Malaysian Economy Tourism Industry In Malaysia 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 Industry on the Ma...

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 Malaysian Economy Challenges in Tourism Sector 2 Introduction Tourism is the fifth largest industry in Malaysia that generating RM240.2 billion to GDP in 2019 compare to 2018: RM220.4 billion. In 2019, GVATI registered a growth rate of 9.0 per cent (2018: 9.8%). The GVATI recorded a contribution of 15.9 percent to Gross Domestic Product (GDP) as compared to 15.2 per cent in 2018 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 Table 6.1: Tourism Sector Satellite Account 2019 4 Design and Orientation of Tourism Policy The main thrusts of the government policies in the tourism sector are to: ○ Generate foreign exchange ○ Encourage equitable economic and social development ○ Promote rural enterprises ○ Generate employment ○ Accelerate rural-urban integration and cultural exchange ○ Encourage participation by all ethnic communities ○ Create a favourable image of Malaysia internationally ○ Foster national unity 5 Growth of Tourism Industry Tourist arrivals in 1980s-1990s Tourist arrivals in 2000-present 6 TRENDS OF TOURIST ARRIVALS AND TOURIST RECEIPTS (1980S-1990S) According to Table 6.2, the tourist arrival and total receipts were growing at a slow pace until year 1990, the launch of the Visit Malaysia Year (VMY) campaign. 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. 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 per cent, the growth rate of tourist arrival remained far behind as compared to the first campaign. 7 TABLE 6.2: MALAYSIA TOURIST ARRIVALS AND TOTAL RECEIPTS, 1980-2013 Year Tourist arrivals (million) % growth Total receipts (RM million) % growth 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 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 1992 6.016 2.9 4,595 7.3 1993 6.503 8.1 5,066 10.3 1994 7.197 10.7 8,298 63.8 1995 7.468 3.8 9,175 10.6 1996 7.138 -4.4 10,354 12.8 8 1997 6.210 -13.0 9,699 -6.3 1998 5.550 -10.6 8,580 -11.5 1999 7.931 42.9 12,321 43.6 2000 10.221 28.9 17,335 40.7 2001 12.775 25.0 24,222 39.7 2002 13.292 4.0 25,781 6.4 2003 10.577 -20.4 21,291 -17.4 2004 15.703 48.4 29,651 39.3 2005 16.431 4.6 31,954 7.8 2006 17.547 6.8 36,272 13.5 2007 20.973 19.5 46,070 27.0 2008 22.052 5.1 49,561 7.6 2009 23.646 7.2 53,368 7.7 2010 24.557 3.9 56,492 5.8 2011 24.714 0.6 58,316 3.2 2012 25.032 1.3 60,557 3.8 2013 25.715 2.7 65,440 8.1 2014 27.440 6.3 72,000 10.0 2015 25.720 -2.7 69,100 -4.0 2016 26.760 4.0 82,100 18.8 2017 25.950 -3.0 82,100 0.0 2018 25.830 -0.4 84,100 2.4 2019 26.100 1.1 86,100 2.4 Source : CEIC & Malaysia Tourism Promotion Board or Tourism Malaysia 9 2020 4.330 -83.4 12,700 -85.3 TRENDS OF TOURIST ARRIVALS AND TOURIST RECEIPTS (1980S-1990S) (CONT.) Malaysia experienced a decline in tourist arrivals from 1996 to 1998, due to various incidents from cholera outbreak in Sabah, dengue fever in Penang, Coxsackie B viral epidemic that killed more than 40 children in Sarawak to haze disaster which led Malaysia Airlines reported a loss due to flight cancellations as a result of the haze disaster. 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. 10 TRENDS OF TOURIST ARRIVALS AND TOURIST RECEIPTS (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 11 billion.  TABLE 6.3: TOURIST ARRIVALS IN 2001 BY MONTH Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec, Jan-Dec, Jan-Dec, 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2001 2000 Asia 892,841 895,933 1,164,835 1,131,876 885,977 1,133,111 972,151 990,009 812,439 494,234 633,038 863,332 10869776 8682189 America 33,593 33,508 38,019 37,898 28,321 33,273 32,239 23,998 16,289 14,366 11,571 18,766 321841 307692 Oceania 35,750 25,444 28,336 35,945 22,155 27,600 24,482 25,841 20,083 18,580 10,298 15,104 289618 267626 Europe 56,197 74,823 89,278 93,067 51,760 58,449 59,779 61,875 46,376 39,612 27,662 38,454 697332 581599 Africa 15,178 14,704 18,299 20,596 15,009 16,173 12,845 12,488 9,860 8,722 6,698 11,354 161926 74314 Others 19,295 45,807 53,468 39,394 34,988 40,182 24,008 35,776 22,159 20,688 70,054 28,761 434580 308162 TOTAL 1,052,854 1,090,219 1,392,235 1,358,776 1,038,210 1,308,788 1,125,504 1,149,987 927,206 596,202 759,321 975,771 12775073 10221582 12 TRENDS OF TOURIST ARRIVALS AND TOURIST RECEIPTS (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. 