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MALAYSIA

THE IMPACT OF TRAVEL &TOURISM


ON JOBSANDTHE ECONOMY
CHAIRMAN: Henry Silverman Maurice H. Greenberg Paul McManus José Antonio Tazón
Sir Ian Prosser Chairman Chairman & CEO President & CEO President & CEO
Chairman Cendant Corporation American International The Leading Hotels of the Amadeus Global Travel
Six Continents PLC Group, Inc. World Distribution
Jonathan Tisch
VICE CHAIRMEN: Chairman & CEO Philip Haan Mark Miller Jeffrey Toffler
Donald Carty Loews Hotels Executive VP International, President & CEO Chairman
Chairman, President & CEO Sales & Information Services Galileo International The Coventry Group
American Airlines Brett Tollman Northwest Airlines
Vice-Chairman Alan Mulally Mustafa Türkmen
Jean-Marc Espalioux The Travel Corporation Anthony Harris President & CEO CEO & Managing Director
Chairman of Management Chief Executive Boeing Commercial Airplanes Enternasyonal Tourism
Board & CEO Hilton International The Boeing Company Investments, Inc.
Accor S.A. GLOBAL MEMBERS: Yapi Kredi Bank of Turkey
Akbar Al Baker Richard Helfer John M Noel
André Jordan Chief Executive Officer President & CEO President & CEO Patrice Vinet
Chairman Qatar Airways Raffles Holdings Ltd. Travel Guard International Partner
Lusotur S.A. Accenture
David Azema James Hensley Tom Nutley
Jonathan S. Linen Chairman & CEO President Managing Director Trevor de Vries
Vice Chairman Eurostar Allied Europe Reed Travel Exhibitions Deputy Managing Director
American Express Company Mondial Assistance S.A.
David Babai Stephen Holmes Alan Parker
Vincent A.Wolfington Managing Director Chairman & CEO, Managing Director Jurgen Weber
Chairman Gullivers Travel Associates Travel Division. Whitbread Hotel Company Chairman
Carey International, Inc. Vice Chairman Lufthansa German Airlines
Phil Bakes Cendant Corporation Dionísio Pestana
Chairman & CEO Chairman Hani A. Z.Yamani
EXECUTIVE FAR&WIDE Travel Raimund Hosch Group Pestana Executive Chairman
COMMITTEE: Corporation President & CEO Air Harbour Technologies
Peter Armstrong Messe Berlin GmbH Stefan Pichler
President & CEO Ted Balestreri Chairman & CEO HONORARY MEMBERS:
Rocky Mountaineer Railtours Chairman & CEO Dieter Huckestein Thomas Cook AG Lord Marshall of
Cannery Row Company President, Hotel Operations, Knightsbridge
Steve Bollenbach Owned & Managed Antonio Manuel Pinto Chairman
President & CEO Gordon Bethune Hilton Hotels Corporation CEO British Airways plc
Hilton Hotels Corporation Chairman of the Board & Sonae Turismo Gestao
CEO Xabier de Irala Servicos Sir Frank Moore, AO
Sebastián Escarrer Continental Airlines Chairman & CEO Chairman
Vice Chairman Iberia Jay Rasulo Taylor Byrne Tourism Group
Sol Meliá Paul Blackney Chairman & CEO
President & CEO Clive Jacobs EuroDisney S.C.A. Frank Olson
Edouard Ettedgui Worldspan Chairman & CEO Chairman of the Board
Managing Director Holiday Autos Group Carl Ruderman The Hertz Corporation
Mandarin Oriental Hotel Marilyn Carlson Nelson Chairman
Group Chairman & CEO Sol Kerzner Universal Media Gérard Pélisson
Carlson Companies, Inc Chairman Co-Chairman,
Maurice Flanagan Sun International Hotels Ltd Teresa Santos Supervisory Board
Group Managing Director Alun Cathcart Managing Director Accor S.A.
Emirates Non-Executive Chairman Craig Koch Group Espirito Santo
Avis Europe Plc President & CEO Tommaso Zanzotto
Michael Frenzel The Hertz Corporation Robert Selander President
Chairman U. Gary Charlwood President & CEO TZ Associates Ltd.
Preussag A.G. Founder, Chairman & CEO Krishna Kumar MasterCard International
Uniglobe Travel Managing Director CHAIRMAN EMERITUS:
David House (International) Inc. The Taj Group of Hotels Per Setterberg James D. Robinson III
Group President, Chief Executive Officer Chairman & CEO
Global Network and Jennie Chua Paulo Faceira Lages Global Refund Holdings A.B. RRE Investors, LLC
Establishment Services President & COO CFO
American Express Company Raffles International Ltd. Sonae Turismo Gestao Mr Eric Speck IMMEDIATE PAST
Servicos Group President Travel, CHAIRMEN:
Richard R. Kelley Rod Eddington Marketing and Distribution Harvey Golub
Chairman Chief Executive Hans Lerch Sabre Holdings Corporation Chairman, AirClic
Outrigger Enterprises, Inc British Airways plc President & CEO Former Chairman & CEO,
Kuoni Travel Holding Ltd Barry Sternlicht American Express Company
Geoffrey J.W. Kent Bernard D. Frelat Chairman & CEO WTTC Chairman
Chairman & CEO President & CEO Fabio Mantegazza Starwood Hotels & Resorts (1996 – 2001)
Abercrombie & Kent Rail Europe Group, Inc. Chairman Worldwide, Inc
AVRO Plc Robert H. Burns
J.W. Marriott, Jr. William H. Friesell Lalit Suri Chairman
Chairman & CEO Chairman Paolo Mantegazza Chairman & Managing Robert H Burns Holdings
Marriott International, Inc Diners Club International President and CEO Director Limited
Globus & Cosmos Inc Bharat Hotels Ltd WTTC Chairman
David Michels Dato’ Gan Eng Kwong (1994 – 1996)
Group Chief Executive Group Chairman Manuel Martin Ian Swain
Hilton International Reliance Pacific Berhad Partner Chairman & CEO PRESIDENT:
CyberDodo Productions Ltd Swain Travel Services Inc Jean-Claude Baumgarten
P.R.S. Oberoi Laurence Geller
Chief Executive CEO Isao Matsuhashi Kathleen Taylor
The Oberoi Group Strategic Hotel Capital Chairman of the Board President,Worldwide Business
JTB Corp. Operations
Four Seasons Hotels and
Resorts Correct as at February 14 2002

© 2002 WORLD TRAVEL & TOURISM COUNCIL


1-2 QUEEN VICTORIA TERRACE.SOVEREIGN COURT.LONDON E1W 3HA. UNITED KINGDOM
TEL: +44 (0) 870 727 9882 • FAX: +44 (0) 870 728 9882 • enquiries@wttc.org • www.wttc.org
THE WORLD TRAVEL & TOURISM COUNCIL (WTTC) IS THE BUSINESS
LEADERS’ FORUM FOR TRAVEL & TOURISM, WORKING WITH
GOVERNMENTS TO RAISE AWARENESS OF THE IMPORTANCE OF
THE WORLD’S LARGEST GENERATOR OF WEALTH AND JOBS.
With the Chief Executives of more than one hundred of the world’s leading companies
in membership, WTTC has a unique mandate and overview on all matters related to
success in Travel & Tourism.

Malaysia's Ministry of Culture, Arts and Tourism and WTTC are Tourism is also a major government revenue producer, accounting for
delighted to have collaborated on this research, the first simulated RM5,304 million (US$1.4 billion) in taxes in 2001. Looking ahead, the
Tourism Satellite Account for Malaysia. This ground-breaking research forecast is very strong with expectations of 6.4 per cent real growth per
makes Malaysia one of the first nations in the world to quantify the far- annum between 2001 and 2010.
reaching contribution of Travel & Tourism by implementing this new The forecasts in this report highlight the need for Malaysia to
concept recently endorsed by the United Nations. Research was address factors such as the macro-economy, employment, investment,
supplied by DRI-WEFA and the Malaysian Institute of Economic government expenditures, sustainability, safety and security and
Research (MIER). marketing and promotion. Malaysia is a nation with outstanding natural
This new TSA research quantifies all aspects of Travel & Tourism resources and, with the information and recommendations in this report,
demand, from personal consumption to business purchases, capital has the opportunity to make the most of these advantages.
investment, government spending and exports. It then translates this We hope that by raising awareness of the enormous potential of
information into economic concepts of production such as gross Travel & Tourism in Malaysia, this report will act as a catalyst,
domestic product, employment and taxes that can be compared with encouraging industry and government to continue to work together to
other industries and the economy as a whole to provide credible create the conditions necessary for this potential to be realised.
statistical information that will assist in our policy and business decision Please note that the research prepared for this report was finished in
processes. August 2001, before the tragic events of September 11, 2001. Therefore,
The message from this report is clear:Travel & Tourism is one of the the end-of-year estimates for 2001 and forecasts for future years provided
largest industries and employers in Malaysia, expected to generate 4.7 per in this report may require adjustment when more information on the
cent of gross domestic product and 393,600 jobs in 2001. Travel & impact is available.

Jean-Claude Baumgarten Sir Ian Prosser


President,World Travel & Tourism Council Chairman,World Travel & Tourism Council
Chairman, Bass plc

The World Travel & Tourism Council and the Malaysian Ministry of Culture, Arts and Tourism would like to express their sincere gratitude to the Members of the TSA Project
Steering Committee which helped guide this project to fruition: Ministry of Culture, Arts and Tourism (MOCAT); Malaysian Institute of Economic Research (MIER); Malaysia
Tourism Promotion Board (MTPB); Economic Planning Unit (EPU), Prime Minister's Department; Ministry of Finance (MOF); Bank Negara Malaysia (BNM) (Central Bank
of Malaysia); Department of Statistics (DOS); Ministry of Human Resource; Ministry of International Trade and Industry (MITI); Ministry of Domestic Trade and Consumer
Affairs; Ministry of Transport; Malaysian Association of Tour and Travel Agents (MATTA); Malaysian Association of Hotels (MAH); Bumiputera Travel and Tour Association of
Malaysia (BUMITRA);
CONTENTS

EXECUTIVE SUMMARY ____________________________________________________________________________ 4


SUMMARY OF KEY TRENDS _________________________________________________________________________________ 7
ECONOMIC IMPACT _________________________________________________________________________________________ 8
GROWTH____________________________________________________________________________________________________ 9
FUTURE PROSPECTS ________________________________________________________________________________________ 10
REALISING THE POTENTIAL __________________________________________________________________________________ 12

MALAYSIA’S TRAVEL & TOURISM


AN OVERVIEW OF CURRENT TRENDS AND DEVELOPMENTS__________________________________________________ 15

TRAVEL & TOURISM SATELLITE ACCOUNT ____________________________________________ 23


TSA CONCEPTS & STRUCTURE _______________________________________________________________________________ 24
TRAVEL & TOURISM’S ECONOMIC IMPACT ___________________________________________________________________ 26
TOTAL DEMAND _____________________________________________________________________________________________ 28
EMPLOYMENT _______________________________________________________________________________________________ 29
GROSS DOMESTIC PRODUCT ________________________________________________________________________________ 30
CAPITAL INVESTMENT ______________________________________________________________________________________ 31
PERSONAL & BUSINESS_______________________________________________________________________________________ 32
EXPORTS ____________________________________________________________________________________________________ 33
GOVERNMENT ______________________________________________________________________________________________ 34
TAXES _______________________________________________________________________________________________________ 35

THE POLICY FRAMEWORK ____________________________________________________________________ 36

APPENDIX
SATELLITE ACCOUNT TABLES ________________________________________________________________________________ 42
EXECUTIVE
SUMMARY
A DESTINATION FULL OF UNREALISED POTENTIAL

MALAYSIA HAS LONG BEEN ONE OF THE WORLD'S


BEST KEPT TOURISM SECRETS. IT IS AN IDEAL
TOURISM DESTINATION IN SO MANY DIFFERENT
RESPECTS AS IT OFFERS A VAST RANGE OF
DIVERSE ATTRACTIONS TO SUIT ALL TASTES –
AND AT RELATIVELY AFFORDABLE PRICES.

Most importantly, since it has not yet attracted mass tourism


interest, it has remained largely unspoilt, despite the industry's
relentless search for new destinations.
The country has endless stretches of white sandy – in developing a clear product appeal as, for
beaches, including some 700 kilometres of almost example, Thailand has. It does not have the draw of
deserted coastline on the east coast of peninsular Bangkok's nightlife, nor that of Singapore's
Malaysia and literally hundreds of tropical islands entertainment possibilities. As a result, Malaysia still
away from the popular, traditional circuits. It is an lags behind other leading competitive destinations in
ecotourist’s paradise boasting 19 national parks, the region, particularly in terms of international
jungles, hill resorts and Southeast Asia's highest tourism receipts.
mountain, Mount Kinabalu in the East Nevertheless, future prospects for Travel &
Malaysia/Borneo state of Sabah. In addition it is a Tourism are good.There is widespread recognition of
harmonious blend of centuries-old cultures, arts and its contribution to the national economy, and the
traditions, and of multi-racial and multi-ethnic Malaysian Government at its highest level is fully
communities. committed to the long-term development of the
Nevertheless, while industry analysts and foreign industry. This should help ensure that, despite the
tour operators have long been predicting that significant challenges still to be addressed, Travel &
Malaysia is on the point of experiencing a tourism Tourism reaches its enormous potential as a catalyst
boom, its actual performance over the past decade has for future economic and social development across
not been outstanding. Despite reported strong the whole of the country. Measures already
growth in arrivals and international tourism receipts undertaken by the government also augur well for
in 1999 and 2000, arrivals grew by only 37 per cent the sustainable development of Travel & Tourism –
in the ten years to 2000, and by just 6.5 per cent from achieving a healthy balance between business
1990 to 1999. imperatives, the protection of cultural heritage and
The main problem seems to be one of image. environment, and the well-being of local
The country has never succeeded – at least until now communities.

4
SUMMARY
OF KEY TRENDS
1 - Malaysia attracted 10.2 million 6 - Only about 30 per cent of all tourist
international tourist arrivals in 2000 arrivals are by air. Kuala Lumpur
staying an average of 5.8 nights in the International Airport (KLIA) and Subang
country. The total represented a 29 per (the former international airport of the
cent increase over the previous year, but Malaysian capital) handled 16.8 million
was only 37 per cent up on 1990's level – passengers in 2000, up 11 per cent on the
highlighting the fact that arrivals over the previous year – and representing more
past decade have grown by a mere 3 per 4 - Asia generates 85 per cent of total than 50 per cent of all passenger traffic
cent per annum. international tourist arrivals, with through Malaysian airports.
Singapore alone accounting for 53 per
cent. After Singapore, the leading source
markets are Thailand, Indonesia, Japan and
China. The UK is the most important
long-haul source, followed some way
2 - Over the same period average per behind by the USA and Germany. 7 - In 2000 there were 125,000 rooms in
capita expenditure increased by 11 per 1,460 hotels in Malaysia, of which 33,000 in
cent a year, and average daily per capita greater Kuala Lumpur. Despite a continuing
spending rose by more than 8 per cent. oversupply of rooms since the height of the
International tourism receipts totalled Asian economic and financial crisis in 1998,
RM17.3 billion in 2000 (US$4.6 billion), 5 - An estimated 43 per cent of arrivals hotel performance has picked up steadily,
while total visitor exports – including fare are for holidays, 15 per cent visits to both in terms of occupancy and yield.
receipts – reached RM24.0 billion friends and/or relations (VFR), 8 per cent
(US$6.3 billion). business trips and 3 per cent for
conferences and conventions. The VFR
share is significantly higher than for
competing destinations in Asia.

3 - Domestic tourism accounts for around 15 8 - While sun & beach tourism continues
million trips a year – of which more than 8 to attract increasing numbers of tourists
million overnight trips – generating a total from abroad, the fastest growth segment of
estimated spending of some RM2.4 billion the leisure market is nature-based tourism.
(US$634.5 million). The annual growth in In the business sector, the meetings,
domestic trips is currently around 15 per cent incentives, conferences and exhibitions
and domestic tourists account for an (MICE) market is showing above average
estimated 50 per cent of all hotel bednights. growth, boosted by a plentiful supply of
low-cost rooms as well as the ringgit's peg
to the US dollar, which has resulted in
stable prices.

