Tourism: A major source of foreign exchange earning

The Tourism Industry has long been identified as a key subsector of the services sector in generating foreign exchange earnings for Malaysia. But the history of the industry is not without it's share of ups and downs.

The growth of this sector during the period 1990 - 1996, which culminated in the tourism receipts of RM 10.354 billion in 1996, was offset by a bout of unfortunate events that shaped the scenario for the years 1997 - 1998.

A spate of negative reports in the international media on haze pollutions, outbreaks of ailments and the currency crisis in the Asian region had adversely affected the tourism industry.

The country's main objective for tourism is to increase the number of international visitors to Malaysia. Malaysia had consistently registered arrival figures exceeding seven million tourists since 1994 with the exception of 1997 and 1998, when the numbers dipped to 6,210,921 and 5,550,748 respectively, as a direct result of the Asian Financial Crisis.

The arrivals for 1999 reflected a rebound, which is consistent with the economic recovery being experienced in the region. In the year 2000, Malaysia played host to 10,221,582 tourists, surpassing the all time high of 7,468,749 achieved in 1995.

Another objective of the industry is to increase revenue from tourism, largely by promoting longer average length of stay and emphasizing more quality tourists.

Tourism receipts, with the exception of the 1997-1998 period, have been increasing since 1994. The receipt in 2000 is RM 17.335 billion, which represents a substantial increase over 1999's tourism receipt of RM 12,321 billion. The higher than expected revenue in 2000 can be attributed to an increase in the number of arrivals as the average per diem expenditure of tourists increased to 3.5 percent compared to 1999 and to a certain extent, the depreciation of the Ringgit.

The growth of the local tourism sector is parallel to the rise in the international tourism business in Malaysia. Up to 14.7 million trips were made by Malaysians within the country in 1999 and last year, an estimated 15.1 million trips were made by the local population to various destinations within the country. The increase in domestic traffic is invariably linked to the introduction of an additional Saturday holiday, the depreciation of the Ringgit and the relatively smaller disposable income, which meant that less Malaysians would be traveling abroad for leisure. All these factors further provided opportunities for growth in the domestic scene.

The Meetings, Incentives, Conventions and Exhibitions (MICE) market has been identified as a significant niche for Malaysia's tourism industry in the long term. Its expansion over the years has been encouraging and it was the only segment virtually unaffected by the regional crisis. There was a 109 percent jump in the number of conventions from 824 in 1999 to 899 in 2000, while the number of participants increased from 305,225 to 334,473 during the same period. Correspondingly the total expenditure by the MICE segment rose from RM 1,060.50 million (1999) to RM 1,164.7 million (2000). In effect, the local MICE segment is experiencing a faster growth rate than its international counterpart and this helps fill the vacuum during hard times when international meetings are not easy to come by.

In 2000, the number of hotels in Malaysia increased to 1,404 exceeding the earlier target set under the Seventh Malaysia Plan of 1,340 hotels by year 2000. The average occupancy rate, an indicator of hotel business, declined as a direct consequence of the Asian Financial Crisis, from which it is now recovering.

The overall hotel average occupancy level, which peaked in 1995 at 65.5 percent, dropped to a new low of 49.9 percent in 1998. A slight recovery was recorded in 1999 at 51.7 percent and in 2000 at 57.7 percent.

Air access into Malaysia, in terms of flight frequency and seat capacity, has expanded from 725 international flights and 146,879 seats weekly in 1994 to a high of 1,058 flights and 228,409 seats weekly in 1997. After some lapse in 1998, the numbers improved marginally to 908 flights and 207,554 seats weekly in 1999 and 938 flights with 216,015 seats weekly in 2000.

"Malaysia Truly Asia", a new initiative chosen for Malaysia, was launched in late 1999. This initiative reflects the distinct cultural diversity of Malaysia as the microcosm of Asia i.e. having a unique culture interwoven with major Asian civilizations like India, China and the Malay archipelago.

The Malaysia Truly Asia campaign is expected to create a universal label which is easily recognizable and which is to be used in all marketing and promotional undertakings by both public and private sectors. It is designed to readily elicit potential travelers when deciding on the choice of destination.