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Business Management

Discovering uncharted lands

A collection of reefs, atolls, cays and tiny islets peppered around the South China Sea, the Spratly Islands are breathtaking, and scarcely populated. Rita Lobo explores why surrounding countries are fighting to turn the remote location into a tourist destination


Upon setting foot on a scattering of islands in the South China Sea, a young British naval captain saw it appropriate to claim them as his own and baptise them as the Republic of Morac-Songhrati-Meads. This was in 1870, and Captain James George Meads promptly declared himself King James I, professing the islands to be the ‘Kingdom of Humanity’, where the poor and downtrodden could find a home. Some sources claim the population of the ‘Kingdom’ reached four thousand prior to the Second World War, before Meads was expatriated to Australia, and his subjects scattered, mostly back to the UK.

Today settlements are scarce, save for small fishing villages, and military bases on the larger islands. There is however, evidence of Chinese habitation during the Song dynasty – circa the fifth century – and ancient Vietnamese maps plot the landmasses. Unlike the Pacific Ocean, the South China Sea is not a vast body of water, and has been a busy trade route for centuries, allowing many workers to stumble upon the islets. A Portuguese sailor by the name of Fernão Mendes Pinto claimed to have discovered them in 1537; a few centuries later British Admiral Richard Spratly came upon the islands and, believing he was the first man on virgin soil, named them after himself. By the latter part of the 19th century half a dozen countries had laid claim to the territory, including Meads’ descendents, who continue to assert a right to the throne of the now defunct Kingdom of Humanity.

Unfounded discoveries
The Meads’ claim over the Spratly Islands is neither original nor relevant, but it is understandable. With deserted stretches of white sand, turquoise seas and coral reefs, the islands are conveniently located on some of the busiest shipping routes in South East Asia – it is no wonder they are so coveted. The Spratlys are currently split between China, Vietnam, Malaysia, Taiwan, Indonesia and Brunei but conflict of ownership persists, particularly between China and Vietnam. Most islands are unoccupied; some are not islands at all, but protruding reefs. There is also the tantalising prospect of oil and gas, hidden beneath some of the most well-conserved and bio-diverse marine ecosystems in the world.

The islands boast exquisite natural beauty, with a stunning contrast of pale sands, rich green vegetation and deep aquamarine seas. The temperate climate and abundant sunshine has prompted speculation about their potential as tourism hubs. The restricted access and small size of the archipelago – there are only 4.5 square kilometres of land – could see it becoming an unrivalled, exclusive destination. Within easy reach of several ports it is a golden opportunity for business; surrounded by emerging Asian markets, it is the perfect place to develop a luxury business travel resort. The Spratly Islands are a natural business hub, where companies from all over the region could meet on neutral, and beautiful, ground.

The depths of opportunity
There is already a modest tourist trade blossoming on some islands. Layang Layang is currently the only island serviced by regular flights. The Malay province also houses the sole resort, though it shares the tiny patch of land with a military base. Layang Layang caters to diving enthusiasts, thanks to the rich underwater fauna that live among surrounding coral reefs; sightings of hammerhead sharks and other endangered species are common in these waters. The resort is currently only open between March and August, as diving is not recommended during monsoon season. The resort is the only tourism facility on the island, which does not have a single shop or restaurant.

Layang Layang’s tourism trade is limited, but there is still clear potential on the Spratly Islands. Some of the islands have small civilian populations, some Vietnamese, others Malay or Taiwanese, but most are inhabited by military personnel from the country that laid claim to the land. However, lawmakers from surrounding countries are beginning to view the islands as a marketable tourism destination. The Spratlys boast the  necessary foundations to support the tourist trade, from their intense beauty to their conflicted history, and now it is up to the countries vying for territories to commit effort and investment and develop the islands in the best ways possible.

Philippine, Chinese and Vietnamese politicians have all recently suggested that they are considering opening up islands to business and tourism. Representative Rufus Rodriguez wrote to the President of the Philippines to request that the administration, “speed up plans to develop the Spratly group of islands into a tourist destination showcasing its pristine beaches, coral reefs and potential diving spots.”

In particular, he is interested in developing Pagasa Island – the biggest Philippine-controlled Spratly. It is the second largest in the region, and lies 300 miles to the west of Puerto Princesa City, a popular tourist destination in its own right. Pagasa, or Thitu Island as it is known locally, has an ample area of 32,000 square metres, and is already kitted out with a landing strip. However, its main attraction is the expansive shallow coral base, which makes the surrounding sea light blue, calm and ideal for swimming and diving. It is a typical paradise island, with white sand beaches and warm, crystalline waters. It would not take much to convert the island into a tourism destination, as the main town, Kalayaan, has a population of around 300 and is equipped with a clinic, town hall, communications tower and water filtration system. The civilian population has long called for the island to be developed as an ecotourism destination, as it is a sanctuary for several rare species of sea birds, and the surrounding coral reefs would make for impressive diving.

Perfect location
The restricted access imposed by military bases currently occupying some of the islands and low population density have contributed to preserving the Spratly Islands as an almost pristine ecological sanctuary. The many atolls and coral reefs make for difficult navigation, so big ships avoid the area – a fundamental factor in protecting one of the most valuable assets the islands can offer: marine biodiversity.

