Malaysia tourism not yet hurt by haze from Indonesia

Malaysia tourism not yet hurt by haze from Indonesia

Carolyn Lim, Dow Jones/ Kuala Lumpur

A noxious haze blanketing Malaysia's capital for a week is yet to
choke off tourism, but visitor arrivals may fall if forest fires
in Indonesia that have caused the sky to turn gray aren't soon
brought under control.

Malaysian airlines, hotel and tourism operators say that so
far it is business as usual despite air quality in Kuala Lumpur
and neighboring cities deteriorating to dangerous levels because
of the haze. Other parts of the country remain unaffected.

Prime Minister Abdullah Ahmad Badawi on Thursday declared a
state of emergency in two coastal towns near Kuala Lumpur after
the air pollution index there zoomed past the dangerous 500-
points level. Air quality on Friday in Kuala Lumpur and
neighboring towns has remained a hazardous 350-450 points.

The government has said it expects the haze won't cause any
lasting damage.

"The haze situation is believed to be temporary and is
expected to change within the next few days with the shift in
wind and weather conditions," the Tourism Ministry said late on
Thursday in a statement.

Still, if the fires continue to burn and the haze remains, the
impact on tourism and the economy generally will be more serious.

A similar environmental disaster that was partially a result
of forest-burning by Indonesian and Malaysian oil-palm plantation
companies, caused an estimated US$9.3 billion in economic damage
in 1997.

Kuala Lumpur, with its gleaming Petronas Twin Towers, swanky
restaurants and lively nightlife is often the point of entry for
the visitors to this Southeast Asian country known for pristine
beaches and sumptuous food.

Some 15.7 million visitors spent 29.65 billion ringgit ($7.80
billion) here last year, according to the Tourism Ministry,
making tourism the country's number-two foreign-exchange earner
after exports. The government expects 16.4 million visitors this
year.

There are signs the haze has hurt some tourism-related
businesses in the capital.

Sunway City Bhd.'s Sunway Lagoon, the city's most popular
amusement park closed its doors Friday after the government
ordered schools to shut and people to remain indoors. The park
has 20,000 visitors on weekends. Shares of Sunway City were down
3.5 percent at 1.93 ringgit midafternoon on Friday.

Still, Sunway City's hotels near the amusement park are
packed, says Sharzede Salleh Askor, a Sunway spokeswoman.

"As of now, we are at full occupancy because of the Middle
East visitors," she says, referring to Arab visitors who hit
tropical Malaysia in droves to escape the searing summer heat in
the Gulf.

Outside of Kuala Lumpur, popular islands such as Penang and
Langkawi, and hill resorts such as Genting Highlands, still enjoy
clear skies and clean air, limiting the impact of the haze on the
overall tourism industry.

"In general, the clear winners (include) Resorts World Bhd.
where the air (in its Genting Highlands resort) is still fresh,"
says Vincent Khoo, research head of local brokerage Hwang-DBS
Vickers, in a report.

Resorts and its Genting Bhd. parent are Malaysia's 13th and
11th biggest companies by market value, and the country's biggest
gaming companies. Midafternoon on Friday, Genting was up 0.5
percent at 19.80 ringgit and Resorts was flat at 10.50 ringgit.

Occupancy levels at Resorts' six hotels in the highlands are
close to 90 percent currently, from an average 80 percent two
weeks ago earlier prior to the haze, Resorts Senior Vice
President Anthony Yeo told Dow Jones Newswires.

"The air quality (here) is still all right. It has encouraged
more people to come up from Kuala Lumpur to escape the haze," he
said.

Some players are taking things in stride despite investors'
fears of the worst.

Low-cost carrier AirAsia Bhd. is planning promotional events
to market flights to haze-free destinations, such as Penang,
Langkawi and East Malaysia, according to industry participants.

An AirAsia spokeswoman declined comment, saying it was too
early to say what impact the haze will have on bookings.
Malaysian Airline System Bhd. also declined to comment.