1st National and International Conference on Administration and Management

January 30, 2015, KU Home, Bangkok, THAILAND

The Socio-Economic Impact of Tourism in Luang Prabang, Lao PDR:

The Resident Perspective
*

**

***

Kongfa Phoummasak , Dr.Xayphone Kongmanila and Dr.Zhou Changchun

Abstract
Since Luang Prabang town, (LPB) Laos has been listed as World Heritage Site since 1995, the tourists
have come to visit LPB yearly with a remarkable increase. The residents recognize the significant positive
economic impacts like increased investments, employment, earning opportunities, women empowerment,
and participation in education and in service sector.
Our study focuses on the resident perspective against the socio-economic impact of tourism in LPB,
by conducting the field survey of 100 residents who involved of tourism sites in 2012.
Descriptive statistics are used to analyze the data from field survey. The results of this study illustrate that
some negative social impacts are underlined by displacement of poor local residents from their land,
increased social gap, loss of cultural, traditional originality, the higher price of goods, services, the land price
and rent, increased income disparity, polarized group.
A frustrating finding is that majority of the tourism assets and well-paid jobs are enjoyed by nonlocals whereas the local residents do not enjoy their rightful share due to uneven benefit distribution.
Keywords: Resident Perspective, Socio-Economic Change, Polarization

Introduction
Tourism has the most important role in socio-economic development in developing countries,
particularly in Lao PDR and it is a fast growing industry and a valuable sector which contributes significantly to
the economy for the LPB residents. The benefits of tourism include both tangible (e.g. job creation, state and
*

Ph.D. Student, Faculty of Economics and Business Management, National University of Laos
Faculty of Economics and Business Management, National University of Laos
***
Kunming University of Science and Technology
**

1st National and International Conference on Administration and Management

January 30, 2015, KU Home, Bangkok, THAILAND
local tax revenue, etc.) and less tangible (e.g. social structure, quality-of-life, etc.). In addition, tourism can,
and often does, result in less desirable effects on the socio-economic (Aref and Redzuan, 2009).
The main resident perspective found that the tourism development enhanced a profit, a wealthcreating and wealth-producing organ of LPB community. It has to consider whether or not the tourism action
is likely to promote the public goods and to contribute to its stability.
The paper is organized firstly to identify the resident perspective on the impacts of tourism to socioeconomy in LPB, secondly the literature review, thirdly the methodology, fourthly the report of empirical
results and the last section covers the discussion and conclusions.

Literature Review
Resident Perspective
The Resident Perspective in positive impact
The tourism plays an important role with the residents to encouraging the establishment of new
entrepreneurs and develops the existing business of various sectors and services in order to welcome the
tourists and the tourism development (Matarrita et. al, 2010; Mowforth, 2003). With the resident perspective
the tourism plays a very important role to assist and encourage the local people to develop their small
business initiated from family business cater. Some residents with high financial resources combined tourism
knowledge started with high edge services like hotel service business. The resident perspective to the
economic benefits to every community in form of people participatory is encouraged by the authority, like
excursions in remote village of within some days and forest tracking that can generate income to the local
people (Lepp, 2008; Lea et. al, 1994).
Resident perspective in negative impact
Many comments of unpleasant incidents caused by tourism are loaded by the resident perspective
which have to find the way to alleviate the difficulties and disputes often occurred by tourism entrepreneurs
and behaviors tourists distorted Lao culture. The shipload of visitors shifted the locals to the tourist trades,
abandoned their old traditional trades which had been slowly fade. The old local trade in the centre part
and main area of LPB are most completely transformed to western restaurant style. Some visitors felt they
were in a Boutique Caf and an Italian Restaurant in some corner in Rome but located in LPB Laos.
There is a sacrifice of most businessmen, owners of the stores and services facilities are changing
towards serving tourists more than locals because of higher price and good margin. A high-brow affluent
restaurant with high price is not awarded for the locals to sit and enjoy drinking like the tourists relatively
affluent.