7
ECONOMIC IMPACT
IN 2001, MALAYSIA TRAVEL & TOURISM IS EXPECTED TO GENERATE
RM69.8 BILLION (US$18.4 BILLION) OF ECONOMIC ACTIVITY (TOTAL
DEMAND).THE INDUSTRY’S DIRECT IMPACT INCLUDES:

393,600 jobs ___________________ representing 4.2 per cent of total employment.

16.9
RM billion (US$4.4 billion) _____________________ of gross domestic product (GDP)
equivalent to 4.7 per cent of total GDP.

HOWEVER, SINCE TRAVEL & TOURISM TOUCHES ALL SECTORS OF THE


ECONOMY, ITS REAL IMPACT IS EVEN GREATER. MALAYSIA’S TRAVEL &
TOURISM ECONOMY DIRECTLY AND INDIRECTLY ACCOUNTS FOR:

822,900 jobs ___________________ representing 6.8 per cent of total employment.

39.1
RM billion (US$10.4 billion) of GDP ________ equivalent to 10.8 per cent of total GDP.

39.1
RM billion (US$10.3 billion) of exports, services & merchandise ____________________
or 8.8 per cent of total exports.

RM 11.1 billion (US$2.9 billion) of capital investment ___ or 12.0 per cent of total investment.

RM 1.1 billion (US$283.2 million) of government expenditures _________ or 2.1 per cent of total.

RM 5.3 billion (US$1.4 billion) of taxes ______________________ or 10.5 per cent of total taxes.

8
GROWTH
OVER THE NEXT TEN YEARS, MALAYSIA’S TRAVEL & TOURISM IS
EXPECTED TO ACHIEVE ANNUALISED REAL GROWTH OF:

6.1% ___________________in Travel & Tourism GDP, to RM38.7 billion(US$10.2 billion) in


2010 for the industry directly and to RM86.3 billion (US$22.7 billion)
for the Travel & Tourism economy overall (direct and indirect expenditures).

2.5% _________ in Travel & Tourism Employment, to 520,700 jobs directly in the industry and
1.0 million jobs in the Travel & Tourism Economy overall (direct and indirect) in 2010

6.4% _____ in total Travel & Tourism Demand, to RM158.2 billion (US$41.6 billion) in 2010.

6.6% ______ in visitor and other exports, rising to RM93.3 billion (US$24.6 billion) by 2010.

5.0% __ in terms of capital investment, increasing to RM20.8 billion (US$5.5 billion) in 2010.

6.3% ___ in terms of government expenditures to RM3.6 billion (US$943.8 million) in 2010.
FUTURE
PROSPECTS
THE BASELINE FORECASTS FOR MALAYSIA ARE
GENERALLY POSITIVE. TRAVEL & TOURISM DEMAND
IS PROJECTED TO INCREASE IN LINE WITH FORECAST
GDP GROWTH OVER THE NEXT FEW YEARS.
The annualised rates of growth for Travel & Tourism demand and
visitor exports are also in line with projections for Southeast Asia
as a whole. However, WTTC believes that Malaysia's Travel &
Tourism growth potential is greater than for major competing
destinations, as well as for the region overall, and that the baseline
scenario forecast could easily be surpassed. At the same time there
are a number of weaknesses that could hinder growth and prevent
Malaysia from attaining its true Travel & Tourism potential.

EMPLOYMENT industry's ability to plan ahead to match supply to

Travel & Tourism accounts for a demand. Malaysia needs to invest in developing a

significant share of Malaysia's more sophisticated research capability, ensuring close

total employment. collaboration between the industry and national and

Yet, given the relatively modest growth in jobs state statistical institutes.

forecast over the next nine years – 2.9 per cent per
annum for jobs directly in the industry and 2.5 per ECONOMY
cent for jobs throughout the Travel & Tourism Malaysia, like most other
economy – the available workforce is unlikely to be countries in the developed and
able to keep up with Travel & Tourism demand.The developing world, is experiencing
situation could be exacerbated by the low an economic slowdown.
unemployment in Malaysia and the fact that Travel & Forecast GDP growth for 2001 has been revised

Tourism jobs are perceived as being poorly paid. downwards by the Malaysian Institute of Economic
Research (MIER) to around 2.2 per cent, rising to

INDUSTRY between 5.0 per cent and 6.0 per cent in 2002, in line

MEASUREMENT with the expected rebound in the global economy

Travel & Tourism research data and an upturn in the electronics sector. Also positive
in Malaysia needs improvement, is the fact that unemployment is low, hovering
both in terms of quantity and around 3.0 per cent, as is inflation, subdued at below
quality. 2.0 per cent. However, the weakness of the yen and
This is especially true of economic data on the other Asian currencies could erode the
industry, such as tourist expenditure patterns. The competitiveness of Malaysia's exports given the
lack of good data makes it difficult to measure trends ringgit's peg to the US dollar. Malaysia is still
in Travel & Tourism demand and reduces the considered a low-cost destination but the strength of
industry's ability to ensure accurate forecasts of future the US dollar/ringgit could soon undermine its
trends. This weakens both government's and the marketing advantage.

10
INVESTMENT sectors of federal, state and local government, private

Both foreign and domestic businesses, non-government organisations and other

private sector investment players. Priority must now be given to implementing

suffered as a result of the Asian the Plan and to involving all stakeholders in the

economic and financial crisis. management of tourism. If this is not assured, and

The resulting decline in tourist arrivals also put growth is allowed to develop in an unplanned/
much deluxe hotel development on hold after uncontrolled fashion, there is a risk of excessive
massive investment in the sector up to 1997. strains on the infrastructure and on natural resources.
Nevertheless, fiscal policy incentives from
government and renewed confidence in the SAFETY & SECURITY
destination have since stimulated Travel & Tourism Malaysia's image as a safe and
investment, which is this year expected to account secure destination has been
for 12 per cent of total capital investment. tarnished – in many ways
unfairly – by travel advisories
GOVERNMENT issued by foreign governments
EXPENDITURES to warn their citizens about
Government expenditures are perceived threats to their safety,
relatively low by comparison. health and well-being.
The cost of providing individual and collective Incidents affecting tourist demand range from
services to the Malaysian Travel & Tourism industry, health scares to the effect of the smoke haze caused
visitors and the community at large is estimated at
by illegal fires in Indonesia, but there are also
2.1 per cent of total expenditures. The share falls
frequent – and often distorted – media reports about
short of the level of expenditures on Travel &
riots and demonstrations in Malaysia. The federal
Tourism services (3.4 per cent) in Southeast Asia
government, through the Malaysia Tourism
generally. More significantly, the 4.7 per cent annual
Promotion Board (MTPB) should address these
growth in government expenditures on Travel &
concerns as a matter of urgency, clearly explaining
Tourism may not be rapid enough for Malaysia to
the extent of the problems rather than avoiding
maintain, let alone gain, competitive edge.
discussion of the issues, as is currently the case.

SUSTAINABILITY
Malaysia is a relatively unspoilt MARKETING &
destination although there are PROMOTION
increasing examples of over- Experience has shown that
exploitation of natural resources. demand for Malaysia as a
One can also find other disruptive impacts of
tourism destination grows
tourism on the local environment and cultural heritage.
significantly when funding for
One of the major problems is that, while federal marketing and promotion is
government is responsible for administering and increased.
managing parks and other protected areas, these The MTPB's budget is well below that of other

remain under the jurisdiction of individual states. national tourism organisations from leading tourism

This has made it difficult to prevent over- destinations in the region. A sustained promotional

development. campaign is critical, not only to clarify and enhance

The elaboration of Malaysia's National Malaysia's image in traditional and emerging source
Ecotourism Plan reflects the commitment by the markets, but also to raise awareness of Travel &
federal government to try to ensure the sustainable Tourism's significant contribution to federal, state
development of tourism. The Plan recognises that and local economies and the spin-off benefits to all
tourism is private sector led but indicates roles for all stakeholders.

11
REALISING
THE POTENTIAL
IN ORDER TO ACHIEVE OR – EVEN BETTER – SURPASS
THE BASELINE FORECASTS, CERTAIN KEY FACTORS
NEED TO BE ASSURED.
These include a well-planned and well-implemented national
tourism policy, a favourable fiscal policy, continuing incentives for
investment, new infrastructure development, sustained and
effective marketing and promotion, improved education and
training, and product diversification. All this presupposes close co-
ordination between the federal, state and local governments, as
well as with the private sector.

Against this background WTTC has made certain policy recommendations to the
Malaysian Government, detailed in the report under the section entitled The Policy
Framework. These recommendations are summarised below:

PLAN FOR THE FUTURE.

Establish a National Tourism Development Plan to all stakeholders.


in consultation with state and local governments and Work more closely with the private sector to
the private sector. address existing concerns and develop public-private
Monitor trends in Travel & Tourism demand so sector partnerships in areas such as marketing and
as to anticipate and adapt products to changing promotions, product development, and education and
demand. training.
Focus on market and product diversification in Anticipate future investment needs by
order to reduce the heavy dependence on traditional introducing new incentive schemes for private sector
markets and to increase yield. capital investment and small business development,
Market and promote more effectively to spread especially to encourage heritage and nature-based
the benefits of tourism to all parts of the country and tourism enterprises.

HIGHLIGHT THE STRATEGIC IMPORTANCE OF


TRAVEL & TOURISM.
Recognise Travel & Tourism's impact across policies for employment, trade, investment and
the wider economy and its ability to diversify education, ensuring that the underlying policy
Malaysia's economy, and ensure this is measured framework is conducive to dynamic growth.
on an annual basis by means of a national Communicate the strategic importance of
tourism satellite account. Travel & Tourism to all levels of government
Reflect Travel & Tourism in mainstream and industry, as well as to local communities.

12
DEVELOP THE HUMAN CAPITAL REQUIRED FOR GROWTH.
Promote a positive image of the Travel & Tourism Industry as a small businesses and local communities throughout the country and

provider of jobs and career opportunities for all Malaysians. across the whole employment spectrum.

Take advantage of Travel & Tourism's potential to provide jobs for Continue to place education and training at the forefront of Travel

young people, first-time job seekers, minority groups and women & Tourism development, introducing it in the high-school curricula and

looking for part-time employment. adopting measures to improve skills.

Recognise that Travel & Tourism employment is concentrated in

ENCOURAGE OPEN MARKETS AND SKIES AND REMOVE BARRIERS TO


GROWTH
Progressively liberalise trade, transport and communications, competitive approaches and restructure the MTPB as a public-
both through regional trading regimes such as ASEAN and the private sector partnership, co-ordinating national, state and local
World Trade Organization's General Agreement on Trade in efforts.
Services. Build safety and security provisions into national, state and local
Open up air transport markets by providing increased incentives strategies, and place special emphasis on Travel & Tourism in overall
to attract more long-haul services, and improve regional networks policing strategies.
by expanding liberal aviation accords. Develop fiscal regimes that encourage tourism growth, exports,
Upgrade marketing and promotions to match prevailing investment, infrastructure, business innovation and job creation.

MATCH PUBLIC AND PRIVATE INFRASTRUCTURE TO CUSTOMER DEMAND.


Develop an agreed process for forecasting Travel & Tourism protection to ensure that the patterns of flow do not adversely affect the
infrastructure demand – especially in the accommodation sector, which natural or built heritage.
will have high credibility in the industry and with the investment and Introduce increasing incentives for the rapid modernisation and
financial community. upgrading of Malaysia's rural infrastructure in order to spread the
Develop new conference/convention facilities to meet the growing benefits of Travel & Tourism across the country.
demand from this high-yield sector. Highlight the dangers of excessive, unplanned development, which
Continue to expand infrastructure, including airports and air traffic can result in unhealthy competition, declining operating performances
control, and streamline immigration and border clearance facilities. and profits.
Co-ordinate with state governments to improve road networks Develop access to capital resources and encourage capital
across the country, opening up new areas for tourism development. investment in Malaysia's Travel & Tourism industry from domestic and
Encourage state governments to improve land-use planning and foreign sources.

FAVOUR TECHNOLOGICAL ADVANCEMENT.


Provide support for local Malaysian companies so that they can Take the lead in the development of a national tourism portal,
develop access to technological advances and compete more effectively together with partners from the private sector, so as to improve
with foreign-owned companies. distribution of Malaysia's tourism products and develop e-marketing skills

PROMOTE RESPONSIBILITY IN NATURAL, SOCIAL AND CULTURAL


ENVIRONMENTS.
Ensure that the procedures and guidelines for planned and benefits of Travel & Tourism are spread equitably across the
sustainable tourism expansion incorporated in the National population in all parts of the country, and actively encourage local
Ecotourism Plan are communicated to all stakeholders and community engagement and empowerment.
implemented as widely as possible. Introduce new financial programmes to provide incentives for
Adopt the principles of Agenda 21 for the Travel & Tourism local community-based sustainable tourism enterprises.
Industry developed by WTTC, the World Tourism Organization and Seek branding for Malaysia's key natural and cultural resources
the Earth Council. through international designations and create new national
Ensure that the socio-economic, cultural and environmental designations.

13
MALAYSIA’S
TRAVEL & TOURISM
OVERVIEW OF RECENT TRENDS AND DEVELOPMENTS

A Major Sector of the Economy The country enjoys an excellent climate. Even during the rainy
Tourism was virtually unknown in Malaysia until the late-1960s. season – which hits the east coast of the peninsula and north-eastern
Since then it has developed into a major sector of the economy – the Sabah during the months of November to February and the west coast
second largest foreign exchange earner after manufacturing – thanks in of the peninsula during April, May and October – the weather is never
no small part to the role played by the Malaysian Government in Travel wet for long, and there is always some part of the country that is dry.
& Tourism’s growth. So seasonality is not a problem for the country as a whole.
In addition to the more traditional goals of generating foreign Despite its undisputed attractions, Malaysia's tourism industry has
exchange, increasing employment, fostering regional/rural development struggled to achieve the kind of growth it deserves. In fact, although
and diversifying the country’s economic base,Travel &Tourism is seen by growth rates have picked up strongly over the last couple of years, the
government as one of the keys to promoting a greater understanding of country is still a long way from reaching its full tourism potential.
the various cultures and lifestyles of Malaysia’s multi-ethnic population. The World Tourism Organization ranks Malaysia as the third most
popular destination in the Asia Pacific region in terms of international
A Rich Diversity of Attractions tourist arrivals, yet it ranks only tenth in terms of receipts (1999) – well
Probably one of the country's greatest assets, Malaysia's population behind some of its major competitors.This is attributed to the fact that
is a pot-pourri of different races comprising three main groups – Malays average length of stay in the country is only 5.8 nights, and the vast
and other indigenous peoples, known as bumiputras (62 per cent), majority of its tourists are from relatively low-yield, neighbouring
Chinese (28 per cent) and Indian and other races (10 per cent).Yet in markets. Only about 30 per cent of Malaysia’s arrivals are by air.
Sabah, for example, there are actually over 30 different races with more
than 80 different languages or dialects – all distinguishable by their KEY TRENDS, 1990-2000
religion, language, work, clothes or type of home. This mix of ethnic The Malaysian Government first became aware of Travel & Tourism’s

groups gives the country an enormously diverse culture that is reflected potential in the late 1960s/early 1970s, when it offered the first incentives

in its festivals, food and general way of life. for private sector investment in the industry. But the first strategic plan for
tourism was not developed until the 1980s.
Malaysia covers an extremely large land area of around 330,000
In 1980 Malaysia attracted a fairly modest 2.3 million international
square kilometres, almost equally divided between the peninsula and the
tourist arrivals. Ten years later the total had more than tripled and the
two states of Sabah and Sarawak on the island of Borneo.Administratively,
country appeared to be firmly established on the world tourism map.
the country is divided into 13 states, 11 in the peninsula and two in North
1990's strong performance – up 54 per cent on the previous year – was
Borneo. In addition, there are three federal territories: Kuala Lumpur, the
attributed largely to increased government spending on overseas
capital, and free port of Labuan Island off Sabah and Putrajaya, the new
promotions in conjunction with Visit Malaysia Year 1990. However, in
administrative centre of the federal government. Each state has its own
1991 arrivals fell dramatically as a result of the Gulf War and, over the next
government and almost all support the federal government's efforts to
five years, while international tourism receipts almost doubled, the arrivals
attract tourism – although the two East Coast Malaysian states have
count showed hardly any improvement. This was despite the country’s
increasingly gone their own way in terms of tourism promotions abroad.
launching a second Visit Malaysia Year in 1994.
The most popular and well-established region in the country for
The fall in international arrivals continued from 1996 to 1998,
tourism, apart from Kuala Lumpur, is the island of Penang, which exacerbated by the Asian financial and economic crisis and less than
attracts sun and beach tourists as well as those interested in Malaysia's cordial relations at that time between Malaysia and Singapore, its leading
colonial heritage. Penang has possibly lost share of leisure tourism over tourism source. In addition, outbreaks of different diseases in Penang and
recent years, but it has increasingly attracted business travellers as a result East Malaysia caused health scares and potential tourists were also
of its growing importance as a high-tech centre.The new, favourite sun deterred by the smoke haze that affected the region, caused by the illegal
and beach holiday spot, meanwhile, is Langkawi Island, seen by many as burning of forest fires in Indonesia.As a result, the country recorded only
a showcase for sustainable tourism development, and Sabah and Sarawak 5.6 million arrivals and RM8.6 billion (US$2.5 billion) international
are gaining in popularity as adventure travel destinations. tourism receipts (excluding fare receipts) in 1998.

