Malaysian Economy - Tourism Industry PDF

MALAYSIAN ECONOMY TOURISM INDUSTRY IN MALAYSIA CHAPTER 6 1 Learning Outcome Introduction Design and Orientation of Tourism Policy Growth of Tourism Industry Target Markets Types of Tourism in Malaysia Impact of Tourism...

MALAYSIAN ECONOMY TOURISM INDUSTRY IN MALAYSIA CHAPTER 6 1 Learning Outcome Introduction Design and Orientation of Tourism Policy Growth of Tourism Industry Target Markets Types of Tourism in Malaysia Impact of Tourism Industry on the Economy Challenges in Tourism Sector 2  Introduction Tourism remains as one of the largest industry in Malaysia, generating RM251.5 billion to GDP in 2022, compared to RM198.5 billion in 2021. Between 2021-2022, Gross Value Added of Tourism Industries Loading… (GVATI) registered a growth rate of 26.7% and recorded a contribution of 14.0% (2022) to GDP. The industry continues to be one of the key foreign exchange earners, helps strengthening the service account of the balance of payments. It is ranked second as a generator of foreign exchange after oil and gas production. The increasing awareness on the importance of leisure as well as the rising standard of living has indeed compounded its significance to new heights. 3  Design and Orientation of Tourism Policy The main thrusts of the government policies in the tourism sector are to: 1. Generate foreign exchange people exchange money RM furn to 2. Encourage equitable economic and social development 3. Promote rural enterprises 4. Generate employment -road connection 5. Accelerate rural-urban integration and cultural exchange 6. Encourage participation by all ethnic communities 7. Create a favourable image of Malaysia internationally 8. Foster national unity 4 Growth of Tourism Industry Tourist arrivals in 1980s-1990s Tourist arrivals in 2000-present Loading… 5  Growth of Tourism Industry (1980s-1990s) Tourist arrival and total receipts were growing at a slow pace in the 80s until 1990. The introduction of the Visit Malaysia Year (VMY) campaign in 1990 and 1994 revitalized the industry, resulting in a surge in tourist arrivals and tourism revenue. Tourism industry has become the third biggest foreign exchange earner in year 1990 with a 53.6% growth in tourist arrivals and 60.5% growth in total receipt compared to the year before. Unfortunately, the number of tourist arrivals decreased moderately in the following years following the aftermath of the Gulf War (1990-1991). The second VMY campaign was launched in 1994, the total receipts had an astonishing growth at 63%. Despite an increase in the number of tourist arrivals by 10.7%, the growth rate of tourist arrival remained far behind as compared to the first campaign. 6  Table 6.1: Malaysia Tourist Arrivals and Total Receipts, 1980-2013 Revenue earn Tourist arrivals Total receipts Notable Events Year % growth % growth (million) (RM million) Early 1980s recession 1980 0.800 - 690 - 1981 2.533 216.6 1,001 45.1 1982 2.774 9.5 1,132 13.1 1983 2.926 5.5 1,329 17.4 1984 2.947 0.7 1,426 7.3 1985 3.109 5.5 1,669 17.0 1986 3.217 3.5 1,669 0.0 1987 3.358 4.4 1,795 7.5 Gulf War 1988 3.623 7.9 2,012 12.1 1989 4.846 33.7 2,803 39.3 1990 7.445 53.6 4,500 60.5 1991 5.847 -21.4 4,283 -4.8 Asian Financial Crisis Commonwealth Games 1992 6.016 2.9 4,595 7.3 Malaysian Grand Prix, F1 1993 6.503 8.1 5,066 10.3 1994 Source: 7.197 Promotion Board or Tourism CEIC & Malaysia Tourism 10.7 Malaysia 8,298 63.8  Growth of Tourism Industry (1980s-1990s) cont. From 1996-1998, Malaysia saw a decrease in tourist arrivals attributed to a series of incidents, including a cholera outbreak in Sabah, dengue fever in Penang, a Coxsackie B viral epidemic claiming over 40 lives in Sarawak, and the haze disaster, which prompted Malaysia Airlines to suffer losses due to flight cancellations. The Asian financial crisis 1997 further worsened the situation. However, the devaluation of currencies due to AFC had major implications for inbound travel, partly due to the higher purchasing power in devalued countries compared to the unaffected countries. Malaysia hosted the Commonwealth Games in 1998, and the Sepang Formula One (Malaysian Grand Prix) in October 1999 that became tourist attractions and these had marginally increased tourist arrival numbers compared to the year of the financial crisis. 