with tourism potential that are not yet developed economically

To create new employment opportunities To contribute to Latin American regional

integration

IDB’S SUPPORT FOR TOURISM DEVELOPMENT The Bank’s main areas of activity related to

tourism are for INFRASTRUCTURE WORKS and for BASIC FACILITIES, including HOTELS and DEVELOPMENT OF CULTURAL TOURIST ATTRACTIONS.

However, the bank is guided by its policies related to providing financing.

While, the Bank expects that the public and

private sector agencies and financial institutions with provide the financing for BASIC FACILITIES it can relax its policy in exceptional circumstances such as:-

IDB’S SUPPORT FOR TOURISM DEVELOPMENT

Limited investments are required to engender broader participation by the private sector

A country does not have the necessary experience or capability, or properly qualified institutions for the development of tourism attractions

Where the Bank is desirous of strengthening institutions responsible for the effect development and preservation of tourism attractions

Need for the expansion of the supply of tourist hotels especially by small and medium businessmen

Need for basic facilities in potential areas with low employment

Nature of the project precludes private sector participation

IDB PROJECTS IN LATIN AMERICA In Bolivia and Nicaragua, the Bank provided

financing and technical support for the following:-

Restoration and improvement of tourism resources

Training & technical assistance to MSMEs To improve planning and management

capabilities Develop culture and leisure centers The restoration and improvement of coastal

promonade and historic centers

IDB PROJECTS IN LATIN AMERICA

The creation of overlooks, bicycle paths, pedestrian walks along scenic routes

The sustainable management of tourist areas such as:- the adapting to climate change; implementation of natural disaster risk management and mitigation procedures in coastal areas; management of beaches; use of renewable energy

Developing systems for the regulation, rating, control and inspection of tourism businesses

The upgrading of regulatory and policy framework

IDB PROJECTS IN LATIN AMERICA In Brazil, the Bank has played an important role in

providing funding for Tourism Development Program in the North East of Brazil (PRODETUR) that is executed by BNB. The program is aimed at social and economic development brought about by developing the tourist activity and resulting in the improvement of life conditions of the inhabitants by creating basic infrastructure; attracting investments, and institutional development. The first phase of PRODETUR was carried out between 1995 and 2004 with a total investment of US$736 million (US$400 million were contributed by IDB) directed at investments in airports, basic sanitation and transport

The International Finance Corporation is

an affiliate of the World Bank Group whose vision is to assist people to escape poverty and improve their lives. It is the largest multilateral developmental financing institution investing in private enterprises in emerging markets.

It provides investment and advisory support to private sector clients and works in “additionality” to existing sources of financing

There are many local, regional and international commercial financial institutions providing support for the sector. However, based on the risk adverse nature of these institutions many don’t provide funding for early stage projects that have inadequate equity investments and or tangible assets to pledge as collateral. These institutions tend to finance the larger upscale projects and provide very little support to the MSME sector

STRATEGIC APPROACH

Need for a coordinated approach between Councils of Tourism to expand market share

Need to determine and prioritize the key development challenges of the tourism sector related to investment and develop a specific plan with precise targets for tourism development

Need for tourism programs to be developed from the perspective of the demand requirements as determined by market research; and the supply markets should be from diversified destinations with future growth potential

STRATEGIC APPROACH

Need to develop joint strategies to promote inbound tourism on a regional level so that the benefits are extended to the entire community of nations

Need for reliable air services, high level of security & supply of goods and services from within the region

Need for an integrated approach to tourism development in conjunction with other related sectors (Agriculture, MSME, Infrastructure)

The Brazilian Approach

The Brazilian government initiated as part of its National Tourism Policy, a Tourism Development Program named PRODETUR. This program of action for Integrated Development of Tourism called for the financing and implementation of tourism infrastructure in locations considered potential inducers of private investment. This program was implemented primarily in the Northeast with a total of US736 million being invested in phase I.

The Brazilian Approach

As mentioned earlier, US400 M was invested by IDB through BNB and US336M came from Govt. of Brazil & the North East States. Areas of investments:-

Environment Protection & Preservation …..3%Structure upgrading & Training……………….4%Restoration of Historic Sites…………………….5%Transportation………………………………………12%Sanitation……………………………………………..24%Airports………………………………………………..34%Other……………………………………………………12%

STRATEGIC APPROACH

Need to provide support to the tourism enterprises & entrepreneurs for the strengthening of their management processes, enhancement skills and to improve capacities to identify and access new opportunities

Need to establish region wide certification standards for quality and the criteria for the classification of products offered in the sector

Facilitating the access to financing and technical assistance to MSMEs

A ROLE FOR VOLUNTEERISM

Based on the need to provide technical training and business assistance to many of the MSME business enterprises and entrepreneurs, a unique opportunity exists for the use of volunteers to provide the required services at a fraction of the cost of contract industry professionals at market costs.

CDC Development Solutions of Washington, DC leverages public, private, and volunteer resources to strengthen MSMEs and the institutions, governments, and industries that drive economic growth in emerging markets.

A ROLE FOR VOLUNTEERISM

CDS applies unique methods to create opportunities for small businesses and entrepreneurs working within the tourism supply chains. They identify “value gaps” where opportunities for local development through jobs creation, new business planning, and supplier relationships have not yet been realized

Two unique MBA Volunteer programs are accessible, which utilize the cutting-edge expertise of these young professionals for either 1-6 month or year long assignments

A ROLE FOR VOLUNTEERISM

There is another volunteer organization, GNTP that intends to focus on leveraging existing efforts to help build a large network of destinations in South and Central America with various degrees of needs

Additionally, this volunteer network would collect extremely important information about the various destinations that they visit and feed this information through the network and beyond that would impact positively on future visitor travel to the region

A ROLE FOR VOLUNTEERISM

To utilize these volunteer networks to direct contributions for social and environmental development projects to a “Trust Fund” that would be administered through the vast banking network of ALIDE member banking institutions

ADDITIONAL SUGGESTIONS

Create a Tourism Development Fund that would have tax-exempt status granted by all participating countries. The Fund would be underwritten by the Development Banks and allocations to DBs would be approved by a Tourism Investment Committee

Create a Vacation Debit/Credit Card to be marketed around the world. Credit portion to be financed over 24 months

Create incentives for travel savings

A CRITICAL NECESSITYMarketing of the Region to generate

increased tourism arrivals with the related growth in revenue that will ensure debt repayments and profits for owners / investors as well as increased public sector income

Need to promote the uniqueness of the region and offer combined destinations tour packages

Need to brand the region as a premier & exquisite vacation destination

SUPPORTING EACH OTHERCapitalize on the two upcoming International

sporting events in Brazil to bring awareness to the region in a sustainable way

Ongoing promoting of the destinations well past the staging of these events to keep the positive experiences of the visitors or the viewing audiences in the forefront of their minds

Develop the Integrated Multi-Destination Marketing Platform for the LAC Region

ADDITIONAL SUGGESTIONSNeed to develop strategies to engender

greater public awareness as to the importance and benefits of tourism for economic growth and establish an incentive system to improve customer service and productivity

IMMP for the LAC Region A Presentation on “An Integrated Multi-

Destination Marketing Platform for the LAC Region” follows…..

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