15
The National Economic Recovery Plan drawn up in 1998 identified In 1994 the government allocated RM100 million to build 15
tourism as a key sector for the country's future economic growth and, budget hotels in the country with a total of 1,450 rooms -– almost
therefore, deserving of increased government attention. Despite hosting exclusively to meet the needs of domestic tourists.
the successful Commonwealth Games that year, international tourist Improved economic conditions in Malaysia have led to increased
arrivals fell to their lowest level since the beginning of the decade, causing leisure time for the population at large so the market has been receptive
the government to consider crisis measures, such as a moratorium on to domestic tourism promotion. At the same time the government has
deluxe hotel construction. discouraged travel abroad as part of its fiscal measures and, at one time
A three-pronged strategy was also drawn up by the Malaysia Tourism after the 1997-98 economic crisis, even considered imposing restrictions
Promotion Board (MTPB) to boost arrivals and earnings from tourism: on outbound travel.
• Go after markets not affected by the Asian economic crisis, such as Efforts to promote the growth of domestic tourism have been
China, India, the Middle East and Europe reinforced by the organisation of special annual events, such as the
• Go after neighbouring markets, namely Singapore, Thailand, Hong Malaysia Fest and Shopping Carnivals, and Malaysia Airlines and the
Kong, Indonesia and Japan Malaysian Association of Tour and Travel Agents (MATTA), have
• Develop domestic tourism developed domestic holiday packages. Nevertheless, the main purpose
The strategy would so far seem to have been successful. In 1999 and of domestic Travel & Tourism, accounting for some 47 per cent of all
2000 Malaysia enjoyed two years of strong growth in international trips, are visits to friends and/or families (VFR).
tourism receipts – of 44 per cent and 41 per cent – with arrivals up 43
per cent and 29 per cent respectively. Preliminary results for the months International Tourism
of January through May 2001 point to a further 46 per cent increase in Singapore accounts for over 53 per cent of Malaysia’s total
arrivals overall. international arrivals count.Although the share is down from 58 per cent
in 1995, it nonetheless highlights the fact that the country is heavily
International Tourist Arrivals and Expenditure, dependent on one major source of tourists – clearly not a healthy state
1990-2000 of affairs. The second largest market, Thailand, generated 9 per cent of
Average arrivals in 2000, and Indonesia (in third place) just 5 per cent.
Average Daily Per Average Total Total
Tourist Length Capita Per Capita Tourism Tourism
In the five years to 2000, Singapore grew by 24 per cent as against
Arrivals of Stay Expenditure Expenditure Receipts* Receipts* 37 per cent for the market overall. The best growth in arrivals came
Year (‘000s) (nights) (RM) (RM) (RM mn) (US$ mn)
from China (up 313 per cent), albeit from a low base.Among Malaysia’s
1990 7,446 4.6 131.4 604.4 4,501 1,667
leading sources there were declines from Hong Kong, Brunei and
1995 7,469 4.8 254.9 1,228.4 9,175 3,909
Taiwan, with stagnation over the period in the South Korean market.
1996 7,138 5.4 269.0 1,443.9 10,354 4,447
The UK is Malaysia’s most important long-haul market followed
1997 6,211 5.3 294.9 1,561.7 9,700 2,702
1998 5,551 5.5 280.3 1,545.8 8,580 2.456 by the USA and Germany. Despite better than average growth in the last
1999 7,931 5.5 282.5 1,553.5 12,321 2,822 five years, North America registered a drop in arrivals from January to
2000 10,222 5.8 292.4 1,696.0 17,335 4,560

* Excluding fare receipts International Tourist Arrivals by Major Markets*,


Source: Malaysia Tourism Promotion Board (MTPB) 1995-2000 (‘000s)
Average length of stay has risen over the past ten years to 5.8 nights
Market 1995 1998 1999 2000
from only 4.6 in 1990. During the same period, average daily per capita
Singapore 4,357 3,008 4,900 5,420
expenditure by visitors has increased by 123 per cent and expenditure per
Thailand 530 455 499 940
trip has almost tripled, to RM1,696 (US$446). Indonesia 234 157 307 545
Japan 331 252 287 456
Domestic Tourism China 103 160 191 425
UK 164 161 136 238
Surveys carried out by the Malaysian Ministry of Culture, Arts and
Australia 136 145 134 237
Tourism and the MTPB suggest that, over the last five years, domestic Taiwan 294 160 137 213
tourism has grown faster than international tourism. Brunei 190 183 188 195
There are a number of conflicting statistics on domestic tourism. USA 98 83 83 184
However, a study carried out for government by the Universiti India 28 34 47 132
Germany 64 51 43 75
Kebangsaan Malaysia suggested that, in the 12 months from August
Philippines 46 33 47 82
1997 to July 1998, a total of some 15 million domestic trips were made, Hong Kong 147 90 67 76
of which 8.3 million were overnight trips.Total spending generated was South Korea 72 22 42 72
RM2.4 billion (US$634 million). Since then growth has been around Total (incl other) 7,469 5,551 7,931 10,222
15 per cent a year in terms of trips and domestic tourists account for an * By residence
estimated 50 per cent of all hotel bednights in Malaysia. Source: MTPB

16
May 2001. Europe was up 16 per cent but this average masks big Purpose of Visit, 1998 (%)
differences from one market to another.
The Middle East, targeted as a growth market two years ago, has
increased from a base of just 28,000 arrivals to over 90,000. Its future
growth prospects also look good given the inauguration of new airline
services from the region and the planned opening of offices by the Other (19.3)

MTPB in Dubai and Jeddah this year.


Holidays (42.5)
Transit (12.6)
Length of Stay
Overnight figures are not yet available for 2000, but an analysis of
1999 results highlights one of Malaysia’s major problems – that of being Conferences (2.7)
VFR (14.8)
dominated by low-yield markets. Singapore’s 4.9 million tourists to Business (8.1)
Malaysia in 1999 stayed an average of only 2.7 nights, but generated only
3.1 million bednights in registered accommodation – 0.6 nights per VFR = visits to friends and/or relations
tourist arrival. By comparison, 136,000 arrivals from the UK resulted in Source: MTPB
2.4 million bednights – an average of close to 17.5 per arrival.
Increased length of stay is the main reason for Malaysia’s growth in shopping influences tourist activities within the country. While in
international tourism receipts. As an example, tourists from Thailand Malaysia, some 66 per cent of all visitors go shopping, with the main
stayed an average of 4.4 nights ten years ago. By 2000 their average shopping items being clothes and textiles.
length of stay had risen to 13.7 nights. For Indian tourists the average In 1997, shopping accounted for around 22 per cent of all tourism
increased from 7.7 nights to 11.5 over the ten-year period, and for receipts from foreign visitors, third after accommodation and food and
Indonesians from 7.3 to 10.2. beverages – and up from 19 per cent in 1992. Other items or activities
that generated increased spending over the five years were local
Purpose of Trip transport, domestic air travel and entertainment, according to the
According to an inbound visitor survey conducted by the MTPB MTPB's inbound visitor survey. But a change in categories from one
in 1998, 43 per cent of tourist arrivals in Malaysia are for holidays, 15 year to another makes strict comparisons difficult.
per cent for VFR and 8 per cent for business. Conferences and
conventions account for a very modest share of around 3 per cent. Distribution of Tourist Expenditure, 1997 (%)
Despite the fact that it has fallen sharply since the early-1990s, the
Other (4)
VFR share is still unusually high – it compares with 5 per cent for Hong Entertainment (3.6)

Kong, for example, and 4 per cent for Singapore. However, this can be Domestic air travel (4.4)
Organised tours/
explained by the 'Singapore factor' – the fact that such a high share of sightseeing (4.8)

tourist arrivals are from neighbouring Singapore, as mentioned above.


Although accounting for a modest share of arrivals, the meetings, Accommodation (34.7)
Local transport (8.3)
incentive, conference and exhibition (MICE) business does seem to be
growing. The number of conventions hosted annually has increased Food and
Beverages (18.7)
from 663 in 1995 to over 800, while expenditure attributed to the
sector has risen over the same period by 28 per cent to US$303.2 Shopping (21.5)

million. Demand will be boosted by the planned new National


Exhibition & Conference Centre (NECC) on the site of the former Source: MTPB

Subang International Airport.The new centre will have a major added


attraction, since Boeing 747s will be able to land there.
Incentive travel is still largely untapped, but would seem to have AIR TRANSPORT
good longer-term prospects. These were highlighted by a Visa In 2000 airline traffic to, from and within Malaysia increased by
International survey, conducted in the mid-1990s, which cited in 11.7 per cent to a record 32.7 million passengers – the second best year
particular the destination's affordability and wide range of attractions. ever after 1997. Of the total passengers around 40 per cent were on
international flights, with Southeast Asia as a source/destination
Organisation of Travel accounting for the largest share.
Only 15 per cent of tourists to Malaysia are on package tours.This This average masks different performances from one airport to
again is a relatively low share compared with that for other Asian another.Among leading airports the strongest growth was for Langkawi
destinations – also attributable to the Singapore factor – although it is (20 per cent) – albeit from a low base – Kuching and Kota Kinabalu (14
up from 11 per cent in 1990. The predilection of Singaporeans for and 12 per cent respectively). Kuala Lumpur International Airport

17
(KLIA) and Subang together achieved 11 per cent growth, but the total Malaysian Government to look closely at three main areas of
recorded was still only 16 per cent above its result three years earlier. development for the airport: traffic facilities, connectivity through MAS
services, and marketing. MAS, which used to be only 42 per cent state
Passengers Handled at Malaysia’s Leading Airports, owned, has since been reacquired by the government in an attempt to
1990-2000
stem the airline's continuing losses. Domestic airfares, which had not
Airport 1990 1996 1997 1998 1999 2000 been raised for many years, have been increased by an average of 51 per
KLIA/Subang 7,521 14,557 15,820 14,788 15,172 16,834 cent – except for flights to and within East Malaysia.
Kota Kinabalu 1,750 2,622 2,732 2,393 2,752 3,092 MAS recently negotiated closer ties with the Dutch carrier KLM
Penang 1,890 2,941 2,907 2,453 2,510 2,741 and it is hoped this can help KLIA gain its hub status as the Asian
Kuching 1,456 2,272 2,257 2,022 2,235 2,545
gateway for the Wings alliance (KLM, Northwest and MAS). MAS is
Miri 802 1,032 1,049 794 892 1,050
one of the few remaining Southeast Asian airlines not yet part of a
Johor Bahru 514 990 1,082 867 898 1,027
global alliance.
Langkawi 166 868 839 740 802 958
All airports* 17,209 29,759 31,275 27,805 29,248 32,660
Despite the poor financial performance of Malaysian Airports
Holdings Bhd over the last two years, most major airline routes out of
* International and domestic passengers
Source: Malaysia Airports Holdings Bhd Malaysia enjoyed healthy increases in 2000. The best growth was
to/from Osaka and Hong Kong. Indonesia showed a decline and
KLIA, which is located at Sepang, 50 kilometres south of the London and Sydney were disappointing, but it is interesting to note that
capital, is considered one of the most stunning airports in the world, in Manchester registered a 139 per cent growth.The trend was also similar
terms of architecture, as well as being ultra passenger and airline friendly. to/from other secondary airports.
However, in the three years since it opened in June 1998 its traffic
Leading International Airline Routes out of Malaysia, 2000
throughput has remained well below full capacity. The airport has two
runways and a current handling capacity of 25 million passengers a year, Annual %
Destination/ Passengers Annual
although longer-term plans call for a capacity of 100 million.An Express Origin (‘000s) Change
rail link, which will transport passengers from the airport to the centre Singapore 2,134 6.4
of Kuala Lumpur in 30 minutes, is scheduled for completion in 2002. Hong Kong 782 16.6
The new airport has always been seen as vital to Malaysia's further Bangkok 659 10.7
tourism development and that of the national flag carrier, Malaysia London 577 0.0
Airlines (MAS). MAS's growth in the past – not to mention its Jakarta 344 -1.1
competitiveness – was undermined by its limited international Taipei 368 6.2
frequencies because of its difficulty in obtaining traffic rights. Bilateral Tokyo 334 6.2
agreements depended on reciprocal rights, yet many foreign airlines had Sydney 292 1.2
little interest in flying to Malaysia since they had adequate services to Madras 259 15.0
Singapore and Bangkok. Osaka 247 14.4
Contrary to expectations, KLIA has had no greater success than Source: Malaysia Airports Holdings Bhd

Subang in selling itself as a viable alternative to Singapore’s Changi or Malaysia has a number of locally owned domestic and regional
Bangkok’s Don Muang airports, with KLIA still only handling about carriers, such as Air Asia and Pelangi Air. The government is now
half the weekly flights that they do. Their main advantage is that both looking at the possibility of allowing private investors to open airports
are hubs for major alliances – Changi for Star Alliance (Singapore in different parts of the country. This could also mean financial
Airlines) and OneWorld (Qantas) and Don Muang for Star Alliance incentives from government and the respective states if the airline/s can
thanks to Thai Airways International. prove there would be clear benefits for the destination if a new airport
In addition, the undercutting of airfares by MAS, in an effort to were opened, or an existing one expanded and upgraded.
attract new traffic, has made it extremely difficult for foreign airlines to
operate profitably to Kuala Lumpur. As a result, the last two years have
seen the suspension of operations by a number of leading foreign ACCOMMODATION
airlines including British Airways, Qantas, Lufthansa, All Nippon Malaysia had approximately 125,000 rooms in some 1,460 hotels
Airways and Aeroflot. in 2000 of which close to 33,000 rooms were in Kuala Lumpur. Both
A major marketing campaign, coupled with a freeze on airport hotel and room supply have shown steady growth over the 1990s. Initial
charges – and 12 months of waived aircraft landing and parking fees for plans by the government were for 80,000 rooms by 2000, but this target
airlines launching new services – have fortunately started to have an was already exceeded by 1996.This was primarily due to the fact that a
impact.All Nippon Airways and Turkish Airlines are resuming service and large number of new hotel projects were planned for the 1998
Qatar Airways will start flying to Kuala Lumpur from December 2001. Commonwealth Games.
In December 2000 a Hubbing Committee was also set up by the The resulting oversupply of rooms was exacerbated by the

