1. Staying Ahead of the Curve Prepared for PATA 60 th Anniversary & Conference Building Tourism: Past. Present. Progressive. by Robert Broadfoot Political & Economic Risk Consultancy, Ltd. E-Mail: info@asiarisk.com April 11, 2011

2. Uncertainty Matrix Critical Planning Issues Important Scenario Drivers Critical Scenario Drivers Important Planning Issues Important Scenario Drivers Monitor Monitor; Reassess Impact Low MediumHigh Degree of Uncertainty Low Medium High Level of Impact

3. Uncertainty Matrix DemographicsEconomic growth Labor availability, quality & retention issues Radical changes in policy National security concerns Status & relations of key players Crime levelsExchange & interest rate changes Environmental issues Inflation Winning the rights to host major events CorruptionConstruction costs Weather Low MediumHigh Degree of Uncertainty Low Medium High Level of Impact

4. Radical Policy Changes Learn from the past. China, Vietnam, Hong Kong and Macao Millions 1,767.2% 570.0% 178.2% 36.03 10.16

5. Reasons Behind HK’s Tourism Growth  Change in HK’s political status  Liberalization of visitor outflow by Beijing  Personal income increases in China  Expanded infrastructure  Land link

6. Where More Radical Policy Changes Are Likely North Korea and Myanmar  Relations with China are already better than with most other countries  Both countries are facing regime changes and are under increasing economic pressure  Both have land links with China  Both figure prominently in Beijing’s national security considerations

7. Beijing’s National Security Concerns  Energy security  Vulnerability of existing points of entry and exit  Exposure to Malaca Strait’s risks  Emphasis on self-sufficiency – inputs, technology

8. China’s Mass Transport Plans Rmb 3.5 trillion in new investment between 2011 and 2015 Double high-speed rail network to 16,000km 45 new airports at a cost of Rmb 1.5 trillion Likely Response to Mitigate Risks

9. 2020 Railway Vision  50,000 km of track connecting all provincial capitals and cities over 500,000  Accessible to 90% of Chinese  Neighboring provincial capitals 1 to 2 hours apart  Provincial capitals only half to one hours apart from other cities in their province  Travel time from Beijing to Hong Kong – 8 hours by train

10. New Entry & Exit Points

11. China Is Pushing For Rail Links with Southeast Asia

12. China’s “Dry Canal” Through Columbia

13. The Big Railroad Picture

14. Status & Relations of Key Players  Who and which departments in China will actual have authority for implementing these plans and how will they interface?  Will corruption distort implementation and perhaps even undermine it?

15. Critical Drivers Will Help You Know  How pieces of the Asian puzzle are fitting together.  Strengths and weaknesses of different branding strategies.  Local partnership identification.  Where within individual countries and cities property prices are likely to go up the most

16. Thank you and good luck!