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The three social impacts that were included in discussions include community pride, impact on the
quality of life for host community and celebration of community values. These three impacts constitute a
component of change in quality of life for host community (Pete, 2007).
Resident perspectives are focused also on some small and medium entrepreneurs with friend loan
financing of high interest rate actually leading a business closure because it is not survived. While some
interviewees as local residents mentioned that tourism was not an essential industry for the towns economy,
others pointed out that LPB has been transformed into a town which cannot be economically sustained
without tourists. It has become tourist dependent. LPB could not survive without that kind of tourist influx.
Economically, many high ranking resident think tourism is necessary. Luang Prabang is a small town, it
needs that influx of tourists. If we look into of polarization, several interviewees mentioned that due to
tourism polarization was occurring between affluent people who earned money outside Luang Prabang or
from the foreign investors and working class residents whose families have been in Luang Prabang for
generations. Disparity in wealth among locals is real and resident interviewees emphasized tourism as one of
the major reasons for economic and social polarization between the affluent and the working residents.

Methodology
Data and Sample
In this paper, we used primary data from field survey of 100 interviewees relating to tourism, living in
LPB that could be considered as representatives of LPB residents impacted by the tourism. The field survey
was conducted by researcher and four research assistants which three from 2 Universities. The questionnaires
were designed and based on literature of the impact of tourism on socio-economic. We used a simple
random for sample selection methods. Face to face interviews and questionnaires distributed to informants
are both methods of our survey strategies.
Data analysis and interpretation
To analyze the impact of tourism on socio-economic and community leaders in LPB, this study use
descriptive statistics methods by calculating Mean and Standard Deviation. Statistics Package for Social
Science was used as analytical tool. Since Likert Scale questionnaires were designed for collecting information
tourism impact on the socio-economic, this study measures the level of impact as following: 5= Very Severe
impact; 4= Major impact; 3= Moderate impact; 2= Minor impact; 1=Very minor impact;
Therefore, we can interpret the results based on the wide of the impact level, which can calculate as
follow:
Wide of impact level=
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1st National and International Conference on Administration and Management

January 30, 2015, KU Home, Bangkok, THAILAND
Thus, we can interpret the result based on wide level of Mean value as following: 4.21 to 5.00 = Very
severe impact, 3.41 to 4.20 = Major impact, 2.61 to 3.40 = Moderate impact, 1.81 to 2.60 = Minor impact, 1.00
to 1.80 = Very minor impact

Results
Basic Information
Table 1 Descriptive Statistics
Variables
SEX:
Female
Male
AGE:
< 25 Years old
25-30 Years old
31-35 Years old
36-40 Years old
> 40 Years old
STATUS:
Single
Married
EDUCATION:
Primary School
Second School
Vocational
Bachelor degree

100

Frequency

Percentage

63
37

63.00
37.00

24
31
16
11
18

24.00
31.00
16.00
11.00
18.00

30
70

30.00
70.00

21
58
15
6

21.00
58.00
15.00
6.00

Mean

Std. Deviation

1.37

0.48

2.68

1.42

1.70

0.46

2.06

0.77

Table 1 provides basic information of informants who are resulted as resident perspectives. The
information suggests that 70% of residents are in marriage status, which has education levels from primary
school to university level. However, based on the data, we note that the education level of resident
interviewees in LPB is very low.