18
economic slowdown, which caused a decline in tourist arrivals and a line with Penang's development as a high-tech centre, a rise in business
subsequent drop in demand for hotel accommodation.At the same time clientele compensated to some extent for the fall-off in leisure guests.
there was a drop in local food and beverage sales as corporate clients
reduced their entertainment budgets. As has already been indicated the
government stepped in and issued a moratorium on new deluxe hotel
development.This remained in effect until last year. MAJOR ATTRACTIONS
Peninsular Malaysia attracts around 90 per cent of foreign arrivals,
Malaysia’s Hotel Supply, although it has been losing share in recent years to the East Malaysian
1995-2000 states of Sabah and Sarawak, which have become increasingly popular as

No. of % Annual No. of % Annual % Average


adventure travel holiday destinations. In terms of hotel bednights, Kuala
Year Hotels Growth Rooms Growth Occupancy Lumpur is the favourite destination followed by Penang, with Langkawi
1995 1,220 8.2 76,373 15.9 65.5
gaining ground – particularly among Western tourists. Singaporeans and
1996 1,289 5.7 85,514 12.0 62.3
Bruneians prefer the Genting Highlands, one hour's drive away from the
1997 1,365 5.9 98,440 15.1 58.0
capital.The resort's main attraction is its casino and golfing facilities.
1998 1,419 4.0 107,791 9.5 49.9
1999 1,404 -1.1 109,413 1.5 57.7
2000 1,459 3.9 124,871 14.1 60.0* Kuala Lumpur
In contrast to other cities in Southeast Asia, Kuala Lumpur has
* Estimated
Sources: MTPB; Malaysian Association of Hotel Owners experienced difficulties in establishing itself as a tourism destination.
The Malaysian capital seems to lack a clear image and is used either as
Data from the MTPB indicate that around 47 per cent of hotel a transit stopover before proceeding on to a resort destination, or as a
guests in Malaysia are foreigners. The importance of the domestic business and convention city. This is partly due to a lack of focused
market helps to explain the Malaysian Government's investment in the marketing but also to the rather dull reputation that lives on from the
construction of budget-class hotels.These can also be expected to meet sleepy city of the 1980s.
the demands of a number of the destination's foreign markets as well, In fact, Kuala Lumpur has changed dramatically during the past
notably China. decade. Seven years of continued strong economic growth drove
The continued oversupply of hotel rooms in the capital means that construction projects in the city and surrounding areas. Numerous new
occupancy rates are hovering around the 50-55 per cent level – or in private developments were completed, as well as several very large-scale
the 60s for deluxe properties. However, both occupancies and average projects – all contributing to placing the capital on the international
room rates have increased over the past 12 months as the growth in business map as an efficient, modern, hi-tech city.
tourist demand has helped fill some of the excess capacity. In spite of the After 1997, the Asian economic crisis took its toll on the pace of
soft operating conditions, new hotel projects are under development development, but many of the city's landmarks were complete or well
and work has restarted on a number of the stalled projects. underway by the time the recession started. A plethora of shopping
centres, restaurants, bars, museums, parks, a new national theatre, a major
Operating Performance of Deluxe Hotels in Kuala international sports complex and a philharmonic orchestra offer
Lumpur,1999-2000 international tourists diverting experiences in a clean, green environment.
At the same time a multitude of skyscrapers – including the tallest
1999 2000
Average occupancy (%) 57 65 building in the world, the Petronas Twin Towers – along with a range of

Average room rate (US$) 37 46 top-class hotels, provide a stylish and polished international image to the
RevPAR (US$) 24 30 visitor. Special events hosted at the new Formula One racetrack

Source: Andersen’s Hotel Industry Benchmark Survey - Asia Pacific


adjoining the airport have also proved to be a draw for tourists from
Southeast Asia.
For destinations outside the capital, there has been considerable
hotel development over the past decade, notably in Langkawi.The surge Shopping
in growth has been helped by the fact that the destination has had duty- Shopping remains one of the favourite activities of both short- and
free shopping status since 1987. Even Malaysians staying on the island long-haul tourists. The variety of bargain items to be found in the
for a minimum of 72 hours can take advantage of this. country's outdoor markets and modern shopping centres is endless,
Penang suffered a downturn in hotel business, primarily from ranging from quality electronics to traditional arts and crafts.
Europe, during the 1990s. This was partly attributed to increased
competition from nearby Phuket in Thailand, but also due to the Sun & Beach
growth in appeal of Langkawi as the sun and beach resort in the area. Most package tours to Malaysia – at least from Western markets –
However, the restoration of historical buildings in the island’s capital, include a stay at a resort destination, usually Penang or Langkawi.
Georgetown, helped to revive tourist interest in the destination and, in Malaysia is blessed with many attractive beaches and just over 1,000

19
offshore islands. In addition to Penang and Langkawi,Tioman, Redang, GOVERNMENT’S ROLE IN TOURISM
Perhentian and Pangkor are among those attracting increasing interest Since the mid-1980s and the decision to allocate a high priority to
from international and also domestic tourists. There are a variety of tourism, the Malaysian Government has been increasingly generous
activities, such as snorkelling and scuba diving, or picnicking and with its budgets for marketing and promotions. In 1999/2000 (fiscal
camping for the locals. year ended December 2000), the MTPB’s budget was RM150 million
(US$39.5 million), and it was given a 33 per cent increase for the
Nature-Based Activities current fiscal year, to RM200 million (US$52.6 million). However, this
Recent statistics suggest that nature-based activities are the fastest- still compares somewhat unfavourably with the budgets of other
growing tourism product in Malaysia.A World Wildlife Fund for Nature national tourism organisations (NTOs) in the region.
(WWF) Malaysia study estimated that ecotourism is growing at 35 per The MTPB, more often known as Tourism Malaysia, is responsible
cent a year in terms of arrivals and currently makes up 10 per cent of for the implementation of tourism policy as well as the development
the country's tourism revenues. and promotion of the industry. It is a 100 per cent subsidiary of, and
Malaysia has 19 national parks, the most widely known probably fully financed by, government and reports to the Ministry of Culture,
being Taman Negara, Endau Rompin, Mulu – famous for its caves – and Arts and Tourism. There are 18 overseas offices, with two new offices
Kinabalu, home of Southeast Asia's highest mountain of the same name. scheduled to open in 2001, in Dubai and Jeddah. Around 12
Activities available include fishing, swimming, bird-watching, mountain representative offices are also due to be added.
climbing and limestone caving. Malaysia boasts abundant wildlife and large A major reorganisation of the MTPB is currently awaiting
areas have been set aside for wildlife reserves, bird sanctuaries and marine government approval.This would involve a big increase in staff numbers
parks. The government has also established a network of virgin jungle – of around 70 per cent on the current 500 – recruited largely from the
reserves to save as permanent nature reserves and natural arboreta and as private sector. The stated aim is to turn the NTO into a much more
undisturbed natural forest for general, ecological and botanical studies. professional marketing body.
Malaysian jungles are older than those found in the Amazon and Africa. In addition to the federal government's involvement in tourism,
The country's hill stations were originally developed as sanatoria – each state also has its own tourism body. A lack of co-ordination
an escape for colonials living in the hot, humid climate of the lowlands. between the respective authorities has sometimes resulted in the
In the post-colonial period, many of these have been converted into duplication of efforts in terms of marketing and promotion abroad, with
tourist resorts, such as Genting Highlands, Fraser's Hill and the Cameron a resulting dilution of valuable marketing dollars.
Highlands.
A visit to the Malaysian rain forest – the oldest in the world – is
usually high on the list of visitors to the country. Along the rivers of CURRENT OUTLOOK
Sarawak and Sabah are some highly unique native communities where Malaysia is one of the few countries in the world that had its own
people live in longhouses – entire villages housed under a single long laws for controlling the environment long before the term
roof. These are fast becoming major attractions for adventure travellers 'environmentally responsible tourism' became widespread. As the
looking for unusual and authentic holiday experiences. international market becomes increasingly aware of the environmental
The Malaysian Government's commitment to the development of friendliness of Malaysia, this should encourage further tourism growth.
sustainable, nature-based tourism is reflected in its National Ecotourism It should also help Malaysia to clarify its image generally.
Plan developed in 1996. The Plan was a follow-up to the National The experience of the last ten years has shown that tourism growth
Conservation Strategy conducted by the Economic Planning Unit in cannot be taken for granted, even if the basic tourism product is sound.
the Prime Minister's Department and was based on discussions with all Malaysia's best prospects for tourism, and for developing a brand image
sectors involved – government, business, tourists and local residents. It that differentiates it from competitive destinations in the region, is to
recognises that tourism is private sector led and indicates roles for all promote its culture, heritage and nature-based attractions.
sectors of federal, state and local government, private businesses, non- There are a number of threats to future growth as highlighted in
government organisations and other players. It was intended to cover the the Policy Recommendations contained in this report. But there are also
duration of the Seventh and Eighth Malaysia Plans, up to 2005. positive signs that could help Malaysia exceed its growth projections. A
At the same time, the World Tourism Organization is currently total of RM1.2 billion (US$309 million) is being allocated for tourism
drawing up a Rural Tourism Master Plan for Malaysia with funding development under the Eighth Malaysia Plan, 2001-05. It now requires
from the United Nations Development Programme. As indicated in the the full determination of government to create a policy framework that
forward to the Draft Policy Document, the Plan is intended to meet the continues to induce investment, stimulate demand and encourage
expectations of "tourists who are seeking a deeper experience of quality, and the commitment and application of the private sector to
Malaysia than the typical visitor to the cities and beach resorts.They will develop and deliver globally competitive products and ensure high
have a strong interest in scenery, nature and tranquillity, but not to the quality service standards.
extent of spending their whole holiday experience exploring the rain
forest, like a committed ecotourist."

20
TRAVEL & TOURISM
SATELLITE ACCOUNT
THIS REPORT FOLLOWS THE CONCEPT OF SATELLITE ACCOUNTING,
DEVELOPED BY PUBLIC/PRIVATE SECTOR EXPERTS UNDER THE
AUSPICES OF THE WORLD TOURISM ORGANIZATION.
It deals with all Travel & Tourism – same-day and overnight trips, • T&T Industry: The concept of the direct Travel & Tourism
business and leisure, international and domestic – according to United Industry. This shows the size of the industry and can be used to
Nations’ definitions. compare Travel & Tourism to other industries in the economy.
It identifies, from Malaysia’s National Accounts, items such as personal • T&T Economy: The concept of the direct and indirect Travel &
consumption, intermediate inputs, government expenditures, imports/ Tourism Economy. This shows the more comprehensive ‘flow
exports, and value-added related to Travel & Tourism. through effect’ that Travel & Tourism has across the whole
It considers two different, but related measurements of Travel & Tourism: economy.

MALAYSIA
Travel & Tourism Employment
(‘000s of Jobs)

Economy Industry
1,000

800

600

400

200

0
1997 1998 1999 2000 2001 2002
T&T Industry T&T Economy
Direct impact of visitor Direct and indirect impact
activity (transportation, of visitor activities, capital
accommodation, food investment, exports and
and beverage, recreation, MALAYSIA government services.
entertainment and Travel & Tourism Gross Domestic Product
travel services) (1990 Constant US$ bn)

Economy Industry
12

10

0
1997 1998 1999 2000 2001 2002

23
TSA CONCEPTS
& STRUCTURE
Year 2001 (RM mn, Employment in ‘000s of Jobs)

Personal Travel Business Travel Government Visitor Government Capital Exports


& Tourism Expenditures Exports Expenditures Investment (Non-Visitor)
(Individual) (Collective)
16,323.6 2,238.8 473.5 25,121.3 581.1 11,086.6 13,933.3

Travel & Tourism Consumption

44.157.1

Travel & Tourism Demand

69,758.2

Travel & Tourism Industry Supply Travel & Tourism Economy Supply (Residual)

44,157.1 25,601.1

Imports
19,449.5
Travel & Tourism Industry GDP Travel & Tourism Economy Supply
(Direct Only) T&T Industry GDP (Indirect)
16,901.9 7,189.3 69,758.2

Comp. Indirect Operating Depreciation Travel & Tourism Economy GDP Imports
Taxes Surplus - (Direct and Indirect)
Subsidies
NA 852.1 NA NA 39,053.9 30,725.8

T&T T&T Other


Industry Economy Taxes
Employment Employment
393.6 822.9 655.5

Personal Indirect Corp.


Income Taxes Taxes
Taxes
801.7 1,968.9 1,877.9

Travel & Toursim Taxes

5,304.1

24
Travel & Tourism Satellite Accounting research for Malaysia made on behalf of the community at large, such as tourism
reflects a comprehensive simulation of the new international promotion, aviation administration, security services and resort
standard adopted by the United Nations following the Enzo Paci area sanitation services.
World Conference on the Economic Impact of Tourism (Nice, • Capital Investment by Travel & Tourism providers (the private
France, June 1999), ten years of model development and TSA sector) and government agencies (the public sector) to provide
experience by WTTC/DRI-WEFA, and application of DRI-WEFA’s facilities, equipment and infrastructure to visitors.
latest macro-economic forecasts. • Exports (Non-Visitor) which include consumer goods sent
abroad for ultimate sale to visitors (such as clothing, electronics
TSA Economic Concepts or petrol) or capital goods sent abroad for use by industry service
The Travel & Tourism Satellite Account is based on a ‘demand-side’ providers (such as aircraft or cruise ships).
concept of economic activity, because the industry does not produce or By employing input/output modelling separately to these two
supply a homogeneous product or service like traditional industries aggregates (Travel & Tourism Consumption and Travel & Tourism
(agriculture, electronics, steel, etc). Instead, Travel & Tourism is an Demand), the Satellite Account is able to produce two different and
industrial activity defined by the diverse collection of products (durables complementary aggregates of Travel & Tourism Supply: the Travel &
and non-durables) and services (transportation, accommodations, food and Tourism Industry and the Travel & Tourism Economy.The former
beverage, entertainment, government services, etc) that are delivered to captures the explicitly defined production-side ‘industry’ equivalent,
visitors.There are two basic aggregates of demand in the TSA: direct impact only, for comparison with all other industries, while the
I Travel & Tourism Consumption represents the value of latter captures the broader ‘economy-wide’ impact, direct and indirect, of
products and services that have been consumed by visitors. It is the Travel & Tourism.Through this process, the Satellite Account is also able
basic demand-side aggregate used to construct an explicitly defined to determine that portion of supply, which it Imports from abroad.
production-side ‘industry’ equivalent for comparison with all other Next, the Satellite Account breaks down both aggregates of supply
industries.Travel & Tourism Consumption includes: (Industry and Economy) into the direct and indirect impacts of Gross
• Personal Travel & Tourism, more formally known as consumer Domestic Product (GDP), the main descriptor of economic
expenditures, which captures spending by Malaysia residents on production, as well as the various components of GDP (Wages &
traditional Travel & Tourism services (lodging, transportation, Salaries, Indirect/Transaction Taxes, Operating Surplus,
entertainment, meals, financial services, etc) and goods (durable Depreciation and Subsidies). Beyond the regular TSA accounts, a
and nondurable) used for Travel & Tourism activities. separate analysis is also provided of Personal Income Taxes paid by
• Business Travel by government and industry, which mirrors Travel & Tourism generated employment and Corporate and
Personal Travel & Tourism’s spending on goods and services Property Taxes paid by Travel & Tourism companies.
(transportation, accommodation, meals, entertainment, etc), but Finally, one of the most important elements of the Travel & Tourism
represents intermediate inputs used in the course of business or Satellite Account is the Employment results which can now be
government work. quantified for the basic Travel & Tourism Industry and the broader Travel
• Government Expenditures (Individual) by agencies and & Tourism Economy.
departments which provide visitor services such as cultural (art • T&T Industry Employment generally includes those jobs with
museums), recreational (national park) or clearance (immigration/ face-to-face contact with visitors (airlines, hotels, car rental,
customs) to individual visitors. restaurant, retail, entertainment, etc).
• Visitor Exports, which include spending by international • T&T Economy Employment includes T&T Industry
visitors on goods and services. Employment plus those faceless jobs associated with:
II Travel & Tourism Demand builds on Travel & Tourism • Industry suppliers (airline caterers, laundry services, food
consumption to include Travel & Tourism products and services suppliers, wholesalers, accounting firms, etc).
associated with residual components of final demand. It is used to • Government agencies, manufacturing and construction of capital
construct a broader ‘economy-wide’ impact of Travel & Tourism. goods and exported goods used in Travel & Tourism.
The residual elements of Travel & Tourism demand are: • Supplied commodities (steel producers, lumber, oil production,
• Government Expenditures (Collective) made by agencies etc).
and departments associated with Travel & Tourism, but generally

25
TRAVEL & TOURISM’S
ECONOMIC IMPACT
TRAVEL & TOURISM – ENCOMPASSING TRANSPORT,ACCOMMODATION,
CATERING, RECREATION AND SERVICES FOR VISITORS – IS ONE OF
MALAYSIA’S LARGEST INDUSTRIES AND EMPLOYERS.

