Boracay: A quiet place

"A Quiet Place" is an unexpected hit movie that cost only $17 million to make and has already grossed over $200 million in the three weeks that it has been showing. On the other hand, Boracay the top tourist destination in the Philippines was totally closed and is off-limits to all tourists starting April 27 and is expected to lose some $1 billion in tourist revenue. It is an interesting coincidence that is full of business and economic implications.

Boracay's official closure came about when it got the attention of President Duterte about the seawater quality and enormous environmental violations happening there. The huge planned investments into the island, including a big hotel-casino, larger seaport and airport, and the volume of tourists coming in kept it also always in the news. The DENR head was tasked to investigate the real state of the island. After a month of fact-finding and consultation with other government departments like the Department of Tourism, it was recommended to the president that in view of the degradation of the land and sea, the disorderly construction and development, the island should be closed for six months. In that time duration, the island should be rezoned, solid waste and water treatment facilities installed, and the island cleaned. It was also found out that many of the structures and establishments in the island were illegally occupying land and buildings were in violation of easement rules and the building code. Some sizable structures were located in "wetlands" and many were discharging waste water directly to the sea.

According to NEDA estimates, the macroeconomic impact of Boracay's closure will be some P1.96 billion and would shed only .01 percent of GDP growth this year. The private sector pegged the economic losses at P50 billion in tourism revenues. There were two million local and foreign tourists who visited Boracay last year, so a six-month closure means one million tourists. Assuming each tourist spends $1,000 to go to and to stay in Boracay, it means $1 billion in lost revenues in plane fare, boat fare, lodging, food, and shopping. This is closer to the P50 million estimate of the private sector which is actually .03 percent of the Philippine GDP. Assuming money velocity at two, the Boracay closure will amount to .06 or onehalf percent of the GDP/economy. With the current strong growth, the Philippine economy could absorb this economic impact. From the microeconomic perspective this would be very significant to the Boracay businesses, the province of Aklan, and the nearby communities.

The sociopolitical effects of this Boracay closure are evenly divided. While the directly affected population are opposed and are negatively reacting to the closure and to the government, there is an equally large number of ordinary citizens who are supportive of the closure for the sake of the environment and the sustainability of the resort areas all over the country. The satisfaction rating of the government will take a slight downward dip which may be easily recovered depending on the things that will be achieved during the six-month rehabilitation of Boracay. The promised infrastructures, environmental protection and compliance by all stakeholders have to be delivered without partiality and selectivity. Allowing the building and operation of a casino will be a big issue and will be very damaging to the credibility and satisfaction rating of the government.

I was in Boracay 20 years ago, 10 years ago, and five years ago. It was no longer quiet during my last two visits but it was always fun for the whole family. Boracay is not just a beach resort area; it is a party place whether you are staying in a Station 2 hotel or in Shangri-La. It is not really meant to be quiet place.

‘With the current strong growth, the Philippine economy could absorb the economic impact of Boracay's closure.’