8  Growth of Tourism Industry (2000s-present) The average growth of tourist arrival had generally slowed down at single digit growth from year 2000- 2013. The industry experienced positive growth with major international conventions being held in Malaysia such as the Union of Forestry Research Organisation Congress in 2000, the 50th PATA Annual Conference in 2001, the 89th FDI World Dental Congress in 2001, and the World Orchid Conference in 2002. In addition, events such as the Colours of Malaysia or CITRAWARNA festival, a month-long celebration featuring a host of cultural activities annually, the Malaysia Mega Sale Carnival held yearly, and being the destination for Meetings, Incentives, Conventions and Exhibition (MICE) in the region contributed towards tourist arrivals. In 2002, tourist arrivals increased to 13.29 million with receipt recorded of RM25.78 billion. 9  Growth of Tourism Industry (2000s-present) cont. However, the US-Iraq war and the Severe Acute Respiratory Syndrome (SARS) outbreak severely affected the tourism industry towards the end of March 2003. Tourist arrivals crashed by 20.4% in year 2003, even after the implementation of the Economic Stimulus Package. The launch of 60m-high ‘Eye on Malaysia’ Ferris wheel in Visit Malaysia 2007 attracted both local and foreign tourists which rebounded tourist arrival on year 2007. 10  Loading… Source: Tourism Malaysia - Malaysia Tourism Key Performance Indicators 2022 11  Tourist Arrivals & Receipts to Malaysia, 2005-2022 Source: Tourism Malaysia - Malaysia Tourism Key Performance Indicators 2022 12  Tourist Arrivals to Malaysia by Country, 2019-2022 Source: Tourism Malaysia - Malaysia Tourism Key Performance Indicators 2022 13  Target Markets Tourists to Malaysia largely come from a few major markets – Asia, ASEAN, Eastern Asia (China and Japan), Europe, Southern Asia (India), Western Asia (the Middle East countries), and Oceania (Australia). These markets were once considered less important, but extremely valuable in the aftermath of September 11 during which tourist arrivals from certain markets, especially from the US, slumped. With the global economy in pessimism, China managed a 7% economic expansion in 2001. The strong Renminbi, had given Chinese Tourist a cheaper overseas travel. The biggest contributors to the country’s coffers come from ASEAN, with Singaporeans constituting more than 50% of all tourist arrivals to Malaysia on average. The Visit Malaysia Year 2014 campaign expects an increase of 20 million ASEAN tourist compared to 19 million a year ago. Besides China and the Middle East, India also offers strong potential for Malaysian tourism. 14 Top 10 country of tourist arrivals to Malaysia, 2019 & 2022 15  Types of Tourism in Malaysia Concepts and definitions in tourism A visitor refers to a traveller taking a trip to a main destination outside his/her usual environment, not more than 12 months other than to be employed by resident entity in the country or place visited. The following list is incorporated in International Recommendations for Tourism Statistics (IRTS) as the main purpose of visit: i. Business and professional ii. Holiday, leisure and recreation iii. Visiting friends and relatives iv. Education and training v. Health and medical care vi. Religion/ pilgrimage vii. Shopping viii. Transit A visitor is classified into two categories: ix. Tourist - If his/ her trip includes an overnight stay x. Excursionist - If his/ her trip takes less than 24 hours 16  Types of Tourism in Malaysia Concepts and definitions in tourism 1. Inbound tourism - Comprises the activities of a non-resident visitor within the country of reference (Malaysia) on an inbound trip. 2. Domestic tourism - Comprises the activities of a resident visitor within the country of reference (Malaysia) either as part of a domestic trip or part of an outbound trip. 3. Outbound tourism - Comprises the activities of a resident visitor outside the country of reference (Malaysia), either as part of an outbound trip or as part of a domestic trip. 4. Internal tourism - Comprises domestic tourism (2) and inbound tourism (1), that is the activities of resident and non- resident visitors within the country of reference (Malaysia) as part of domestic or international trips. 