Could Malaysia Bring Back Tourists?

 The tourism industry plays a major role in the economy. It employs nearly a quarter of the country’s workforce and historically has contributed about 15% to the national gross domestic product (GDP).

But for an industry that has such great significance, it seems that the local tourism scene is not living up to its full potential. From the Kuala Lumpur International Airport’s aerotrain fiasco to the lack of coordinated efforts among tourism-related entities, there are several unaddressed issues that make Malaysian tourism less attractive. The claim by the Tourism, Arts and Culture Minister that tourists are prohibited from buying alcohol or wearing shorts in Langkawi only adds to the list of problems.

Without a comprehensive rebranding, traditional tourist hotspots in Malaysia are finding it harder to attract not just foreign tourists but also the locals. The increasingly popular tourist locations in South-East Asia such as Phuket, Krabi, Pattaya, Bali and Boracay are slowly taking away the limelight from Malaysian destinations.

Since 2012, the number of foreign tourists into Malaysia has stagnated between 25 million and below 27 million annually, except in 2014 when the number reached 27.4 million arrivals perhaps due to the Visit Malaysia campaign.

For comparison, Singapore reported 19.1 million foreign visitors in 2019.

Post-pandemic recovery in foreign tourist arrivals into Malaysia is noticeably slow. To put it into perspective, in the first half of 2023 (1H23), foreign tourist arrivals into Malaysia were 31.4% lower than the same period in 2019. This is despite Malaysia fully reopening its borders to international travellers from April 1, 2022. It seems that the weak ringgit has not been a successful pull-factor in increasing tourist arrivals.

Bank Negara has noted that tourist arrivals in Malaysia has reached about 70% of the pre-pandemic level. The great fall in the number of Chinese tourists amid the country’s economic slowdown has impacted Malaysia as well as the larger South-East Asia. For example, the number of tourists from Singapore in 1H23 was 28% lower than the same period in 2019, while the arrivals were 22% lower from Indonesia.

A key structural issue with Malaysian tourism is its extremely high reliance on Asean tourists. In pre-pandemic 2019, two-thirds of foreign tourists to Malaysia came from Asean countries. In 2022, this increased to at least 80%, according to Tourism Malaysia. Diversifying Malaysia’s tourist base should be one of the main concerns for the Minister of Tourism, Arts and Culture. 

There remain many under-tapped markets, especially in the Western world, where Malaysia’s tourism uniqueness can be promoted further. Malaysia should consider providing visa-on-arrival for all countries to remain competitive in the global tourism industry. This is now on for those coming from India or China. 

Perhaps the stagnation in tourist arrivals is partly due to the fact that Malaysia’s cultural environment is not as “liberal” as its regional competitors. The situation in Langkawi is not as dire as reported recently.

The island has experienced an occupancy rate ranging between 60% to 70% due to a festival weekend. The months of August, September and October are always considered low season periods. Occupancy is likely to pick up as the year progresses towards its end.

Across the nation, the lower foreign tourist arrivals have been greatly felt by the hotel industry. While domestic tourism is increasing, it is not big enough to compensate the absence of international tourists.

Popular destinations such as Penang have experienced a rapid return of tourists. However, other less well-known destinations continue to suffer from relatively low occupancy levels. A major challenge impacting Malaysia’s appeal as a tourist destination is the limited availability of direct flights.

The government has planned 2026 for the Visit Malaysia campaign, with a target arrival of 26.1 million foreign tourists. The country has two more years to fully prepare for a successful Visit Malaysia campaign to promote Malaysia as a tourist destination for a larger international market. Connectivity, ease of visa issuance and cordial front-line immigration staff are essential ingredients for tourist arrivals. Just look at Singapore or Thailand if you need a case study!

Reference:

Bringing back the tourist, Ganeshwaran Kana, The Star, 18 November 2023

This is the last article for the year!

We will resume on Monday, 8 January 2024!