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Economic Positive Impact of Tourism
Regardless of category and theory, most informants perspective stated of positive benefits of tourism
rather than other issues. Some expressed their views like Definitely tourism helps all, from beggar to highend businessmen relatively connected to tourism business and development, Tourism created jobs in
town, Definitely tourism is a big factor in the economics of LPB, Its very important for the health of the
residents, Most of the businesses in LPB and specially the main center area rely on tourism, without the
tourists they would not survive , The tourism is the top priority for the LPB residents on income which
generate the most part of revenue of LPB authority, To have income and disseminate the culture, Keep
cleanliness, rite and culture, Training the tourist staffs, Facilitate the student to have job and some
income,
Table 2 Positive Impact of Tourism on Economic
Variables
PE1(Create more jobs)
PE2 (Entrepreneur has developed more businesses)
PE3 (People has more income)
PE4 (There are more developed infrastructures)
PE5 (More investment in various areas)
PE6 (Living standard is more improved)
Valid N (list wise)

N
100
100
100
100
100
100
100

Min
2
3
3
3
2
3

Max
5
5
5
5
5
5

Mean
4.41
4.55
4.59
4.19
4.04
4.38

SD.
0.71
0.57
0.66
0.54
0.82
0.69

The mean of all questions replied by the 100 interviewees is in the high range from 4.04 to 4.59 as
shown in the table 6 below. Every informant fully perceived that tourism brings more benefits to the people
and the community than the disadvantage side affected on a few part of the local residents.
Negative Economic Impact
Apparently the negative economic side of tourism would not be consciously seeable in short time if
most people were encroaching to the income everyday of their tourism connections. Most of the LPB
residents gave some significant and remarkable signals of the negative tourism affects that had been occurred
in Lao community as the result tabulated in the table 3. Most of the locals show their perspectives on the
high goods price relatively caused by the tourism. The mean of 3.17, as indicated in Table 3, is the highest
Mean. The Mean value of 6 variables shown in the table 3 is perceivably few remarkable from 2.66 to 3.17.
Some resident perspectives view the cause of tourism like Goods and food price in LPB are higher than
other town, Tourism increased cost of land and housing, immigration of labors, over commitment of
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resources and development budgets to tourism, Concession of any public area caused conflict with the
people, Thief make tourist in trouble, Tourist do not respect Lao law, harm the Lao culture
Table 3 Negative Impact of Tourism on Economic
Variables
NE1(More foreigners relatively occupied tourism assets)
NE2 (No real freedom and privacy of the entrepreneurs)
NE3 (Higher goods price)
NE4 (Disparity of peoples income)
NE5 (Loss of land property)
NE6 (Low wage of local employees)
Valid N (list wise)

N
100
100
100
100
100
100
100

Min.
1
1
1
1
1
1

Max.
5
5
5
5
5
5

Mean
2.66
2.99
3.17
3.01
2.65
2.61

SD.
1.14
1.30
1.07
1.12
1.24
1.10

Positive Social Impact of Tourism

LPBs tourism industry is based on the charming social community laying in the old town with
traditionally old Lao-colonial designed such as housing, temples with fascinating performance of alms giving
to monks, natural touristic resources and cultural tradition with their unique identity. All cited elements have
creatively and naturally harmonized into one unique social home of LPB. Any LPB people dialogued with
they are very proud, strong self, and seemingly fierce of them self for being and residing in the World Heritage
Site. Most residents related to tourism are happy of the positive economic side as reflected in the table 4.
The mean of 6 types of impact is from 3.15 to 4.51 that represent the satisfaction of LPB traders. Social
interaction and more diverse taste in town are more active.
Table 4 Positive Impact of Tourism on Social
Variables
PSC1(The residents behaviors and attitudes are changed
in positive way)
PSC2 ( Making the local resident more proud)
PSC3 (Making the local residents recognize the important
of education)
PSC4 (More security and stability in life)
PSC5 (Create more jobs to women)
PSC6 ( Reduce the migration of the locals to other places)
PSC7 (Thieving and robbery are reduced)
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N Min. Max Mean

100 1
5
3.91

SD.
.944

100
100

3
2

5
5

4.49
4.40

.659
.765

100
100
100
100

3
2
1
1

5
5
5
5

4.44
4.51
3.19
3.15

.625
.745
1.398
1.480

1st National and International Conference on Administration and Management

January 30, 2015, KU Home, Bangkok, THAILAND
Table 4 (Continue)
Variables
PSC8 (Agro and handicraft products are more enhancing )
Valid N (list wise)