5. National tourism - Comprises domestic tourism (2) and outbound tourism (3), that is the activities of resident visitors within and outside the country of reference (Malaysia) either as part of domestic or outbound trip. 6. International tourism - Comprises inbound tourism (1) and outbound tourism (3), that is, the activities of resident visitors outside the country of reference (Malaysia) either as part of domestic or outbound trip and the activities of non- resident visitors within the country of reference (Malaysia) on inbound trip. 17  Types of Tourism in Malaysia Inbound & domestic tourism The government emphasises on promoting domestic tourism through Cuti-Cuti Malaysia campaign. It brings about the expansion of other linked industries, especially tourist expenditure on accommodation, food and beverages, transportation, shopping, and entertainment. It is believed that booming domestic tourism will help reduce heavy dependence on the influx of foreign tourists. Government could employ thematic efforts to continuously promote the country year-round events of festivities and celebrations. Constantly to develop new iconic tourism products such as LEGOLAND, I-City Shah Alam etc. 18 19 20 21  Types of Tourism in Malaysia Outbound tourism Outbound tourism expenditure posted RM22.5 billion in 2022 with a growth of 114.6% as compared to RM10.5 billion (-39.1%) in the previous year, in line with the international border openings by most countries. The main component in outbound tourism expenditure were Passenger transport (31.0%), Shopping (22.9%) and Accommodation (21.3%). 22 Income for Income for Malaysia other countries 23 Types of Tourism in Malaysia Tourism spectrum 24  Types of Tourism in Malaysia Tourism spectrum - Shopping Shopping represented about 42.3 per cent of total tourist spending in Malaysia in 2020, and it is the second largest expenditure category after accommodation. The enthusiasm of the government in promoting the Mega Sales Carnival has made Malaysia as shopping paradise that offers fantastic luxury shopping deals. This has spurred both consumption spending and tourist arrivals and made Malaysia a leading shopping destination. Increase the amount of Factory Outlet store such as Johor premium outlet to provide affordable luxury products where extraordinary discounts offer bargains galore for both local and overseas shoppers. Sufficient advertisement exposure should be given to ensure that information on interesting local activities and events reach tourists, so as to encourage longer stays and more visitors spending. Malaysia Year-End Sale. 25  Types of Tourism in Malaysia Tourism spectrum - Medical It is the idea of mixing leisure with healthcare has made Malaysia a major health tourism destination, from the setting up of spas on hills and beach resorts to tapping the country’s ethnic diversity to attract people from the region. The healthcare travel industry grew by 12.3% between 2006 and 2008. Malaysia attracted over 1 million foreign patients with total medical receipts of about RM800 million (10 MP). Medi-tourists usually travel for dual purposes: for health treatment and traveling. It’s a lucrative opportunity to attracts the families, relatives, or close friends who travel along to visit Malaysia Malaysia has the potential to become a healthcare centre for people from China, India, Indonesia, and West Asia by leveraging on the country’s diversity. Malaysia will continue to become one of the recognised networks that allow tourist participation in rehabilitation activities. 26  Types of Tourism in Malaysia Tourism spectrum - Medical Source : Malaysia Healthcare Travel Council (MHTC) 27  Types of Tourism in Malaysia Tourism spectrum - Education Edu-tourism is an important revenue-generating source as being a moderate Muslim country, with relatively cheaper tuition fees, Malaysia is an alternative choice for education. To position Malaysia as a centre of academic excellence, it is essential to attract international students to study here while providing them with reasonable and affordable tour packages to visit the country’s scenic spots. Credit largely goes to aggressive efforts in promoting Malaysia as a centre of education excellence via joint promotional campaigns between the Ministry of Education, higher learning institutions and training centres with foreign universities. The political stability, peace, technological progress and research as well as the low exchange rate are cited as factors that make Malaysia a conducive environment for learning. Its racial harmony also proves that the people of Malaysia are ready to accept students from any religious and cultural backgrounds. 