Worldwide in 2001, it is expected to post US$4.5 trillion of employment in 2001 and are forecast to rise to 520,700 jobs or 4.8 per
economic activity (Total Demand) and is forecast to grow to US$8.7 cent of the total by 2010.
trillion by 2010. Travel & Tourism is a major exporter, with inbound visitors
Travel & Tourism Total Demand in Southeast Asia is expected to injecting foreign exchange directly into the economy.Travel & Tourism
total US$100 billion in 2001, growing to US$257 billion in 2010. exports in Southeast Asia are expected to represent 8.0 per cent of total
In Malaysia in 2001, Travel & Tourism is expected to post exports in 2001.
RM69,758 million (US$18.4 billion) of economic activity (Total In Malaysia, exports make up a very important share of Travel &
Demand), growing to RM158,213 million (US$36.9) billion by 2010. Tourism’s contribution to Gross Domestic Product. Of total Malaysian
In 2001, the T&T Industry should contribute 4.2 per cent to exports, services and merchandise, Travel & Tourism is expected to
worldwide Gross Domestic Product (GDP).The broader T&T Economy generate 8.8 per cent (RM39,055 million or US$10.3 billion) in 2001,
should contribute 10.7 per cent to 2001 GDP. growing to RM93,308 million or US$21.8 billion (10.0 per cent of
In Southeast Asia, the Travel & Tourism Industry is expected to post total) in 2010.
a GDP contribution of 4.1 per cent in 2001, while the Travel & Tourism Travel & Tourism is a catalyst for construction and manufacturing.
Economy contribution totals 9.1 per cent. In 2001, the private and public sectors combined are expected to spend
In Malaysia, the T&T Industry is expected to contribute 4.7 per US$656.7 billion in new Travel & Tourism capital investment worldwide
cent to GDP in 2001 (RM16,902 million or US$4.4 billion), rising to – 9.0 per cent of the total – rising to US$1.3 trillion by 2010 – 9.2 per
RM38,713 million or US$9.0 billion (5.3 per cent of total) by 2010. cent of the total.
The T&T Economy contribution should grow from 10.8 per cent Southeast Asia Travel & Tourism capital investment is expected to
(RM39,054 millions or US$10.3 billion) to 11.9 per cent (RM86,285 total US$17.1 billion in 2001 or 9.9 per cent of total regional capital
million or US$20.1 billion) in the same period. investment.
Travel & Tourism is a high growth activity, which is forecast to Year 2001 capital investment in the Malaysian T&T Economy is
increase its total economic activity by 3.9 per cent per annum estimated at RM11,087 million (US$2.9 billion) or 12.0 per cent of
worldwide in real terms over the next ten years. total investment. By 2010, this should reach RM20,801 million (US$4.9
In Southeast Asia, Travel & Tourism is expected to post average billion) or 12.4 per cent of total.
annualised gains of 6.2 per cent between 2001 and 2010. Travel & Tourism is both a generator and receiver of government
For Malaysia, Travel & Tourism economic activity is expected to funds. Globally in 2001, Travel & Tourism is expected to generate
grow by 6.4 per cent per annum, in real terms, between 2001 and 2010. US$787.8 billion of taxes – 10.6 per cent of total – while channelling
Travel & Tourism is human-resource intensive, creating quality jobs US$216.2 billion of government expenditures – 4.2 per cent of total. By
across the full employment spectrum. In 2001, one in 12.2 jobs is 2010, taxes should increase to US$1.5 trillion – 10.8 per cent of the total
generated by the T&T Economy.The T&T Industry accounts for 3.1 per – and government spending to US$391.9 billion – 4.4 per cent of the
cent of global employment.Today there are 78.2 million T&T Industry total.
jobs and 207.1 million jobs in the T&T Economy, rising to 96.7 million Taxes from Travel & Tourism in Malaysia in 2001 are expected to
T&T Industry jobs and 253.7 million T&T Economy jobs by 2010. total RM5,304 million (US$1.4 billion) or 10.5 per cent of total
The Southeast Asia Travel & Travel Industry is expected to generate taxation. In contrast, government T&T operating expenditures are
7.3 million jobs in 2001 (3.2 per cent of total employment), while the forecast at RM1,076 million (US$283 million) or 2.1 per cent of the
broader Travel & Tourism Economy produces 18.3 million jobs (8.0 per total government spending.
cent of total employment). Over the next ten years, Malaysia Travel & Tourism taxes are
In Malaysia in 2001, T&T Economy employment is estimated at expected to grow to RM11,782 million (US$2.7 billion) or 11.5 per
822,900 jobs or 8.8 per cent of total employment. By 2010, cent of total taxes. During this period, government T&T spending is
this should grow to 1.0 million jobs, 9.6 per cent of total employment. forecast to grow to RM3,586 million (US$836 million) or 2.2 per cent
The 393,600 T&T Industry jobs account for 4.2 per cent of total of overall expenditures.

26
Malaysia Estimates and Forecasts

2001 2010
RM mn % of Total Growth1 RM mn % of Total Growth2
Personal Travel & Tourism 16,323.6 10.6 20.2 34,597.3 11.1 5.8
Business Travel 2,238.8 --- 13.2 5,992.0 --- 5.4
Government Expenditures 1,076.2 2.1 14.5 3,586.4 2.2 6.3
Capital Investment 11,086.6 12.0 -8.6 20,800.6 12.4 5.0
Visitor Exports 25,121.3 5.7 27.4 61,655.9 6.6 7.4
Other Exports 13,933.3 3.1 8.5 31,652.4 3.4 6.6
Travel & Tourism Demand 69,758.2 --- 13.3 158,212.8 --- 6.4
T&T Industry GDP 16,901.9 4.7 13.2 38,712.8 5.3 6.5
T&T Economy GDP 39,053.9 10.8 4.7 86,285.0 11.9 6.1
T&T Industry Employment3 393.6 4.2 11.8 520.7 4.8 2.9
T&T Economy Employment3 822.9 8.8 2.5 1,038.5 9.6 2.5

12000 Real Growth Adjusted for Inflation (%); 22001-2010 - Annualised Real Growth Adjusted for Inflation (%); 3Employment in '000s of jobs

Southeast Asia Estimates and Forecasts

2001 2010
US$ bn % of Total Growth 1
US$ bn % of Total Growth2
Personal Travel & Tourism 28.2 6.1 4.6 68.6 6.2 5.3
Business Travel 8.9 --- 6.2 21.3 --- 4.9
Government Expenditures 3.4 5.4 7.4 7.5 5.6 4.7
Capital Investment 17.1 9.9 12.0 42.2 10.1 6.1
Visitor Exports 29.6 5.6 8.0 87.7 7.2 7.5
Other Exports 12.9 2.4 16.5 30.4 2.5 6.0
Travel & Tourism Demand 99.8 --- 8.5 257.4 --- 6.2
T&T Industry GDP 31.2 4.1 6.0 86.5 4.9 6.7
T&T Economy GDP 70.1 9.1 5.3 188.6 10.6 6.6
T&T Industry Employment3 7,331.6 3.2 5.7 9,817.4 3.4 3.3
T&T Economy Employment3 18,288.0 8.0 2.7 24,618.0 8.5 3.4

12000 Real Growth Adjusted for Inflation (%); 22001-2010 - Annualised Real Growth Adjusted for Inflation (%); 3Employment in '000s of jobs

World Estimates and Forecasts

2001 2010
US$ bn % of Total Growth1 US$ bn % of Total Growth2
Personal Travel & Tourism 2,104.1 10.4 4.3 3,790.2 10.5 3.1
Business Travel 453.8 --- 3.9 811.4 --- 3.2
Government Expenditures 216.2 4.2 3.8 391.9 4.4 3.1
Capital Investment 656.7 9.0 5.2 1,339.0 9.2 4.4
Visitor Exports 601.7 7.3 9.7 1,281.6 6.7 5.1
Other Exports 462.1 5.6 13.5 1,100.4 5.8 6.3
Travel & Tourism Demand 4,494.5 --- 5.9 8,714.1 --- 3.9
T&T Industry GDP 1,381.5 4.2 4.3 2,508.5 4.2 3.2
T&T Economy GDP 3,497.1 10.7 4.6 6,543.3 11.0 3.5
T&T Industry Employment3 78,183.4 3.1 3.1 96,746.6 3.4 2.4
T&T Economy Employment3 207,062.0 8.2 3.2 253,655.0 8.9 2.2

12000 Real Growth Adjusted for Inflation (%); 22001-2010 - Annualised Real Growth Adjusted for Inflation (%); 3Employment in '000s of jobs

27
TOTAL DEMAND
TRAVEL & TOURISM IN MALAYSIA IS EXPECTED TO TOTAL RM69,758
MILLION (US$21.0 BILLION) OF TOTAL DEMAND IN 2001, INCLUDING:

• RM16,324 million (US$4.3 billion) of residents, Travel & Tourism companies, regional results of 68 per cent cumulative
Personal Travel & Tourism consumption and government agencies; growth during this same period. Few Travel &
by residents of Malaysia (10.6 per cent of • RM25,121 million (US$6.6 billion) of Tourism economies around the world have
total personal consumption); Visitor Exports, 5.7 per cent of total matched this level of cumulative growth.
• RM2,239 million (US$589 million) of exports in Malaysia generated from The long-term outlook for growth in
Business and Government Travel by international visitor markets; and Malaysia’s Travel & Tourism demand is
resident companies and government • RM13,933 million (US$3.7 billion) of expected to be strongly positive following the
employees; Merchandise Trade Exports, 3.1 per cent late 90s’ financial crisis and the major recovery
• RM1,076 million (US$283 million) of of total exports in Malaysia. of 1999-2000. It is expected that all indicators
Government Expenditures, 2.1 per This apportionment of Malaysia Travel & will positively contribute to healthy and
cent of total government spending in Tourism demand clearly illustrates what may continued growth, helping to produce a gain
Malaysia, to provide individual and be common knowledge to some and news to of 4.4 per cent in overall Travel & Tourism
collective services to the Malaysian others, and that is Visitor Exports by demand for 2001.
Travel & Tourism Industry and its international visitors makes up more than Over the next ten years, Malaysia’s Travel
visitors; one-third of the Malaysian Travel & Tourism & Tourism demand growth is expected to
• RM11,087 million (US$2.9 billion) of economy. average 6.4 per cent per annum, well exceeding
Capital Investment, 12.0 per cent of total Over the past 12 years (1988-2000), world average expectations for 3.9 per cent
in Malaysia, in personal, commercial and Malaysia has grown its Travel & Tourism per annum and slightly bettering gains in
public Travel & Tourism facilities, activity a remarkable 118 per cent in real regional Southeast Asia expected at 6.2 per
equipment and infrastructure by terms. This compares with the Southeast Asia cent per annum.

MALAYSIA MALAYSIA MALAYSIA


Travel & Tourism Total Demand Travel & Tourism Total Demand Travel & Tourism Total Demand
(2001 US$ mn) (1990 Constant US$ bn) (Cumulative Real Growth, %)

Personal Travel & Tourism (4,295.7) 20


200
Other Exports (3,666.7)
175
18
150

16 125

100
14
75

12
50

Visitor Exports (6,610.9) 25


Capital Investment (2,917.5) 10 0
Government Expenditures (283.2)
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
Business Travel (589.2)

SOUTHEAST ASIA SOUTHEAST ASIA SOUTHEAST ASIA


Travel & Tourism Total Demand Travel & Tourism Total Demand Travel & Tourism Total Demand
(2001 Est. US$ bn) (1990 Constant US$ bn) (Cumulative Real Growth, %)

Personal Travel & Tourism (28.2) 90 200


Other Exports (12.9)
175
85
150
80
125

75 100
Visitor Exports (29.6)
75
70
50
65
25
Capital Investment (17.1)
Government Expenditures (3.4) 60 0
Business Travel (8.9) 1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010

28
EMPLOYMENT
THE TRAVEL & TOURISM INDUSTRY IN MALAYSIA IS EXPECTED TO
DIRECTLY YIELD 393,600 JOBS IN 2001.

A total 822,900 jobs (direct and indirect) are jobs in Malaysia totaling 822,900 jobs represent points. First, Malaysia’s Travel & Tourism
expected to be generated across the broader 8.8 per cent of the total workforce. By 2010, employment growth has been strongly
spectrum of the Travel & Tourism Economy Travel & Tourism Economy employment is positive during periods of economic stability
including: expected to increase by 215,600 jobs in and nominally flat during periods of
• Travel company employment; Malaysia to 9.6 per cent of total. uncertainty. Second, among its Southeast Asia
• Government agency employment; and Over the past 12 years, Travel & Tourism neighbours, Malaysia’s current level of Travel
• Supplier company employment. in Malaysia has created more than 383,200 & Tourism employment as a percentage of
The first category represents Travel & jobs. In 2001, due to the moderation of total employment ranks at the middle-tier of
Tourism Industry jobs, while all three economic growth, the jobs outlook for Travel the list, suggesting an average or comparable
categories represent Travel & Tourism & Tourism is positive, but only marginally contribution. Last and most important,
Economy jobs. better than year 2000 totals. However, Malaysia’s Travel & Tourism employment
The 2001 Travel & Tourism Industry jobs assuming a resumption of stronger economic growth rate, expected over the next ten years,
in Malaysia totalling 393,600 represent 4.2 per growth in next few years, there is a strong is on the low end of the regional list and
cent of the total workforce. By 2010,Travel & potential over the next decade to create more about one-third the growth of its overall
Tourism Industry employment is expected to than 22,000 new jobs each year. Employment Travel & Tourism demand.This situation may
increase by 127,100 jobs in Malaysia to 4.8 per growth is expected to total 2.5 per cent per suggest requisite increases in productivity or
cent of total. annum between 2001 and 2010. possible shortages of Travel & Tourism
The 2001 Travel & Tourism Economy The charts below reveal a few interesting employees.