13 TRENDS OF TOURIST ARRIVALS AND TOURIST RECEIPTS (2000S-PRESENT) (CONT.) The poor handling of the tragedy of MH370 as reported in the China Daily has left many Chinese with frustration, suspicion, and high perceive travel risk to Malaysia which causes a 60% drop of booking from China to Malaysia. In 2013, about 1.8 million Chinese visited Malaysia (Table 6.3) and this number is expected to fall this year despite of the promotion of “Visit Malaysia Year 2014”. 14 TRENDS OF TOURIST ARRIVALS AND TOURIST RECEIPTS (2000S-PRESENT) (CONT.) In 2017, Malaysia received 17.34 million tourist arrivals from January till August. Malaysia’s target for 2018 is 33.1mil visitors The tourist receipts from January until June 2017 rose 1.8%, contributing RM31.8bil to the nation’s revenue. Tourism is currently the second highest contributor in terms of foreign exchange earnings. Tourism also comes third in terms of contribution to the gross national income. 15  TABLE 6.4: MALAYSIA: TOURIST ARRIVALS (PERSON) FROM SELECTED COUNTRIES, 1997-2013 TOTAL Asia ASEAN Western Southern Eastern Americas U.S. Europe Oceania Africa Asia Asia Asia 1997 6,210,921 5,371,641 4,440,532 20,294 53,644 851,463 137,164 94,649 382,956 152,234 23,502 1998 5,550,748 4,610,140 3,843,111 23,854 56,117 684,729 121,569 83,089 363,377 166,491 25,519 1999 7,931,149 6,763,480 5,947,009 21,731 68,992 723,922 122,079 83,260 306,060 154,078 29,863 2000 10,221,582 8,682,189 7,194,965 53,370 180,016 1,248,861 307,692 184,100 581,599 267,626 74,314 2001 12,775,073 10,869,776 9,208,136 114,776 212,083 1,325,421 321,841 145,827 697,332 289,618 161,926 2002 13,292,010 11,577,959 9,878,233 131,779 244,351 1,314,707 283,216 127,920 631,230 254,174 148,102 2003 10,576,915 9,164,157 8,042,189 80,216 209,120 832,632 270,157 131,071 451,160 199,061 137,061 2004 15,703,406 14,091,878 12,491,030 126,050 248,673 1,226,125 271,917 145,094 534,179 266,231 140,995 2005 16,431,055 14,815,709 13,238,898 147,646 321,246 1,107,919 274,915 151,354 611,515 339,158 133,096 2006 17,546,863 15,681,176 13,856,726 186,821 371,436 1,266,193 312,478 174,336 673,118 355,467 163,024 2007 20,972,822 18,120,238 15,620,290 245,302 659,399 1,595,247 472,164 204,844 829,653 441,034 314,863 2008 22,052,488 19,527,778 16,636,977 264,338 762,863 1,849,245 345,217 223,249 1,010,860 486,775 143,356 2009 23,646,191 21,358,566 18,386,363 284,890 828,290 1,844,375 345,768 228,571 1,150,594 599,592 98,742 2010 24,577,196 22,212,975 18,937,179 320,373 930,465 2,024,958 353,383 232,965 1,147,992 646,847 26,395 2011 24,714,324 22,183,884 18,885,302 273,584 890,277 2,134,721 302,770 216,755 1,044,823 639,798 31,441 2012 25,032,708 22,558,550 18,809,736 272,979 920,546 2,555,289 327,065 240,134 1,043,309 573,674 23,635 2013 25,715,460 23,122,135 19,105,915 219,733 931,100 2,865,387 335,840 246,936 1,078,926 589,517 22,473 16 Table 6.4: Tourist Arrivals and Receipts To Malaysia By Year Source : Tourism Malaysia 17 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) (Table 6.3). 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 per cent 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 per cent of all tourist arrivals to Malaysia on average (Table 6.4). 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. 18  TABLE 6.5: TOP-10 TOURIST ARRIVALS ASEAN: ASEAN: Eastern ASEAN: ASEAN: Southern Asia: ASEAN: Oceania: Eastern Europe: Singapore Indonesia Asia: Brunei Thailand India Philippines Australia Asia: Japan U.K. China* 1997 3,489,032 227,339 158,679 179,193 483,406 28,948 53,750 129,262 308,902 162,079 1998 3,007,666 157,391 159,852 183,146 454,789 33,751 32,743 145,162 252,178 160,678 1999 4,900084 307,373 190,851 187,704 498,578 46,537 47,238 134,311 286,940 136,398 2000 5,420,200 545,051 425,246 195,059 940,215 132,127 81,927 236,775 455,981 237,757 2001 6,951,594 777,449 453,246 309,529 1,018,797 143,513 122,428 222,340 397,639 262,423 2002 7,547,761 769,128 557,647 256,952 1,166,937 183,360 