28 Types of Tourism in Malaysia Tourism spectrum - Education Total New Applicants for Higher Education Institutions in Malaysia, 2020 Loading… Source : Education Malaysia Global Services (EMGS) and UNESCO 29  Types of Tourism in Malaysia Tourism spectrum - Ecotourism Eco-tourism relates to travel to relatively uncontaminated natural areas that conserve the environment and sustain the well-being of the local people; enjoying the scenery and its flora and fauna, as well as any cultural manifestation found in the areas. Eco-tourism brings benefits to rural communities in terms of increased revenue. Eco-tourism is also a powerful incentive for governments to conserve certain areas. It offers a realistic key solution to the apparent conflict between environmental protection and economic growth. The government has emphasised the preservation of natural attractions such as heritage sites and natural sites like wildlife sanctuaries (Mulu Caves), national parks (Taman Negara in Peninsular Malaysia), highlands (Genting Highlands, Cameron Highlands), and islands (marine parks at Tioman, Sipadan, Langkawi, and Redang Islands) as tourist attractions. 30  10 OF MALAYSIA’S BEST ECO-TOURISM DESTINATIONS 1. Kuala Gandah Elephant Sanctuary, Pahang 2. Santubong and Buntal, Sarawak 3. Cameron Highlands, Pahang 4. Pulau Perhentian, Terengganu 5. Mulu Caves National Park, Sarawak 6. Penang National Park, Teluk Bahang 7. Talang-Satang National Park, Sarawak 8. Forest Research Institute Malaysia (FRIM), Selangor 9. Taman Negara, Pahang, Kelantan and Terengganu 31 10. The Royal Belum State Park, Perak 32  Types of Tourism in Malaysia Tourism spectrum - Agrotourism The tourism industry also stands to benefit from the parallel development of agrotourism. More value-added activities will be expanded such as farm-stays and visits to agricultural parks. In Malaysia, farm holidays are slowly gaining popularity, which has long been a big hit among major producers of agricultural crops in Europe, the US, Canada, and Australia. For instance, in the year 2002, about 1.8 million holiday makers and tourists chose vacations in farmhouses in Italy, where activities ranged from horse riding and cart rides to trekking. Apart from that, visitors are usually allowed to eat fruits that they pick in orchards or the organiser offers various meals made using the farm’s own produce. In Malaysia, agrotourism was developed with the participation of the rural population who offer accommodation at their homes to tourists at a reasonable price with the choice of either day visits or farm- stays based on the bed-and-breakfast concept in the West. 33  Types of Tourism in Malaysia Tourism spectrum - Sports To increase Malaysia’s market share for convention centres, international and local organizations should be encouraged to hold conventions in Malaysia, such as exhibitions, travel trade fairs, sporting events and games. Hosting more international events such as international sport activities, establishing Malaysia as a business tourism destination, apart from targeting more conferences or conventions can also boost up the growth to the tourism industry. Among these international sport events are the Malaysia Formula One (F1) Grand Prix, Formula One Powerboat Race, Putrajaya Boat Championship, World Motor Cycle Grand Prix, Mount Kinabalu Climbathon, Langkawi International Maritime and Aerospace (LIMA) Exhibition, Le Tour de Langkawi (international cycling event), World Golf Championships, and Commonwealth Games 1998. The other sport activity is FISE World Series - The Festival International Sport Extreme, in which Malaysia has won the bid to host this event from 2014-2016. This is the worldwide sport festival for five categories (Skateboard, BMX, wakeboard inline skate and mountain bike). 34  Impact of Tourism Industry on the Economy Foreign Exchange Earnings The tourism industry is acknowledged as one of the leading sectors in generating income via foreign exchange (Forex) earnings of the country. A rise in tourist arrivals will boost Forex earnings. Government revenues from the tourism sector can be obtained via direct and indirect contributions. Direct contributions are generated by taxes on income from tourism businesses and levies on departure taxes, while indirect contributions are taxes levied on goods and services supplied to tourists. 