MALAYSIA MALAYSIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Employment Travel & Tourism Economy Employment Travel & Tourism Economy Employment
(Thousands of Jobs) (Cumulative Real Growth, %) (2001, % of Total Employment)

Economy Industry
1,000 100
1 Laos ..................................................................13.1
2 Philippines ........................................................11.8
800 80
3 Thailand ............................................................11.3
4 Cambodia ........................................................10.2
600 60
5 Papua New Guinea ........................................10.1
6 Singapore ............................................................9.9
400 40
7 Burma..................................................................8.9
8 Malaysia ................................................8.8
200 20
9 Indonesia ............................................................5.9
10 Vietnam ..............................................................5.4
0 0
1990 1995 2000 2005 2010
11 Brunei Darussalam ..........................................4.7
1997 1998 1999 2000 2001 2002

SOUTHEAST ASIA SOUTHEAST ASIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Employment Travel & Tourism Economy Employment T&T Employment by Industry
(Millions of Jobs) (Cumulative Real Growth, %) (10 Year Real Growth, Annualised, %)

20 Economy Industry 100


1 Brunei Darussalam ..........................................5.3
80 2 Indonesia ............................................................4.6
15
3 Cambodia ..........................................................3.7
60 4 Papua New Guinea ..........................................3.4
10 5 Singapore ............................................................3.3
40 6 Philippines ..........................................................3.1
7 Thailand ..............................................................2.8
5
20 8 Laos......................................................................2.8
9 Malaysia ................................................2.5
0 0
10 Vietnam ..............................................................2.3
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Burma..................................................................2.0

29
GROSS DOMESTIC
PRODUCT
THE TRAVEL & TOURISM INDUSTRY IN MALAYSIA IS EXPECTED TO
DIRECTLY PRODUCE RM16,902 MILLION (US$4.5 BILLION) OR 4.7 PER
CENT OF TOTAL GROSS DOMESTIC PRODUCT (GDP) IN 2001.
The broader Travel & Tourism Economy Tourism Economy. These charts also regional history and forecasts, where Travel &
(direct and indirect) is expected to produce illustrate how positive and negative changes Tourism Economy growth is much stronger
2001 GDP of RM39,054 million (US$10.3 in the Travel & Tourism industry result in a and quicker to recovery.
billion) or 10.8 per cent of total. The long- much larger impact on the broader Travel & The third set of charts (right), comparing
term expectations for Travel & Tourism GDP Tourism economy. In general, the near-term Malaysia with the WTTC estimates for the
growth are positive (6.1 per cent annualised results for Southeast Asia Travel & Tourism Southeast Asia countries, illustrates how its
real growth). By 2010, the Travel & Tourism GDP have followed regional uncertainties
Travel & Tourism Economy GDP as a
Economy GDP is forecast to gain 1.1 and rebounds.
percentage of total GDP compares with its
percentage points to total 11.9 per cent or In the second set of charts (Cumulative
peers. Ranked at number 4, between Laos at
RM86,285 million (US$20.1 billion). Real Growth), Malaysia’s Travel & Tourism
number 3 and Singapore at 5, Malaysia is
The Travel & Tourism Economy results Economy shows the dynamic growth that it
and forecasts illustrate the massive economic has produced over the past ten years. Also clearly among the top-tier tourism intensive
stimulus effect of Travel & Tourism. In the first evident are two periods of short-term loss countries. Additionally, the second league
set of charts (stacked bar), it is easy to (1992 and 1996), which temporarily caused table extract illustrates that Malaysia’s
recognise how the tourism industry acts as a concern for Malaysia’s Travel & Tourism prospects for GDP growth are about average
leading economic catalyst as its contribution growth. Overall, this level of dramatic growth within the region, where it is ranked 7th.
permeates through Malaysia’s Travel & is in sharp contrast to the Southeast Asia

MALAYSIA MALAYSIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism GDP Travel & Tourism Economy GDP Travel & Tourism Economy GDP
(1990 Constant US$ bn) (Cumulative Real Growth, %) (2001, % of Total GDP)

Economy Industry
12 200 1 Thailand ............................................................13.1

10
175 2 Papua New Guinea ........................................12.8
150 3 Laos ..................................................................10.9
8 4 Malaysia..............................................10.8
125
5 Singapore..........................................................10.2
6 100
6 Vietnam ..............................................................9.5
75
4 7 Philippines ..........................................................9.1
50
8 Cambodia ..........................................................8.6
2
25
9 Indonesia ............................................................8.5
0 0 10 Burma..................................................................5.8
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Brunei Darussalam ..........................................5.8

SOUTHEAST ASIA SOUTHEAST ASIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism GDP Travel & Tourism Economy GDP Travel & Tourism Economy GDP
(1990 Constant US$ bn) (Cumulative Real Growth, %) (10 Year Real Growth Annualised, %)

80 Economy Industry
200 1 Thailand ..............................................................7.2
175
2 Brunei Darussalam ..........................................7.1
60 3 Singapore ............................................................6.8
150
4 Indonesia ............................................................6.8
125
5 Cambodia ..........................................................6.6
40 100
6 Papua New Guinea ..........................................6.3
75
7 Malaysia ................................................6.1
20 50 8 Vietnam ..............................................................5.8
25 9 Laos......................................................................5.5
0 0 10 Philippines ..........................................................5.0
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010 11 Burma..................................................................4.1

30
CAPITAL
INVESTMENT
IN 2001, TRAVEL & TOURISM CAPITAL INVESTMENT IN MALAYSIA IS
EXPECTED TO TOTAL RM11,087 MILLION (US$2.9 BILLION) OR 12.0 PER
CENT OF TOTAL INVESTMENT.
The largest component of capital insight into the market forces at work in a The charts below illustrate several
investment originates from the private sector, given economy and the expectations by the interesting points. First Malaysia’s Travel &
which is expected to invest RM10,313 million public and private sectors to meet the Tourism capital investment growth is expected
(US$2.7 billion) in new plants and equipment, challenges and opportunities in the years to re-ignite in 2001 following the difficult
while the public sector is expected to invest ahead. For the most part, Travel & Tourism years of 1999 and 2000. Even after considering
RM773 million (US$204 million) in new capital investment tends to be cyclical, with these circumstances, Malaysia’s cumulative
Travel & Tourism infrastructure in 2001. strong links to major public policy initiatives, historical and forecast growth well exceeds
This represents a small gain on year 2000 the business/market cycle, major events (ie that of Southeast Asia. Second, based on a
results and the first gain in three years, natural disasters) and significant socio-political ranking with the individual Southeast Asian
illustrating the returning optimism about changes. countries, Malaysia ranks high in investment
Malaysia’s overall economy this year. Over the Worldwide, Travel & Tourism capital percentage terms for 2001.At 12.0 per cent of
next ten years (2001-2010), the average investment is expected to total 9.0 per cent of total investment, Malaysia is in 3rd position,
contribution of Travel & Tourism to Malaysia’s total investment in 2001. Global growth just after Burma. However, unlike its average
capital investment account is expected to grow expectations for 2001-2010 are 4.4 per cent GDP growth, Malaysia’s Travel & Tourism
at a strong rate of 5.0 per cent per year in real per year (constant dollars). In the Southeast capital investment growth (prospects for 2001-
terms. Asia region, the respective figures are 9.9 per 2010) ranks at the lowest level of the WTTC
Examination of Travel & Tourism capital cent of total capital investment in 2001 and 6.1 league table for Southeast Asia, between Laos
investment results and forecasts lends greater per cent real growth over the coming decade. at 9th position and Burma at 11th position.

MALAYSIA MALAYSIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Capital Investment Travel & Tourism Capital Investment Travel & Tourism Capital Investment
(1990 Constant US$ bn) (Cumulative Real Growth, %) (2001, % of Total)

3.5 200
1 Cambodia ........................................................17.9
175 2 Burma................................................................16.1
150 3 Malaysia..............................................12.0
3.0
125 4 Indonesia ..........................................................10.8

100
5 Philippines ..........................................................9.8
6 Singapore ............................................................8.9
75
2.5
7 Papua New Guinea ..........................................8.8
50
8 Laos......................................................................8.7
25
9 Thailand ..............................................................8.5
2.0 0 10 Brunei Darussalam ..........................................8.3
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Vietnam ..............................................................6.3

SOUTHEAST ASIA SOUTHEAST ASIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Capital Investment Travel & Tourism Capital Investment Travel & Tourism Capital Investment
(1990 Constant US$ bn) (Cumulative Real Growth, %) (10 Year Real Growth Annualised, %)
20
200
1 Brunei Darussalam ........................................10.3
175
18 2 Vietnam ..............................................................7.0
150 3 Indonesia ............................................................6.5
16 125 4 Singapore ............................................................6.0
100 5 Thailand ..............................................................5.8
14 6 Papua New Guinea ..........................................5.6
75
7 Cambodia ..........................................................5.6
50
12
8 Philippines ..........................................................5.4
25
9 Laos......................................................................5.4
10 0
10 Malaysia ................................................5.0
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Burma..................................................................3.5

31
PERSONAL & BUSINESS
IN 2001, MALAYSIA IS EXPECTED TO GENERATE RM16,324 MILLION
(US$4.3 BILLION) OF PERSONAL TRAVEL & TOURISM CONSUMPTION BY
RESIDENTS, OR 10.6 PER CENT OF TOTAL PERSONAL CONSUMPTION.
In Malaysia, business travel in 2001 is place abroad. When the spending does take manifested itself in reduced Malaysian resident
expected to total RM2,239 million or place abroad, the Satellite Account generates a spending on Travel & Tourism as illustrated in
US$589 million (53 per cent corporate, 47 corresponding ‘import credit’, providing for the stacked bar and cumulative growth charts
per cent government). an accurate assessment of Travel & Tourism below for 1998 and 1999. Nevertheless, the
Unlike visitor exports, which depend upon ‘produced’ in Malaysia and Travel & Tourism cumulative growth charts for Malaysia and
international markets for consumers, the ‘produced’ by the rest of the world. Southeast Asia below illustrate the
business generated in these two categories Analysis of Malaysian results illustrates a overwhelming growth of Malaysian and
depends on the Malaysian economy itself.As the few interesting points. First, Malaysian regional Travel & Tourism spending. Second, if
Malaysian economy grows, Malaysian consumer residents have recently spent about 10.6 per as expected the economy continues positive
and business travel follows suit. Malaysian cent of their personal expenditures on Travel growth, Malaysian residents’ spending on
personal Travel & Tourism has grown a & Tourism. This percentage is right on target personal and business Travel & Tourism is also
remarkable 76 per cent since 1998 – clearly for the world average of 10.4 per cent and likely to return to steady growth. Last, the
indicative of the economy’s recent development. significantly higher that the regional Southeast league table extracts illustrate a consistent
Over the next decade (2001-2010), personal Asia average of 6.1 per cent. Generally, the message of spending priority: the current
Travel & Tourism in Malaysia is expected to level of personal Travel & Tourism spending situation where Malaysia ranks above each of
grow at an annual rate of 5.8 per cent, while has a direct relationship to the development of the Southeast Asia countries in terms of Travel
business/government travel is expected to grow the resident economy, as per capita income & Tourism spending vis-à-vis total personal
at an annual rate of 5.4 per cent. increases, then Travel & Tourism spending consumption; and the future situation where
Although most of this Travel & Tourism follows suit. Second, Malaysia’s overall macro- Malaysia ranks 2nd in terms of Travel &
takes place within Malaysia, a portion takes economic situation in the late 1990s Tourism spending growth.

MALAYSIA MALAYSIA WTTC LEAGUE TABLE EXTRACT


Personal & Business Travel & Tourism Personal Travel & Tourism Personal Travel & Tourism
(1990 Constant US$ bn) (Cumulative Real Growth, %) (2001, % of Total Personal Consumption)

6 Business Personal
150 1 Malaysia..............................................10.6
5
2 Papua New Guinea ........................................10.1
125
3 Singapore ............................................................9.3
4 100 4 Thailand ..............................................................8.6

3
5 Vietnam ..............................................................8.2
75
6 Philippines ..........................................................6.8
2 50 7 Laos......................................................................5.7

1 25
8 Brunei Darussalam ..........................................5.0
9 Burma..................................................................3.8
0 0
10 Indonesia ............................................................3.4
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Cambodia ..........................................................2.4

SOUTHEAST ASIA SOUTHEAST ASIA WTTC LEAGUE TABLE EXTRACT


Personal & Business Travel & Tourism Personal Travel & Tourism Personal Travel & Tourism
(1990 Constant US$ bn) (Cumulative Real Growth,%) (10 Year Real Growth Annualised, %)

35 Business Personal
150 1 Indonesia ............................................................6.3
30 2 Malaysia ................................................5.8
125
3 Vietnam ..............................................................5.6
25
100 4 Papua New Guinea ..........................................5.6
20
5 Cambodia ..........................................................5.5
75
15 6 Thailand ..............................................................5.5

10
50 7 Philippines ..........................................................5.4
8 Brunei Darussalam ..........................................5.3
5 25
9 Laos......................................................................5.3
0 0 10 Singapore ............................................................4.8
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010 11 Burma..................................................................4.6

3232
EXPORTS
TRAVEL & TOURISM EXPORTS PLAY A LEADING ROLE IN MALAYSIA’S
TRAVEL & TOURISM BUSINESS.

In 2001, Travel & Tourism services and tripled (200 per cent) in real terms, well above Although long-term expectations for
merchandise exports for Malaysia RM39,055 and beyond the regional growth of 86% during Malaysia’s Travel & Tourism export growth
million or US$10.3 billion (64 per cent by this same period, illustrating the strength of (2001-2010) are positive, these forecasts, like
visitors, 36 per cent by exported consumer and Malaysia’s international appeal and product. In any other, depend on future events and are
capital goods) are expected to represent 56 per real terms over the next ten years, Malaysian therefore not guaranteed. The 1998 financial
cent of total Travel & Tourism demand. visitor exports are expected to grow 7.4 per crisis, which had a short-term negative impact
Without question, as this category grows and cent per annum, while Travel & Tourism on tourism, is a perfect example of uncertainty
contracts, the health and vitality of Malaysia’s merchandise exports (non-visitor exports) are inherent in forecasting.
Travel & Tourism sector will grow and expected to follow just behind at 6.6 per cent Examination of the WTTC league tables
contract. per annum. Clearly, based on these forecasts, reveals that Malaysia is placed about average
In 1999 and 2000, the gains for Travel & Malaysia is well positioned in the long term to among its Southeast Asia competitors, in terms
Tourism visitor exports have been enormous. grow its Travel & Tourism exports. of visitor exports as a percentage of total
In constant dollars, gains for 1999 visitor Globally and for Southeast Asia, visitor exports. On the second league table, Malaysian
exports totaled 45 per cent, while year 2000 exports are expected to grow at 5.1 and 7.5 visitor exports growth illustrates its future
gains totaled 27 per cent. Over the longer-term per cent per annum respectively over the next potential, listed in third place at 7.4 per cent
(1988-2000), Malaysia’s visitor exports have ten years (2001-2010). per annum after Indonesia and Thailand.

MALAYSIA MALAYSIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Exports Travel & Tourism Exports Travel & Tourism Visitor Exports
(1990 Constant US$ bn) (Cumulative Real Growth, %) (2001, % of Total Services Exports)
6 Other Visitor
300
1 Laos ..................................................................16.3
5
250 2 Cambodia ........................................................14.5
3 Thailand ............................................................11.1
4 200
4 Papua New Guinea ..........................................9.4
3 150 5 Vietnam ..............................................................6.9
6 Philippines ..........................................................6.7
2 100
7 Malaysia ................................................5.7
1 50 8 Indonesia ............................................................4.3
9 Singapore ............................................................3.9
0 0
10 Burma..................................................................2.5
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Brunei Darussalam ..........................................1.3

SOUTHEAST ASIA SOUTHEAST ASIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Exports Travel & Tourism Exports Travel & Tourism Exports
(1990 Constant US$ bn) (Cumulative Real Growth, %) (10 Year Real Growth Annualised, %)

40 Other Visitor
300
1 Indonesia ............................................................8.9
250
2 Thailand ..............................................................8.2
30 3 Malaysia ................................................7.4
200 4 Papua New Guinea ..........................................7.3
20 150
5 Cambodia ..........................................................7.3
6 Singapore ............................................................7.0
100 7 Vietnam ..............................................................5.8
10
8 Laos......................................................................5.2
50
9 Philippines ..........................................................4.9
0 0 10 Brunei Darussalam ..........................................1.9
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Burma..................................................................1.5

3333
GOVERNMENT
IN 2001, NATIONAL AND LOCAL GOVERNMENT AGENCIES IN MALAYSIA
ARE EXPECTED TO SPEND RM1,076 MILLION (US$283 MILLION) OF
CURRENT OPERATING FUNDS FOR TRAVEL & TOURISM.
This represents 2.1 per cent of total 2.1 per cent suggests that it is falling well short toward that industry/sector. In Malaysia,
government expenditures in providing of its regional and global competition for the 2001 ratio of Travel & Tourism GDP
individual and collective government Travel & Travel & Tourism support and services. (percentage of total) to government
Tourism services to visitors, travel companies In this WTTC report, 2001 government expenditures (percentage of total) is 5.2 to
and the community at large. Over the next ten expenditures include: individual expenditures 1.0. Worldwide and in Southeast Asia, this
years (2001-2010), Travel & Tourism RM474 million (US$125 million) which ratio is 2.5 to 1.0 and 1.7 to 1.0 respectively.
government expenditures in Malaysia are can be linked to individual visitors like These results would indicate that the
expected to increase 6.3 per cent per year in museum subsidies or immigration services; Malaysian government authorities are
real terms. and collective expenditures RM581 million returning significantly less to Travel & Tourism
Globally, the average government is (US$153 million) that are undertaken for than the average country.
expected to contribute 4.2 per cent of the community at large like airport The graphics below reinforce all of these
government expenditures to Travel & Tourism administration or tourism promotion, but points. First Malaysia government expenditures
related functions and increase this spending by have a logical service connection to Travel & are growing strongly compared to those of
3.1 per cent per annum over the next ten Tourism. other Southeast Asia countries (middle
years.The corresponding figures for Southeast Intuitively, one would think that there graphics and second league table), but
Asia is 5.4 per cent of total government should be a direct link between the impact of Malaysia’s current contribution is well below
spending and 4.7 per cent real growth for the an industry/sector like Travel & Tourism on that of its competitors, showing up in 2001
coming decade. Based on these results, the economy (in terms of GDP) and the in 9th position at 2.1 per cent of total
Malaysia’s 2001 government contribution of amount of funding allocated by governments government spending.