107,527 193,794 354,563 239,294 2003 5,922,306 621,651 350,597 215,634 1,152,296 145,153 90,430 144,507 213,527 125,569 2004 9,520,306 789,925 550,241 453,664 1,518,452 172,966 143,799 204,053 301,429 204,409 2005 9,634,506 962,957 352,089 486,344 1,900,839 225,789 178,961 265,346 340,027 240,030 2006 9,656,251 1,217,024 439,294 784,446 1,891,921 279,046 211,123 277,125 354,213 252,035 2007 10,492,692 1,804,535 689,293 1,172,154 1,625,698 422,452 327,140 320,363 367,567 276,213 2008 11,003,492 2,428,605 949,864 1,085,115 1,493,789 550,738 397,884 427,076 433,462 370,591 2009 12,733,082 2,405,360 1,019,756 1,061,357 1,449,262 589,838 447,470 533,382 395,746 435,091 2010 13,042,004 2,506,509 1,130,261 1,124,406 1,458,678 690,849 486,790 580,695 415,881 429,965 2011 13,372,647 2,134,381 1,250,536 1,239,404 1,442,048 693,056 362,101 558,411 386,974 403,940 2012 13,014,268 2,382,606 1,558,785 1,258,070 1,263,024 691,271 508,744 507,948 470,008 402,207 2013 13,178,774 2,548,021 1,791,423 1,238,871 1,156,452 650,989 557,147 526,342 513,076 413,472 19 Ways to Promote Tourism In the Tenth Malaysia Plan, the target is to position Malaysia to be the top 10 in terms of global tourism receipt, and to do so develop iconic tourism products and improve the existing tourism sites are needed (10MP). It is noteworthy that sightseeing in the cities (85%) has been identified as the most activities engaged. Other family activities or family entertainment that slowly catching up are shopping (70%), visiting beaches (31%), hiking/trekking (24%), visiting museum (23%), and scuba diving and snorkelling (14%), among others (Table 5.6). Clearly, there are a few areas that bring a high multiplier effect to the economy, and need greater attention in order to promote tourism in Malaysia, namely domestic tourism, shopping-tourism, medi-tourism, edu- tourism, eco-tourism, agro-tourism, and sports-tourism. 20 Hotel Industry in Malaysia Tourist arrivals and the demand for hotel accommodation are highly dependent on tourism events organized in the destination country. For instance, the demand for hotel rooms increased significantly following the first launched of Visit Malaysia Year campaign in 1990, and the hotel industry grew when Malaysia hosted the Commonwealth Games in 1998. Furthermore, it is also influenced by inherent seasonal characteristics or religious festivals such as Hari Raya Aidilfitri, Chinese New Year, Deepavali, Christmas, and other auspicious occasions celebrated by the citizens. Room capacity in the industry increased by almost 3-fold from 45 thousand to more than 130 thousand rooms during the implementation of the VMY 1990 campaign. 21 Hotel Industry in Malaysia Despite the number of tourists increasing over the past decade, the national average occupancy rate (AOR) dropped from 72.9 percent peak in 1990 to its lowest at 49.9 percent in 1998 as price wars were fought over shares of the shrinking pie as a way to attract guests. However, strong growth in international arrivals and domestic tourism contributed to higher hotel occupancy rates which increased from 51.7 per cent in 1999 to as high as 70 per cent in 2007. In between, in March 2003, the SARS outbreak caused the AOR dip and airline bookings declined by 40 per cent. The effect of SARS on the tourism industry seemed to be worse than that caused by the September 11 terrorist attacks in the US, the Bali bombings, the Iraq war, and the bird flu outbreak. 22 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 23 Domestic Tourism Figure 6.6: Domestic Tourism Malaysia 2020 24 Shopping Tourism 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. 25 Malaysia Year-End Sale Medi-Tourism 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 26 tourist participation in rehabilitation activities. Medi-Tourism Figure 6.7: Medi-Tourism Arrival and Revenue in Malaysia 27 Source : Malaysia Healthcare Travel Council (MHTC) Edu-Tourism 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. Malaysia aspires to position itself as a center for educational excellence in the Asia Pacific region. 