The countries that currently have territories on the Spratlys have made a point of the conservation efforts, and some even cite this as a reason to maintain the islands scarcely populated. As well as abundant and diverse marine fauna, the waters surrounding the Spratly Islands are clean and undisturbed, which has helped preserve the region’s coral reefs, but is also one of the reasons that the ocean is such a rich and pure shade of turquoise.

Following in Rodriguez’s footsteps, the Institute for Tourism Development Research (ITDR) is lobbying the Vietnamese government to speed up plans to develop its territories on the Spratlys, known in Vietnam as Truong Sa. According to Dr Pham Trung Luong, Deputy Chief of the ITDR, developing the region for visitation is part of the national sea and island tourism project, scheduled to run until 2020.

Plans include the development of attractions, from water sports to a sea-ecology facility.

The ITDR has also suggested Truong Sa would be an ideal location for sailing, and has hinted at potential marinas and ports to accommodate private boats. “We have recommended the construction of an air taxi port and a quay to facilitate tourism services on Truong Sa,” Luong said, adding that the islands are expected to welcome their first visitors as early as 2015.

A viable model
Vietnam currently controls the greatest number of islets in the archipelago, giving it significant options for tourism development. If the facilities are completed in time, Vietnam will also be the most developed tourism area in all the Spratly Islands. This would give numerous advantages over competitors for control of the islands. The region is fiercely disputed, but perhaps tourism can be a viable and sustainable alternative to resolve the conflict. That is the case in the neighbouring Paracel Islands, another contested archipelago, which has been open to tourists since 1997.

Now under the administration of China, though still contested by Vietnam and Taiwan, the archipelago is known locally as Hainan. It has recently been announced that local administration will be opening the scenic islands to resort-style tourism. Similar in appearance to the Spratlys, the Paracels have received day visitors for around 15 years.

There are museums and ports in some of the bigger islands, but the tourism flow has been limited by lack of accommodation. The Chinese administration is  now promoting the Paracels as a conserved and unspoiled version of Australia’s great barrier reef, and the scenery certainly corroborates this marketing strategy.

China’s government has announced it wants to launch the Paracels as a top international tourism destination by 2020, which will require the rapid development of hotels, shops, clinics and transport facilities. But the commitment to this development seems to be a positive move, and may serve as inspiration for progress in the Spratly Islands. Vietnam’s current plans for Truong Sa involve first setting up camping locations before investing in hotels and resorts in a gradual, long-term scheme. Although this may seem an excessively humble beginning for an archipelago with the potential of the Spratly Islands, it is nevertheless a step in the right direction. It might be a little hasty to start planning five-star spa hotels when there is scarce transportation and communication between the islands and any mainland.

Transport is still a significant issue on many islands. Some have makeshift landing strips, but these are often only suitable for small aeroplanes, and can be incredibly dangerous.

The only island with regular air transport links is Malaysia’s Layang Layang, which receives weekly flights during diving season. Some areas can be approached by sea, but coral reefs surround a number of the bigger, more scenic islands. This limits the approach of boats, necessitating long piers reaching beyond the reefs, to allow any passengers or supplies to arrive at the islands Another issue hampering the development of the region is the scarcity of drinkable water. The one island in the archipelago with its own supply of fresh water is Taiping Island − the only Spratly currently under Taiwanese administration.

Overcoming adversity
All other inhabited islands, cays, and reefs count on expensive purifying systems that filter seawater into a drinkable liquid. Any long-term development of the region would rely on the installation of more cost effective and efficient forms of water purification.

Complicating matters, the installation of other secondary systems, like generators, photovoltaic energy plants and communication towers is also necessary before the development of any long-term tourism facilities can even begin.

But these issues are easily overcome with appropriate investment and the right attitude.

With South East Asia emerging as an increasingly desirable business location, the opportunities for developing the Spratly Islands are virtually limitless. Though the rivalries over territory in the region are particularly raw at the moment, the right kind of investment could be the saviour that staves off conflict. By ensuring the islands are developed in a fair and sustainable way – with the shared long-term goal of protecting the region, its flora and fauna – a tourism project could even be a cooperative venture. The islands are full of unexplored potential, but the first step must come from the governments in the region, clearing the way for international investors to develop the tourism sector on the islands.

The location of the archipelago cannot be underestimated in its potential as a future business tourism hub. Much like Dubai’s transformation a decade ago from just another emirate into a stylish place to meet and do business, the Spratlys are blessed to be adjacent to the most important emerging markets in the world. As an investment opportunity, the archipelago goes above and beyond what Dubai ever had to offer; with astounding natural beauty, it will never have to rely on the extravagance that has become synonymous with the emirate. All it would take is the right infrastructure: good communication systems, efficient transport links to the surrounding countries, and a few luxurious facilities.

An exclusive business tourism centre, part Dubai, part French Polynesia, might further boost demand for luxury travel in the region, and provide an ideal setting for international companies to do business. There is much going against the Spratly Islands right now, but its exquisite beauty and business potential has been left unexplored for too long.

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