MALAYSIA MALAYSIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Gov’t Expenditures Travel & Tourism Gov’t Expenditures Travel & Tourism Gov't Expenditures
(1990 Constant US$ mn) (Cumulative Real Growth, %) (2001, % of Total Gov't Expenditures)
250
250
1 Singapore ............................................................9.1
2 Cambodia ..........................................................8.8
200
3 Indonesia ............................................................8.4
200

150
4 Laos......................................................................8.1
5 Burma..................................................................3.8
100 6 Philippines ..........................................................3.5
150
7 Thailand ..............................................................2.6
50 8 Papua New Guinea ..........................................2.2
9 Malaysia ................................................2.1
100 0
1997 1998 1999 2000 2001 2002
10 Brunei Darussalam ..........................................2.0
1990 1995 2000 2005 2010
11 Vietnam ..............................................................1.2

SOUTHEAST ASIA SOUTHEAST ASIA WTTC LEAGUE TABLE EXTRACT


Travel & Tourism Gov’t Expenditures Travel & Tourism Gov’t Expenditures Travel & Tourism Gov't Expenditures
(1990 Constant US$ bn) (Cumulative Real Growth, %) (10 Year Real Growth Annualised, %)

3.2
250 1 Brunei Darussalam ..........................................8.9
3.0
2 Vietnam ..............................................................6.4
200 3 Malaysia ................................................6.3
2.8 4 Cambodia ..........................................................5.9
150
2.6
5 Papua New Guinea ..........................................5.9
6 Indonesia ............................................................5.8
100
2.4 7 Laos......................................................................5.7

2.2 50 8 Singapore ............................................................4.2


9 Philippines ..........................................................3.7
2.0 0 10 Thailand ..............................................................3.1
1997 1998 1999 2000 2001 2002 1990 1995 2000 2005 2010
11 Burma..................................................................2.9

34
TAXES
MALAYSIA’S TRAVEL & TOURISM ECONOMY IS EXPECTED IN 2001 TO
GENERATE RM5,304 MILLION (US$1.4 BILLION) IN TAX REVENUE.

The largest portion of this total is from increase to RM11,782 million (US$2.7 Tourism results relative to world results also
indirect taxes (RM1,969 million or US$518 billion). By 2010,Travel & Tourism will account supports the analysis of government
million) paid in connection with visitor for 11.5 per cent of Malaysia’s tax revenue. expenditures on the previous page, showing
purchases of goods and services. Next in size is By definition, the economic success of that it is generating taxes five times the total of
the RM1,878 million (US$494 million) of Malaysia’s Travel & Tourism Economy government Travel & Tourism expenditures.
corporate income taxes paid by Travel & dictates the tax contributions it makes to The world average for Travel & Tourism taxes
Tourism businesses and suppliers. Personal national and local collections. As Travel & is only three times the expenditure of
taxes are paid by Travel & Tourism generated Tourism Economy employment increases, so governments on Travel & Tourism. This
emloyment, and other taxes include oil and do personal taxes. As visitor numbers and comparison would suggest that Malaysia’s
stamp taxes. All totaled, the Travel & Tourism spending increase, so do the indirect taxes government expenditure for Travel & Tourism
Economy is responsible for 10.5 per cent of collected by Travel & Tourism companies. As relative to its tax collection is uncompetitive
total taxes paid in Malaysia. Travel & Tourism businesses expand, so do the with world standards. Travel & Tourism Taxes
Over the next ten years, Malaysia’s Travel income taxes associated with those businesses. for the other Southeast Asia countries are not
& Tourism tax contribution is expected to A comparison of Malaysia’s Travel & available at this time.

MALAYSIA MALAYSIA
Travel & Tourism Taxes Travel & Tourism Taxes and Gov’t Expenditures
(1990 Constant US$ mn) (1990 Constant US$ mn)
1,500 Indirect Personal Corporate Other 1,500 Total Taxes Government Expenditure

1,250 1,250

1,000 1,000

750 750

500 500

250 250

0 0
1997 1998 1999 2000 2001 2002 1997 1998 1999 2000 2001 2002

WORLD WORLD
Travel & Tourism Taxes Travel & Tourism Taxes and Gov’t Expenditures
(1990 Constant US$ bn) (1990 Constant US$ bn)

Indirect Personal Corporate Total Taxes Government Expenditure


700 700

600 600

500 500

400 400

300 300

200 200

100 100

0 0
1997 1998 1999 2000 2001 2002 1997 1998 1999 2000 2001 2002

35
THE POLICY
FRAMEWORK
POLICY RECOMMENDATIONS

Malaysia's Federal Government is firmly committed to Travel & planning must involve all levels of state and local government and the
Tourism growth and there is clear recognition at the highest levels of private sector, including local communities. This will help overcome
government of the pivotal role played by Travel & Tourism in terms of conflicting federal and state interests, as well as encouraging growth that
sustainable growth, employment creation and social development across is sustainable economically, environmentally and socially. It will also help
the entire national economy.This is reflected by the prominence given spread the benefits equitably across the country to all stakeholders,
to Travel & Tourism in the 1998 National Economic Recovery Plan. thereby stimulating support and commitment from all sectors.
WTTC's forecasts indicate that the growth prospects for Malaysia's The National Tourism Policy must start from a vision of what kind
Travel & Tourism are good – in line with forecast average annual GDP of Travel & Tourism government and the citizens of Malaysia wish to
growth and with projections for Southeast Asia's tourism generally.Yet develop – in physical and marketing terms. The Policy must include
the potential impact could be even greater than forecast if the certain basic elements:
underlying policy framework is conducive to growth – if Malaysia is • Clearly defined goals, objectives and benchmarks
able to ensure the underlying conditions for market confidence, • Indications of best practice in tourism development
dynamism and sustainability. • Incorporation of Malaysia's National Ecotourism Plan elaborated
While the private sector can and must play an increasingly proactive in 1999 and the Rural Tourism Master Plan for Malaysia being
role in developing quality products and services geared to international developed by the World Tourism Organization
and domestic demand, the federal government needs to show leadership • Measures to support existing industry, as well as for the promotion
by encouraging continued investment, building infrastructure and of new developments
streamlining and co-ordinating tourism-related policies and activities • An articulated strategy for product diversification
with state and local governments.This will help ensure a more integrated • A long-term strategy for tourism marketing and promotion in line
approach to tourism development and management. with the Policy’s long-term goals and objectives
Business confidence in the rapid growth of demand has generated • Clear branding that reinforces the basic vision for Malaysia’s Travel
significant private sector capital investment. Continued efforts should be & Tourism development
made to encourage sustained demand and expand related infrastructure
accordingly, in particular opening up areas of the country that do not Monitor Trends in Travel & Tourism Demand
yet enjoy the benefits of tourism. In order to plan ahead better and anticipate changing demand, it is
Above all consumer interest must be maintained in a climate in important to track trends in past and current Travel & Tourism demand.
which the safety and security of tourists is guaranteed – and perceived This implies ensuring good quality statistical data on Malaysia's Travel &
to be guaranteed. In today's world of discerning customers and Tourism, including expenditure patterns and its overall economic
competitive destinations reputations have to be built carefully and contribution.
creatively.Yet with instant global communications they can be quickly A national Tourism Forecasting Council (TFC), established along
lost. This is a high-priority challenge if Malaysia's Travel & Tourism the same lines as Australia's successful TFC in which all stakeholders are
potential is to be realised – together with the broadscale economic well represented, could be a useful tool for ensuring the credibility of
wealth and job creation that will accompany it. demand forecasts and help to mitigate serious supply shortages or
Against this background WTTC recommends that the Malaysian oversupply in the future.
Government: Monitoring Travel & Tourism trends will also help identify threats
to growth, as well as new opportunities. Examples of threats to growth
include the longer-term impact of the smoke haze from which Malaysia
PLAN FOR THE FUTURE has been plagued on an annual basis for the last few years, as well other
Long-Term Tourism Planning health scares, acts of violence against tourists, or perceived civil unrest.
Malaysia's future tourism development requires long-term
planning, including the elaboration of a National Tourism Policy, since Encourage Greater Market and Product
the industry can be fragile and is often adversely affected by short-term Diversification
political or commercial considerations. Malaysia has traditionally suffered competition from other Southeast
As Travel & Tourism impacts all sectors of the economy – from Asian destinations, but it now also faces increased competition from a
wholesale and retail business to real estate and construction – this growing number of destinations around the world. Given the strength of

36
the US dollar, the current ringgit:US dollar peg could have a negative Subang International Airport should help attract new year-round
impact on demand from key source markets within the member demand and enable Malaysia to compete more effectively with other
countries of the Association of Southeast Asian Nations (ASEAN), and destinations.
notably Singapore, which accounts for a significant 53 per cent of total It is nevertheless important for the different centres to co-ordinate
foreign arrivals. It is therefore important for Malaysia to focus on product their marketing and promotion activities to avoid unnecessary
and market diversification to reduce its over-dependence on Singapore competition. The best way of ensuring this is to set up a national
and some other traditional markets. convention bureau, ideally an independent private sector body with an
As the Ministry of Culture, Arts and Tourism and the Malaysia initial injection of funding from the federal and state governments, or a
Tourism Promotion Board (MTPB) have already suggested, non-ASEAN joint venture with the MTPB.
source countries would seem to offer the greatest potential for future Complementing the growth in conferences and exhibitions,
growth, at least in percentage terms. Long-haul markets, such as the Malaysia has also been increasingly successful at selling itself as a special
Middle East and Europe, are especially attractive as they generate longer event destination.This is clearly a sector to develop further in the future
stays and higher yields. However, markets closer to home also have above as it is relatively high yield and generates strong visibility for the
average growth potential. China and India are two that show great destination.Among the leading events hosted over the last few years have
promise. The easing of visa requirements and increased marketing and been World Cup Golf, the Formula One Power Boat Race, Le Tour de
promotion will stimulate demand Langkawi, and the annual Malaysian Grand Prix, first organised in 1999
The MTPB has also recognised the importance of domestic at the Sepang International Circuit.
tourism. In addition to generating increased earnings for less well-known In order to secure future business with guaranteed economic returns
parts of the country, local tourism can promote a greater understanding for all stakeholders, the MTPB should develop a sophisticated capability
of the various lifestyles and cultures of Malaysia's multi-ethnic for the evaluation of special events and the related economic returns, in
population, contributing to harmonious living and encouraging support order to assist in future targeting of events.
from local communities for tourism development.
The most promising growth sector is nature-based tourism, for Invest More in Effective Marketing and
which Malaysia has unique selling appeal. It is also particularly important Promotion
for the future well-being of Malaysians themselves as it has the potential Although the annual marketing and promotion budget of the
of ensuring economic development and employment in rural areas that MTPB has increased significantly in recent years, it is still lower than for
would never attract manufacturing industries. The federal and state national tourism organisations in Asia's leading tourism destinations.
governments should show leadership in stimulating the development of This does not augur well for tourism growth. Foreign tour operators
new nature-based tourism products, providing incentives and matching tend to agree that Malaysia is a hard sell as it has so many different
funding to the private sector in these areas and encouraging buy-in by images but no strong identity.
local governments and communities. The 'Malaysia Truly Asia' campaign launched in October 1999 is
Two relatively undeveloped markets that the MTPB would like to extremely professional and has been very effective. But it focuses on the
expand for international tourists are cruises and golf. Most cruise business traditional appeal of Malaysia and does not adequately promote the rich
for Malaysia is currently booked out of Singapore, with the result that the diversity of attractions and activities that constitute the country's wide
economic benefits to Malaysia's tourism industry are sometimes appeal as a tourism destination. Malaysia's natural resources are still
questionable. However, the waters of peninsular Malaysia in particular are relatively little known in the international marketplace, for example.
a popular cruising ground and the potential for cruise development in Advertising and media marketing are important to sustain demand
East Malaysia would seem to be enormous. in existing markets, as well as to generate demand from new markets and
Golf is actually much more developed in Malaysia than many realise to promote new products. Close to 700 events have been planned for
– the country has 220 golf courses as against Thailand's 180 and Malaysia in 2001, for example, yet the vast majority of these receive little
Indonesia's 125.Yet, until now, the country has not been able to establish media attention.
itself as a major golf destination, with only 2-3 per cent of international The establishment of the National Committee on Tourism
tourists – a mere 300,000 – playing golf when in Malaysia.The country's Promotion and Co-ordination, chaired by the Minister of Culture, Arts
disadvantage is that rates are reportedly much less competitive than they and Tourism and including state tourism ministers and umbrella Travel
are in Thailand, and service also compares unfavourably. However, since & Tourism associations, is an important step forward. It is now important
hotel rates are so much lower than they are in Thailand, Malaysia should to work in much closer partnership with state governments and the
be able to overcome this handicap with the development of attractive, private sector to facilitate the process and stretch advertising dollars, as
fully inclusive packages. well as help promote tourism in the less developed rural parts of the
Malaysia is still a relative newcomer to the world of meetings, country.
incentives, conference and exhibition (MICE) travel compared with A three- to five-year Tourism Marketing Plan should be
other leading Asian destinations. The MICE business accounts for a incorporated into the National Tourism Policy and updated on an
modest 3 per cent of arrivals although it is showing stronger than annual basis, or more frequently if warranted by changing market
average growth. The development of the proposed National demand and the operating environment.A number of countries, such as
Exhibition & Conference Centre (NECC) on the site of the former Australia and Canada, offer best practice models of such plans.