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 Edu-Tourism Figure 6.8: Total New Applicants for Higher Education Institutions in Malaysia, 2020 29 Source : Education Malaysia Global Services (EMGS) and UNESCO Eco-Tourism 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. Besides, government have to try their best to obtain entitlement from UNESCO which could boost the image of tourist spots in Malaysia. 30  1. Kuala Gandah Elephant Sanctuary, 10 OF MALAYSIA’S Pahang BEST ECO-TOURISM 2. Santubong and Buntal, Sarawak DESTINATIONS 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 10. The Royal Belum State Park, Perak 31 32 Agro-Tourism The tourism industry also stands to benefit from the parallel development of agro- tourism. 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, agro-tourism 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 34 Sports Tourism 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). 35 Homestay Homestay is collaboration project by local entrepreneurs (homestay host) and government agencies. Homestay can be classified as a type of community-based tourism product, which has seen as catalyst for sustainable development and rural development Government develops homestay program under the National Plan for Rural development. This small-scale tourism business creates more jobs opportunities and increase income level and improve the quality of life in rural areas, apart from conserve and enforce existing community cultural and heritage 36 Impact of Tourism Industry on the Malaysian Economy 1.FOREIGN EXCHANGE EARNING 2.EMPLOYMENT AND CREATION OF JOBS 3.INFRASTRUCTURE INVESTMENT STIMULATION 37 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 38 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 spin-off 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. The employment in the hotel industry created an average annual rate of 3.2 per cent to reach 79,600 in 2000. 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. 39 Infrastructure Investment Tourism induces better infrastructure development such as the improvement of the quality of water systems, electricity, telephony 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. To promote Malaysia as the preferred holiday destination, the government allocated slightly more than RM1 billion for tourism-related expenses. These included major programmes such as the preservation of national historical sites, beautification and environment protection, tourism product development, as well as the provision of accommodation and tourism-related infrastructure facilities. 40 Challenges in Tourism Sector 1.SAFETY AND SECURITY ISSUES 2.HUMAN RESOURCE DEVELOPMENT (HRD) 3.PROMOTION AND MARKETING PLAN 41 Safety and Security Issues The tourism industry is particularly sensitive to issues of tourist comfort, safety, and security. For example, the haze hazard and the outbreak of localised viruses (Coxsackie virus, cholera, Japanese Encephalitis (JE), Nipah virus, meningitis, SARS and bird flu) 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 per cent in 1998. In the aftermath of September 11 attacks in the US, tourist arrivals were again affected. 42 Safety and Security Issues The sensitive geopolitical risks in view of the US-led military action in Iraq also dampened travel sentiment for fear of retaliatory moves by Iraqis in the form of plane hijackings, bombings, or other terrorist attacks. More recently, there have been cases of gunmen kidnapped cases happened at the Malaysian splendid island of Borneo in Sabah, rebuild the tourists’ confidence level is necessary. Among the measures taken to counter future intrusions were ○ anyone wish to enter the resort island requires to obtain a permit and clearance from police, ○ high risk areas will be declared and only security forces are allowed to assessed, and no boats and ships are allowed to go to and from Sabah waters. It is obvious how important it is for tourism provisions to ensure the safety of tourists and to avoid negative perceptions that are detrimental to the prospects of the tourism industry. 43 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. 44 Promoting and 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. 45 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 46 growth.