Korea Tourism: Beyond K-Pop & Seoul – Policy Reform Needed

What is the most painful thing that an economy with a declining population experiences? The first thing that comes to mind may be that industrial activities are shrinking due to a lack of people to work, or that social welfare costs are increasing significantly due to aging. But what is more painful than that is the collapse of the domestic market that will be brought about by population decline.

It is easy to understand the reality by looking at the case of Japan, where the economically active population began to decline as early as the mid-1990s. Japan’s deflationary economy, described as the ‘lost 20 years’, is the result of a slump in the domestic market caused by a decline in the consumer population.

So, what Japan came up with in an attempt to lessen the impact of the collapse of the domestic market is the inbound tourism strategy to revive domestic demand by attracting foreign tourists.

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「 Concerns over domestic demand stagnation due to population decline
Japan uses inbound tourism strategy

Implementing a regional-led tourism policy
Highest number of foreign visitors at 37 million

Establish a cooperation system between ministries and regions
Strategies for utilizing local airports should also be explored.
」

Former Prime Minister Shinzo Abe was at the center of Japan’s inbound tourism policy. As soon as Prime Minister Abe took office, he established the ‘Tourism Entry Promotion Ministerial Council’ in which ministers from all ministries participated and became the chairman himself, leading the tourism policy. He emphasized throughout his eight years in office that ‘inbound tourists are the engine of economic growth’ and that ‘tourist arrivals are a catalyst for local revitalization.’ They realized that there is nothing better than inbound tourism to simultaneously deal with the two crises of zero growth and regional extinction.

Based on Abe’s encouragement, each government department pursued innovative tasks such as dramatically improving entry procedures, expanding digital tourism infrastructure, expanding the tax exemption system, and turning national cultural assets into tourism resources. As a result, Japan, a country with such a strong resistance to change that the culture of stamps and faxes still remains, brought about unprecedented changes in the tourism sector.

It was also an excellent move to develop a region-led tourism policy to respond to regional extinction. The strategy was to allow foreign tourists to visit the surrounding areas and every corner of the province, rather than just stopping by Tokyo and Osaka. To this end, the central government and local governments have made intensive efforts to organically link together to advance regional characteristics and dramatically expand tourism and transportation infrastructure such as airports.

The result of this inbound tourism strategy was a huge success. When the Abe administration came into power, the number of foreign tourists was around 10 million, which was less than that of Korea, but last year, the number of inbound tourists reached an all-time high of 37 million.

Effective in responding to tourism and regional extinction
The results of local-led tourism policies were also remarkable. The number of foreign tourists has increased explosively not only in Tokyo and Osaka, but also in regions such as Fukuoka, Hokkaido, and Okinawa. How hot these regions have become is evidenced by the fact that their real estate price growth rates over the past 10 years ranked 1st, 5th, and 6th out of 47 prefectures in the country.

Compared to Japan’s brilliant achievements, our performance is shabby. The number of inbound tourists, which used to be greater than that of Japan, is now less than half of that of Japan. Why did it happen like that?

The fundamental reason is the difference in the two countries’ policy interest in inbound tourism. In direct contrast to Japan, where the government pushed its inbound tourism policy with all its might, Korea’s interest in the policy has actually decreased. The tourism promotion meeting chaired by the president was relegated to being chaired by the prime minister, and the position of the Blue House Tourism Promotion Secretary was eliminated. The president no longer directly presides over the tourism policy control tower.

Just looking at the name of the ministry in charge (Ministry of Culture, Sports and Tourism), which places tourism as the third department after culture and sports, you can guess that the status of the tourism policy control tower has been weakened. This is in contrast to Japan, which created a separate tourism agency and placed it under the Ministry of Land, Infrastructure, Transport and Tourism, which oversees transportation policy.

Another reason for the widening gap between Korea and Japan can be found in the fact that while Japan pursued a regionally driven tourism policy, Korea focused on centrally driven policies. To put it bluntly, our country’s tourism policy relies on ‘K-pal’. ‘K○○’ is added to all tourism policies. Although the effect is perfect, the scope of the effect is limited to Seoul.

As a result, the concentration of foreign tourists in Seoul is excessive. Even when foreign tourists visit Korea, they end up staying in Seoul for a short period of time before leaving. There are bound to be limits to increasing the number of foreign tourists by relying on Seoul, and it is not desirable.

The stark contrast between the realities of Korea and Japan’s inbound tourism policies is in the actual use of airports. Japan has 97 airports across the country. Japan actively utilized these regional airports by reorganizing them into international airports as needed to attract foreign tourists. Sapporo, Okinawa, and Fukuoka airports, which were originally international airports but had small and limited international capacity, were greatly expanded in response to the increasing number of foreign tourists. Based on organic cooperation between government ministries and between the central government and local governments, we responded promptly to maximize the use of the airport and dramatically improved local accessibility for foreign tourists.