N Min. Max Mean

100 1
5
4.45
100

SD.
.903

Negative Impact of Tourism on Social

More foreign investments are making local resident businessmen weaker that can be leaded to
closure of their business. Some sell out their properties to foreigners. The immigration of the rural youths
happened by leaving their home villages to come working in downtown for mini salary with no other choices.
All youths, especially the ladies, are quite sensible to tourist fashion and behavior that they think anything
shown up by the foreigners is modern, correct and model for them to adapt, accept and imitate the foreignfashionable style. High benefit made by only non locals creates gap in socio benefits. The working locals
expressed worry regarding the towns gradually polarized economy and divided social classes. Social gab and
jobless would allow happening in social phenomena such as increase of crime rate, prostitution, drug and
human trafficking in wider range. Regarding to the mean of figures tabulated in the table 5 below has shown
no high score varied from 2.09 to 2.75 that reflect the negative social impact of the tourism is not yet
significant compared other provoked issues responded by the resident perspective. The mean in the table 5,
is showing the acceptable toleration of the negative impact toward the community of LPB in the present
time.
Table 5 Negative Impact of Tourism on Social
Variables
NSC1(The Poor has to move from their own land)
NSC2 (More mixed of inter socio-cultural)
NSC3 (The locals imitated more the tourist behaviors)
NSC4 (Social issues and disorder are more increased)
NSC5 (: Create more larger gab in the community)
NSC6 (The volume of human drug trafficking and
prostitute are more increased)
NSC7 (Local language and wording are apparently
changing)
NSC8 (Local independence and identity are reduced)
Valid N (list wise)

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N
100
100
100
100
100
100

Min.
1
1
1
1
1
1

Max.
5
5
5
5
5
5

Mean
2.32
2.31
2.20
2.46
2.75
2.09

SD.
1.145
1.277
1.318
1.381
1.274
1.138

100

2.29

1.365

100
100

2.15

1.282

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January 30, 2015, KU Home, Bangkok, THAILAND

Discussions
The goal of this paper was to study how and why the Resident Perspectives impacted to tourism
affect on Socio-Economic of LPB and how the Resident perspective had stressed in 2 side-effects, positive
and negative, due to the growing up of LPB tourism. The interview was conducted with working local
residents whose relationships were connected to tourism. The study found that resident perspectives in LPB
perceive both side effects of positive and negative socio-economic impacts of tourism. The high majority of
interviewees, regardless of business type, has a strong feeling speaking attachment to their local community
and living town of LPB, and do not want to change their traditional-social town for increased tourism
development even if it results in satisfactory increased revenue. While the importance of the LPB tourism
industry is significantly recognized, the residents do not want LPB town image and tourism businesses to be
relatively and fully dominated by the foreign investors and businessmen. But in the main tourism area during
this transitory-open-market business of the government policy since 1986 to the present time, the foreign
investors take it as a biggest stakeholder of the business affaires and become the leader of high-end business
players of tourism sector of today.

Conclusion
Even though the tourism industry of LPB was a mean powerful key of LPB development at a
significant economic growth rate, in other side the charm and small LPB city was recognized both the positive
and negative impacts of tourism on the present living hood of the LPB residents. The resident perspective
perceived the positive as larger than the negatives. This study found that the potential for economic gain has
a direct and positive affect on resident support. Nevertheless the survey revealed that the LPB residents
largely benefited from the foreign visitors. Tourism helped promote the value of local-social identity, aroused
peoples consciousness to keep properly their socio-cultural-traditional live style and to save local identity
and their premises and town clean, charm and safe. The adverse affects of tourism on crimes such as drug
and human trafficking, prostitution, burglary, bag snatcher, friction between the tourists and local residents,
polarization leading the division of living classes and other negative ones are believed to be minimal.

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