APEC Turns to Digital Tools to Support Tourism Sector’s Transition to the Formal Economy

With significant portion of the tourism sector remains informal, limiting economic opportunities and generating inequalities, APEC turns to digital tools in a bid to drive the sector’s transition to the formal economy.

According to the APEC Policy Support Unit’s recent policy brief, the size of the informal economy in the APEC region has been estimated to be 13.4 percent of GDP in 2020, and the average earnings of informal workers in several APEC economies is around 40 to 67 percent lower than those working formally.

During a recent workshop hosted by the APEC Tourism Working Group in Lima, Peru, stakeholders from across the region gathered to identify strategies for business formalization through the use of digital tools, enhance capacity to implement the formal economy transition, propose customized solutions aligned with APEC economies’ domestic circumstances, as well as fostering collaboration and learning.

In her opening remarks at the workshop, Peru’s Vice Minister of Tourism Madeleine Burns said that this effort is crucial for creating the necessary conditions to drive the economy and social development of the region.

“Formalization supported by digital tools offer a unique opportunity to enhance the management efficiency and competitiveness of the businesses in the tourism sector,” Vice Minister Burns said.

She highlighted findings from a recent study conducted by Peru and funded by APEC, which shows that digital tools can be a powerful catalyst for formalization. However, the study also shows that many businesses still face a significant barrier to accessing and effectively using these tools. To this end, good practices will be put forward to enable their appropriate adoption in APEC economies.

“It is our responsibility as leaders and facilitators of change, to provide not only the necessary information, training, but also to create a conducive environment where these digital tools can be adopted and used efficiently,” Vice Minister Burns added.

“Transitioning to the formal economy for businesses not only improves their competitiveness, but also contribute to the sustainable economic growth of our society,” she continued.

“Today, we are reminded of the critical role that tourism plays in the economies of the APEC region,” said Renato Reyes, Peru Senior Official for APEC. “Yet, despite its importance, the tourism sector often faces challenges related to the informality, which can hinder its growth, sustainability and contribution to inclusive development.”

“This is where our collective efforts are crucial,” Reyes continued. “Through this workshop, we aim to explore how digital tools can serve as catalyst for formalization, enabling tourism businesses to thrive within a more structured and supportive economic environment.”

Despite the clear benefits of digitalization, several challenges remain in ensuring its successful implementation. One of the key challenges identified during the workshop is the digital divide that persists in many parts of the APEC region.

This divide limits the ability of small tourism businesses, particularly those in remote or rural areas, to access and utilize digital tools effectively. Addressing this challenge requires concerted efforts to improve digital infrastructure, enhance digital literacy and ensure that digital tools are accessible and affordable for all.

Dr Yasmeen Yasim, lead shepherd of the APEC Tourism Working Group, highlighted the need for a collaborative approach to overcoming these challenges. "Digitalization presents a tremendous opportunity for the tourism sector, but it also requires us to address the underlying barriers that prevent businesses from fully participating in the digital economy.”

“By working together, we can create the conditions necessary for all businesses to thrive, regardless of their size or location," Dr Yasmeen said.

In addition to addressing the digital divide, participants at the workshop also discussed the importance of data protection and cybersecurity in the context of digitalization. As more businesses move online, ensuring the security of digital transactions and the privacy of customer data becomes increasingly critical.

“Government, authorities and regulators agency will have a decisive role in this process by implementing policies and regulation to facilitate that adoption of this digital tools, creating a more favorable environment for businesses to thrive within the formal economy,” Vice Minister Burns concluded.