There are 15 airports in Korea. Of these, 83% of foreign airport arrivals use Incheon and Gimpo airports. The number of foreigners entering the country using Gimhae and Jeju airports is 8% each. The rest of the airports have virtually no foreign tourists. Seven airports are not used as international airports at all even though they have excellent local tourism resources.

Tourism policy dependent on Seoul has clear limitations
It is not a lack of local tourism resources, but a lack of transportation accessibility. Expansion of Gimhae Airport and Jeju Airport, which are currently in a state of saturation, is far from possible. The existing airports cannot be utilized properly and the necessary airports cannot be built. This is the current state of the difference in tourism policy capabilities between Korea and Japan.

The inbound tourism industry is as important to our economy as the semiconductor industry. Our economy, which has a large proportion of self-employed people and small and medium-sized businesses that are completely dependent on the domestic market, will inevitably suffer a huge and painful impact from the collapse of the domestic market. Japan turned this painful crisis into an opportunity. The total consumption of inbound tourists in Japan last year was 8 trillion yen, ranking second in export volume after the automobile industry exports, making it an export-rich industry.

Now we also need reform of the overall inbound tourism policy. To achieve this, the first thing to do is to establish a new inbound tourism policy governance. As a first step, the position of Secretary for Tourism Promotion in the President’s Office, which has disappeared, must be revived. For tourism policies to be effective, organic cooperation between ministries is essential.

For example, the digital tourism policy has many problems that cannot be solved without cooperation with other ministries, such as expanding accessibility to online payment and digital reservation services for foreigners, digital transformation of small businesses, and easing regulations on online map services. Cooperation with the Ministry of Land, Infrastructure and Transport to improve transportation accessibility, a key element of inbound tourism, is also important.

A powerful tourism policy control tower is needed.
It is not enough for the youngest organization of the Ministry of Culture, Sports and Tourism to handle this kind of work. In order to coordinate interests between ministries and go one step further in deriving innovative tourism policies, it is necessary to establish a control tower in the Presidential Office dedicated to tourism policy.

Second, the linkage and cooperation system between local governments must be reestablished to effectively promote regionally-led tourism policies. In the case of Korea, the administrative districts divided for administrative convenience are not suitable as a regional unit for implementing tourism policies. The size of the provincial unit is too large to develop a regionally specialized tourism strategy. The size of the county unit is too small, so the capacity to invest human and material resources is low, and it is also unsuitable for devising inter-regional linkage strategies. The more than 250 unique swing bridges installed like a trend across the country are the result of rapid-fire competition between local governments.

Japan has a regional specialized tourism policy centered on the prefecture level, and the average area and population size of the 43 prefectures is smaller than Korea’s provinces and much larger than counties. The conditions are more favorable than those in Korea for implementing regional specialization strategies.

Since we cannot change our administrative system right away, we need to strengthen the cooperative administrative system that seeks to link between local governments to compensate for the handicap. First of all, unnecessary competition between county units or metropolitan local governments must be avoided. Furthermore, a separate linkage and cooperation organization between local governments should be established focusing on tourism resources. Of course, it is necessary to strengthen the control tower function at the central government level to coordinate these matters.

Third, the utilization capacity of airports across the country must be dramatically improved in order to move away from the center of Seoul and transform the entire country into a tourism resource. Domestic airlines serve more than 30 of Japan’s 97 airports. I go to the airport of a small town in Japan whose name I have never heard of. This is the result of the Japanese government’s active policy of attracting foreign airlines to revitalize local tourism.

As a result, local cities in Korea and local cities in Japan are competing to attract domestic tourists. Let alone attracting foreign tourists, the outflow of domestic tourists overseas is also serious. The number of Korean tourists visiting Japan in the first half of this year is close to 5 million. On the other hand, only 1.6 million Japanese tourists visited Korea. It is also centered around large cities such as Seoul.

Transportation accessibility must be secured using airports across the country.
We also have many excellent tourism resources with airports nearby, such as Pohang, Gyeongju, Yeosu, and Gunsan. However, this area has a fatal weakness as an inbound tourism resource due to poor transportation accessibility for foreigners. Even now, local airports, which are treated as outcasts, should be actively utilized as a contact point for inbound tourism. The Muan Airport disaster should not result in arguments about the uselessness of local airports. Rather, we must take a future-oriented response to ensure that sacrifices are not in vain by revitalizing local airports.

While Korea is focusing on a grandiose and abstract event called ‘A country with attractive tourism with K-culture’, Japan is working hard on a promotional event where the head of the National Tourism Organization visits Korea and invites people to tour every corner of Japan under the theme of ‘Finding Japan’s Hidden Gems’. It is a symbolic cross-section that shows the current state of Korean and Japanese tourism policies.

This is not the time to just like the movie ‘K-Pop Demon Hunters’ just because it came out. Don’t think of ‘Kedeheon’ only as a way to promote tourism in Seoul, but use it as a lever to promote tourism throughout the country. A major reform of tourism policy to upgrade inbound tourism is urgently needed.

Kwon Soon-woo, President of the Korea Self-Employment Research Institute and economic columnist