9 Nov 2021 | HKPL

Financing sustainable mountain tourism in Bhutan, Nepal, and Pakistan

Syed Muhammad Abubakar & Binaya Pasakhala

5 mins Read

The tourism sector is likely to witness exponential growth in a post-pandemic world and this presents an opportunity for building green, inclusive, and resilient mountain tourism in the Hindu Kush Himalaya (HKH). This was among the many topics discussed at the webinar on Financing sustainable mountain tourism that we organized in collaboration with the State Bank of Pakistan (SBP) on 7 June 2021.

The webinar brought together experts from the banking and tourism sectors in Bhutan, Pakistan, and Nepal as well as from government and civil society organizations to discuss innovative financial solutions for the tourism sector that can help make the sector sustainable, address emerging climate risks, and contribute to conservation.

In his opening remarks, our Director General, Pema Gyamtsho highlighted the role of tourism in conservation, “Tourism can help generate much needed investments for protecting our environment and conserving our culture and biodiversity, but it can also destroy them if not properly managed.” He also stressed the importance of aligning this with the theme of World Environment Day 2021 – Ecosystem Restoration – and the need for innovative solutions that tackle environmental degradation while ensuring sustainable livelihood opportunities for mountain communities.

Shaukat Zaman, Foreign Exchange and Development Finance and Group Head – Networking and Financial Management, SBP highlighted that the banking sector can significantly contribute to tourism financing by developing various innovative products for hospitality, transportation, travel facilitation and service needs. Similarly, Raja Nasir Ali Khan, Tourism Minister, Gilgit-Baltistan, Pakistan informed that given the high influx of domestic tourists in Gilgit-Baltistan, the Tourism Department is now conducting a study on the impacts of tourism in the Gilgit-Baltistan region.

Ghulam Ali, our Programme Coordinator for the Hindu Kush Karakoram Pamir Landscape (HKPL) Initiative introduced the objectives of the webinar and highlighted the potential for circuit tourism with greening tourism (financially as well as in terms of environmental planning for destination management) across the Hindu Kush, Karakoram, Pamir mountains (Wakhan) across the China-Pakistan-Afghanistan-Tajikistan border areas. He underlined the need for green financial solutions, a concept that emerged from tourism stakeholders during the ICIMOD supported studies.

In her presentation on sustainable mountain tourism in the HKH region, Anu Lama, our Tourism Specialist shed light on the intrinsic relationship between mountains and tourism in the HKH and the potential for tourism to enhance livelihoods and achieve the sustainable development goals. The presentation recognized the role played by micro, small and medium enterprises (MSMEs) within the tourism economy. The business case for mountain tourism sustainability requires innovative financial solutions, and the work done under innovation, entrepreneurship, and investment provides an important case for tourism and financial institutions to learn from and develop their own customized green financial products. She also emphasized the need to promote low carbon and wellbeing-focused sustainable mountain tourism for a green, inclusive, and resilient future post-COVID 19.

Malik Mirza and Amjad Ali, shared their research on tourism and financing needs, which showcased the stakeholders’ perceptions of how unplanned tourism in Gilgit-Baltistan has led to significant land use change and increased pressure on its ecosystem services.

Regional cooperation for financing sustainable tourism

The webinar also helped build synergies and collaboration among the stakeholders of the three countries. In the first session on regional cooperation, Basanta Raj Shrestha, our Director of Strategic Cooperation briefed the participants on regional cooperation and private sector partnership and led the discussion on sharing regional experiences while keeping in view the tourism and financial perspectives.

Experts from Bhutan, Nepal, and Pakistan – Dasho Dorji Drahdul, Director General, Tourism Council of Bhutan; Padmakshi Rana, Deputy Director Programs, Nepal Communitere; and Iqbal Walji, President, Walji’s Travel from Pakistan – discussed tourism sector policies, programmes, sustainability challenges and solutions, and the importance of access to finance and provision of tailored financial products.

This was followed by another set of presentations on regional financial solutions, current offerings, and the perspectives of banks by Prem Moktan, Director for Credit Services, Bank of Bhutan, Bhutan; Maitreya Shakya, Executive, Corporate Advisory and Research Unit, Nabil Investment Banking Limited, Nepal; and Mazhar Shahzad, Joint Director, Infrastructure, Housing & SME Finance Department, SBP, Pakistan. The various stakeholders urged to continue the exchanges until green financial solutions are regionally promoted. The presentations can be accessed here.

Sustainability of mountain tourism

The second session had a moderated discussion on the sustainability aspects of mountain tourism and ways to harness tailored financial solutions. Panellists emphasized the need for more exchanges on technical dimensions while pursuing resilient, equitable, low carbon, and sustainable tourism for the wellbeing of tourists, environment, and local communities. They agreed that tourism is a prioritized sector for the respective governments, and that linking national tourism policies and strategies including financial solutions will promote sustainable tourism.

Key takeaways

Imran Ahmad, Additional Director, Development Finance Support Department, SBP and Babar Khan, our Senior Ecosystem Management Specialist summed up the key takeaways:

The high value and low volume (HVLV) tourism policy of Bhutan can be a replicable policy model for other countries in HKH region – a pathway for shifting from mass tourism to sustainable tourism.
Tourism sector in the region is vulnerable to climate change impacts, therefore, regional cooperation is essential for climate change adaptation and mitigation.
There is a need to have more technical exchanges while devising effective and innovative banking schemes and green financial products for micro, small, and medium enterprises in the tourism sector.
Seasonality of tourism sector and consequent cash flows are an opportunity (for tailored product development) as well as major impediments for lending loans to MSMEs in tourism sector.
Equated Annual Investment (EAI) in Bhutan and branchless banking through local agents in Nepal were innovative financial solutions tailored for MSMEs in tourism sector.
Capacity building of MSMEs for greening of tourism sector through project financing i.e., Tourovation Hub in Nepal has shown positive results. Women entrepreneurs continue to face multiple challenges to access financial investments.
Innovative solutions such as cash flow-based credit risk assessment and lending, green interest rates for low carbon product packages i.e., refurbishing hotel facilities with green technologies, capacity building of MSMEs, as well as banking and financial institutions i.e., financial literacy and business projections, for ensuring desired credit flows toward tourism sector in the region.
In the post-COVID-19 scenario, the tourism sector is likely to witness exponential growth which calls for innovative approaches to green financing, product branding and capacity building for greening of tourism sector through investments in renewable energy, green infrastructure, housing, transportation, and waste management.
Financing sustainable mountain tourism should be reimagined, repurposed, and recalibrated. This calls for a robust approach and responsible, recovery-based policies and actions.
Continued exchange and sharing of technical knowledge and learning between HKH countries to develop new and relevant financial products and monitoring of impacts at scale.