35  Impact of Tourism Industry on the Economy Employment and Creation of Jobs Employment opportunities have grown in tandem with the industry. An increase in tourist arrivals and tourism-related activities has brought spillover effects on other service sectors (especially wholesale and retail trade, hotels and restaurants, transport, storage, and communications). Total employment (including that in travel and tour agency operating businesses, airlines, tourism educational institutions, and the hotel industry) has been increasing almost every year. Thus, rapid expansion of the tourism industry has led to significant employment creation through tourism-related businesses such as hotels and lodging industry, food and beverages, car rental, cultural and entertainment, banking and financial services, and so on. 36  Impact of Tourism Industry on the Economy Infrastructure Investment Tourism induces better infrastructure development such as the improvement of the quality of water systems, electricity, telephone networks, and public transport networks. Travelling within the country is accessible via the 847 km-long North-South Expressway, rail services, LRT (to facilitate tourists travelling within the city), the modern KLIA airport with high-quality MAS Airbuses, and others. Such investments stimulate the quality of life for residents and increase the standard of living for the people. 37 Challenges in Tourism Sector 1. SAFETY AND SECURITY ISSUES 2. HUMAN RESOURCE DEVELOPMENT (HRD) 3. PROMOTION AND MARKETING PLAN 38  Challenges in Tourism Sector Safety and Security Issues The tourism industry is particularly sensitive to issues of tourist comfort, safety, and security. For example, the haze hazard, the outbreak of localised viruses (Coxsackie virus, cholera, Japanese Encephalitis (JE), Nipah virus, meningitis, SARS and bird flu) and COVID-19 have adversely affected in-bound tourist arrivals. Therefore, haze and health-related preventive measures should be effectively formulated and implemented. When the Asian financial crisis broke out, the tourism industry was once again hit with a decline in in-bound traffic flows by almost 11% in 1998. In the aftermath of September 11 attacks in the US, tourist arrivals were again affected. The most severe impact was due to COVID-19 pandemic. 39  Challenges in Tourism Sector Human Resource Development (HDR) Although tourism resources serve as a crucial factor for the development of the tourism industry, this alone does not suffice for the success of the tourism industry. The industry’s success also hinges inextricably on the need to place emphasis on HRD and to provide quality training to equip workers with relevant skills ranging from operational and production levels right up to management levels. Sufficient funds are required for education and training to develop the required human resources. Since tourism is a labour-intensive industry, both government and private sectors are responsible for sustaining the quality of tourism-related services. 40  Challenges in Tourism Sector Promotion & Marketing Plan If funds are mismanaged, the tourism sector will not develop to its full potential. Major programmes such as preservation and conservation of national historical sites and other tourism-related infrastructure must be properly planned. With sluggish performance and boorish sentiments expected in the near future, more intense and innovative marketing efforts are crucial to promote the tourism industry. Well-planned and proper implementation of marketing efforts has a positive impact via advertising and promotional campaigns. Locally-manufactured products must be marketed in promoting Malaysia as a shopping paradise. It is vital that promotion and marketing campaigns are aggressively implemented to overtake competitors from Thailand, Hong Kong, and Singapore. 41  Conclusion The tourism industry has become one of the most important sources of revenue for the overall economic development of the country. In order to maintain growth in the tourism sector, the government should make tourism a strategic, economic, and employment priority. Pushing government policies towards progressive liberalization within the framework of the WTO is one step in the right direction. Other concerted efforts include expanding liberal aviation accords, upgrading promotions to match prevailing competitive approaches, and ensuring that the industry receives the same incentives as other exports. Also, the government must pursue sustainable development with a long-term perspective, paying particular attention to eco-tourism, and must take into account the need for local community development. Finally, the government should make an effort to eliminate barriers to tourism growth. 42