37
HIGHLIGHT THE STRATEGIC further by 2010, it is important to point out that the annual growth in
IMPORTANCE OF TOURISM job creation will average only a modest 2.5-2.9 per cent. This is well
Recognise Travel & Tourism’s Economic below the forecast annual rise in Travel & Tourism demand (6.4 per
Importance cent) and capital investment (5.0 per cent) in Malaysia.
Travel & Tourism has the potential to diversify Malaysia’s economy. The situation could be exacerbated by the low level of
It can further enhance the country's ‘tourism balance of payments’, unemployment and by the preponderance of unskilled workers earning
stimulate entrepreneurship – particularly in small businesses – catalyse low wages. As a result, it is likely that the Travel & Tourism industry will
investment, create large numbers of sustainable jobs and help social have difficulty recruiting a sufficiently skilled workforce and this may put
development in local communities. pressure on productivity and labour costs, leading to reduced margins.
The government should undertake an image campaign to ensure
that all public and private stakeholders recognise Travel & Tourism's full Take Advantage of Travel & Tourism's Ability
impact across the national economy – not just on hotels, restaurants and to Provide a Wide Range of Jobs
retail business, but also on construction, real estate and other sectors of Career opportunities in Travel & Tourism can be extremely varied
the economy. Even more importantly, stakeholders should be made – with upstream suppliers such as hotel designers or airport engineers,
aware of its untapped potential and of the spin-off benefits of tourism or with downstream service companies like retail shops, gas stations,
that filter down through all levels of the community. clothing manufacturers and food suppliers.The former depend on travel
company purchases, the latter are driven by visitor expenditures. There
Make Travel & Tourism a Strategic Priority are also jobs in the public sector catering to visitors – such as border
Travel & Tourism should be factored into mainstream policies for inspectors, air traffic controllers and museum attendants.
employment, trade, investment and education and environmental Contrary to conventional wisdom, jobs created by Travel &
protection, ensuring that the underlying policy framework is conducive Tourism – both directly in and outside the industry – range across the
to dynamic growth. The strategic importance of Travel & Tourism entire employment spectrum and, in many cases, have characteristics
should be communicated to all levels of government, industry and local which fit model employment patterns:
communities. • The increasing sophistication of the industry means that there are
All levels of government – federal, state or local – affected by, or a growing number of high-level jobs in different sectors
impacting on Travel & Tourism development should be closely involved • They can be created at low cost, with few barriers to entry, and
in elaborating and implementing the National Tourism Policy. faster than most industries
• They are service and export related
Implement Satellite Accounting • They provide an impetus to regeneration and social cohesion by
on an Annual Basis counter-balancing the flow of people to the cities from
Travel & Tourism needs to be effectively measured in order to disadvantaged rural areas
understand its full impact throughout the economy. As a new industry, • They are often created in small and medium-sized enterprises, or
Travel & Tourism is not discretely identified in charts of national or state family-run businesses, encouraging traditional crafts and cultural
accounts – its component parts are scattered throughout the accounts. activities
Public sector analysis and related policies tend to overlook, or understate, • They provide significant opportunities for women, many of whom
the impact of the industry, or deal with its smaller individual components. want part-time jobs
The technique of satellite accounting is designed to measure the new • They are ideal for young or first-time employees
service sectors. This new tourism satellite account (TSA) developed by • They have good capacity for education, training and skills
WTTC and DRI-WEFA for Malaysia, in collaboration with the Malaysian development
Institute of Economic Research (MIER), is a significant tool for planning • There are widespread opportunities for long-term careers rather
and policy development. WTTC urges the Malaysian Government to than mere jobs
update it on an annual basis to ensure that adequate data are available to
factor Travel & Tourism into economic and employment strategies. Place a High Priority on Education &
Training
Given the projected growth in Travel & Tourism demand, it is
DEVELOP THE HUMAN CAPITAL important to plan ahead to attract sufficient numbers of workers with
REQUIRED FOR GROWTH the appropriate skills. Special attention has already been paid to
Promote a Positive Image of the Travel & placing education and training at the forefront of Travel & Tourism
Tourism Industry as a Provider of Jobs and development, introducing it into the school curricula and
Careers implementing measures to improve skills, such as training accreditation
The Travel & Tourism industry directly generates around 4.2 per programmes.
cent of total employment in Malaysia, or some 393,600 jobs; the Travel A nation-wide educational campaign is also recommended to
& Tourism economy overall accounts for an 8.8 per cent share, or enhance the image of Travel & Tourism, which is perceived by many as
822,900. Although these shares are significant and are expected to rise offering low wages and poor working conditions. Emphasis should be

38
placed on informing all sectors of the community about the career Restructure the Management and Promotion
opportunities available. of Travel & Tourism
WTTC encourages the Malaysian Government to promote the While ultimate responsibility for Malaysia's Travel & Tourism at
scale, scope and characteristics of career opportunities created directly national level should remain with the MTPB, the tourism marketing
and indirectly by Travel & Tourism, and to factor this into mainstream and promotion function should be adapted to match prevailing
employment, trade, investment and education policies. It also competitive approaches.
recommends that the government pay particular attention to the The Malaysian Government should take note of the existing,
availability of low-cost accommodation for unskilled workers in or near highly successful examples of public-private sector partnership
upmarket resort areas. This problem should be addressed as a matter of developed in several countries around the world – in particular Canada
priority by state governments and the private sector. and Australia – for tourism marketing and promotion. Consideration
should be given to restructuring the MTPB as a public-private
partnership, responsible for the co-ordination of national, state and local
ENCOURAGE OPEN MARKETS AND government tourism efforts.
SKIES AND REMOVE BARRIERS TO For this partnership approach to be successful it will be necessary
GROWTH to ensure the following:
Open Markets and Improve Airline Access • Top-level active political support and engagement
Capital controls have in the past worked in favour of Malaysia's • A declared strategy – with clear targets and a detailed gameplan for
tourism industry. But there is no guarantee that, if they were to be implementation
reintroduced, the same thing would be true in the future. A liberal • The involvement of major stakeholders in the development process
international trading regime, with free-flowing markets for goods and • Strong public and private sector co-operation with outreach to
services, tends to help Travel & Tourism growth and, in turn, enhance partners across the Travel & Tourism economy
wealth and job creation. Increased trade encourages business trips, and • Substantially increased public sector funding and exceptional
growing disposable income expands leisure travel. inducements to attract matching private sector funding
The implementation of the ASEAN Free Trade Area (AFTA) in • Private sector leadership in drawing up marketing strategies
January 2003 augurs well for free trade within the region as tariffs in • An integrated approach across government departments, and
the founding member countries will have to be brought down to a particularly in co-ordinating national, state and local promotional
range of 0.0-5.0 per cent, which will ultimately increase consumers' efforts
purchasing power and likely boost both international and domestic • A formal launch of the new body to raise the profile of the
tourism. campaign and media interest
Air transport's share of total arrivals in Malaysia is still very modest,
at around 30 per cent, and the new Kuala Lumpur International Airport Enhance Safety and Security
(KLIA) has struggled to retain existing services, let alone attract new Public safety and security have been identified by tourists as areas of
ones. Part of the problem, as the Malaysian Government is well aware, is concern. Although the problem is more one of perception than reality –
the difficulty for airlines in operating profitably to/from Malaysia caused by unfair media reporting – safety and security provisions should
because of the low cost structure on the routes. KLIA's location is also be built into national, state and local strategies, and special emphasis
unfortunate, squeezed between Asia's two main hub airports, Singapore's should be placed on Travel & Tourism in overall policing strategies.
Changi and Bangkok's Don Muang. While conscious that there is a clear recognition of this aspect of
The Malaysian Government should make even greater efforts to tourism development at the highest government levels,WTTC believes
open air transport markets to attract more long-haul services, and its pivotal importance should be underlined. Successful law enforcement
improve regional networks by expanding liberal aviation accords and could result in a more optimistic forecast scenario in the medium term.
according more Malaysian airports international status. It should But if the underlying problems are not addressed, this may negatively
continue to encourage code-sharing, joint operations and block-seat impact the baseline forecast.
arrangements with Malaysian Airlines, paying particular emphasis to At the same time, health concerns should be addressed and clear
routes where capacity is low and capacity growth running below the guidelines communicated for dissemination by the media.All too often,
growth in traffic demand. One notable example is routes to/fromChina. Malaysia is too harshly judged by the media – as in the case of the
Increases in airport and landing charges should continue to be frozen annual smoke haze, or when there have been outbreaks of infectious
until such time as demand picks up. diseases – when open discussion of the perceived problems could so
The introduction of new airline routes by local state or privately easily reduce their impact.
owned airlines should also be encouraged. One such route, a direct link
between Kota Kinabalu in Sabah and Mulu in Sarawak, was recently Tax Intelligently
inaugurated and is expected to stimulate tourist demand. Prior to the Travel & Tourism taxes currently represent an estimated 10.5 per
inauguration of the new direct link, visitors to Mulu had to transit via cent of total taxation in Malaysia, according to estimates by WTTC and
the airport at Miri. DRI-WEFA.Although not an unreasonable share, it should be noted that
it is far higher than Travel & Tourism's contribution to GDP. Care should

39
be taken that any new taxes are not excessive, as this could have a in the rural areas of the country should also be improved.
negative impact on demand.There is an increasing tendency worldwide Airport expansion and air traffic control (ATC) system
for governments – whether national or state/local – to target Travel & modernisation are priorities for Travel & Tourism growth, as well as
Tourism as a revenue generator to meet short-term budget objectives, streamlined immigration and border clearance facilities. The efficiency
with little thought to the longer-term consequences on demand and of transport-related infrastructure can play a significant role in customer
job creation. acceptance of airport hubbing strategies.
While Travel & Tourism should pay its fair share of taxes, the growth Where land-based ATC systems are currently in use, these should
and prosperity of the industry – including the investment necessary to also be switched to satellite navigation as soon as possible to contain
generate these future revenue flows – will depend in no small part on the operating costs, improve safety and reduce congestion.
competitiveness of Malaysia’s Travel & Tourism. This also depends on
whether it receives equitable treatment relative to other industries and to Improve Land-Use Planning and Protection
competing destinations. In a decentralised political system, such as Malaysia, it is sometimes
WTTC urges the Malaysia Government to ensure fiscal regimes difficult to reconcile the interests of federal, state and local governments.
that continue to encourage tourism growth, exports, investment, This is evident in some cases of land-use planning. As an example,
infrastructure, business innovation and job creation. The 'User Pays – Malaysia's island marine parks are the responsibility of the federal
User Benefits' principle should be given priority, with funding collected government as far as administration and management are concerned, yet
earmarked for Travel & Tourism infrastructure and promotion. they come under the jurisdiction of the respective state governments.
New fiscal programmes, such as tax credit schemes, also need to be So over-development cannot always be prevented.
developed to encourage tourism growth, exports, investment, Better land-use planning by state governments and local
infrastructure, business innovation and job creation. authorities, and particularly zoning, should be encouraged to protect the
character of the natural environment, which is one of Malaysia's major
attractions for residents and visitors alike.
MATCH PUBLIC AND PRIVATE Admittedly the federal government cannot enforce all types of
INFRASTRUCTURE WITH legislation, but it can show leadership and encourage buy-in for
CUSTOMER DEMAND legislation by state and local governments. Special incentives should also
Expand Infrastructure be proposed for the rapid modernisation and upgrading of Malaysia's
Infrastructure remains a critical component in Travel & Tourism rural areas in order to spread the benefits of Travel & Tourism across the
development if the full potential of employment generation, export country.
earnings and regional development effects are to be achieved. In most
cases public infrastructure that supports Travel & Tourism expansion will Develop Access to Capital Resources and
anyway serve other urban and regional development purposes. Encourage Sustained Capital Investment
Quality infrastructure is also essential to diversify the product base, Capital investment in Malaysia’s Travel & Tourism is currently high,
remove bottlenecks, ensure good service and distribute the benefits of at an estimated 12.0 per cent of total capital investment. Over the next
tourism flows around the economy. It is not only a question of coping nine years it is also forecast to rise by about 5.0 per cent a year to reach
with increasing numbers of visitors, but also of making sure that the 12.4 per cent. However, there is no room for complacency. Experience
patterns of flow do not affect the natural or built heritage, nor run has shown that investment – whether foreign or domestic – is extremely
counter to local interests. sensitive to economic changes. To guard against this, continued efforts
Over the last few years a number of very large-scale infrastructure need to be made, through the development of incentive schemes, to
projects have been completed by the federal government, primarily in attract sustained capital investment in the country's Travel & Tourism
Kuala Lumpur.The Malaysian capital now has good transportation links, industry from domestic and foreign sources.
including a network of highways and suburban rail lines and three mass At the same time, however, it is important to guard against the
transit lines, while the new international airport is an architectural dangers of excessive development that bears no relation to existing or
triumph – even if it has been less successful than initially expected at projected demand.This can result in cut-throat competition, leading to
attracting new airline service. Since the 1997-98 economic crisis, some declining operating performances and lower profits.
construction projects have slowed or been put on hold, but there is still
plenty of evidence of ongoing development. Road and highway
construction, in particular, continues in order to foster development of FAVOUR TECHNOLOGICAL
the whole Klang Valley metropolitan area. ADVANCEMENT
WTTC believes that there is a need to conduct an indepth Telecommunications
investigation into infrastructure needs and resources outside Kuala An increasing share of Travel & Tourism operations – and virtually
Lumpur, whether air transport or road and rail infrastructure. This will all distribution and sales transactions – flow through telecommunications
help open up new areas for tourism development. Particularly circuits. Where telecommunications are monopoly controlled, there are
important are rest-stops, or en route facilities for land-based travellers, often restrictions on access, high costs and unreasonable operating
including basic accommodation along major routes. Communications conditions. This in turn limits the potential of market-oriented

40
expansion of Travel & Tourism, with negative impacts domestically and • Malaysia adopt the principles of ecological preservation as outlined
internationally in terms of cost, operational efficiency and customer in Agenda 21, developed for the Travel & Tourism Industry after the
service. 1992 Rio Earth Summit by WTTC, the World Tourism
WTTC recommends that the Malaysian Government should Organization and the Earth Council
continue pursuing its policy of open telecommunications markets, Sustainability will need a balance of private initiative, economic
which will help to lower costs and enhance services for travellers and incentives and regulation. Global principles should be reflected in local
tourism companies. action and market-based delivery mechanisms should be encouraged.
Pilot projects should be used to evaluate and demonstrate local
E-Marketing and Distribution sustainability. It is important for sustainability to be accepted as a policy
In today's increasingly competitive global marketplace, there is a real across the industry as a whole, and not just as a policy for rural and
need for a strong national leadership branding which optimises resources, nature-based tourism.
focuses the myriad of interests – public and private sector, national, state
and local – and gets the attention of travellers.This will require particular Increase Branding through International
attention to a co-ordinated approach to internet marketing and and/or National Designations
distribution to optimise Malaysia's visibility. Malaysia boasts several examples of world-class natural and cultural
The Malaysian Government has already taken the lead in resources that are worthy of World Heritage designation. Its unique
developing a national tourism portal, to be operated by Pempena Sdn landscape, including the world's oldest rainforests and a wealth of other
Bhd, a subsidiary of the MTPB. A one-stop Malaysia website is being natural attractions, is one of its greatest assets. The declaration of Mulu
developed, and this will provide an online booking facility.A total cost of National Park in Sarawak and Kinabalu National Park in Sabah as World
some RM26 million (US$6.8 million) is being invested in the portal's Heritage sites has added to the image of these two states as the wild,
development. unexplored frontiers of Malaysia. Other attractions could be proposed as
Experience in other countries around the world has shown that, candidates for international designation.
while public sector support for national destination databases is critical, At the same time, the Malaysian Government could also consider
operation and marketing of these databases are best left to the private developing and promoting a national heritage designation, with clearly
sector. Best practice models include Ireland and the Netherlands. The defined criteria defined to support quality. Such a designation should be
federal government should provide support for local Malaysian accompanied by increased government funding for the development
companies so that they can promote and distribute their products through and promotion of identified areas of particular heritage value.
the website, as well as developing access to other technology advances. Malaysia is a harmonious blend of centuries-old cultures, arts and
This will help them compete more effectively with foreign-owned traditions, and of multi-racial and multi-ethnic communities that
companies in Malaysia and with suppliers in competing destinations. epitomise the 'Malaysia Truly Asia' slogan of the MTPB's current
marketing and promotional campaign. This also offers limitless
opportunities to promote the rich cultural diversity of the destination in
PROMOTE RESPONSIBILITY IN terms of foods, arts and crafts. Efforts should be made to encourage all
NATURAL, SOCIAL AND CULTURAL stakeholders to be proud of this cultural heritage and to develop new
ENVIRONMENTS tourism attractions around it for the benefit and enjoyment of domestic
Establish Clear Procedures and Guidelines and international tourists.
Since the Rio Earth Summit in 1992, it has been widely recognised
that sustainability has to be at the core of all policy-making and
development planning. This holds especially true for Travel & Tourism.
With huge increases in the number of people travelling for tourism
purposes over the next decade, there are evident implications for
consumption, waste and resource utilisation.
The Malaysian Government has already taken a major step forward
by developing the National Ecotourism Plan. It is essential that the
procedures and guidelines incorporated in the Plan are communicated
to all stakeholders and implemented as widely and as quickly as possible.
Implementation of these procedures and their impact should also be
closely monitored.
In addition,WTTC recommends that:
• The socio-economic, cultural and environmental benefits of Travel
& Tourism be spread equitably across the population in all parts of
the country
• Local community engagement and empowerment be actively
encouraged

41
SATELLITE ACCOUNT
TABLES
1997 1998 1999 2000 2001E 2002E 2010P
Malaysia Travel & Tourism - RM mn
Personal Travel & Tourism 11,732.2 11,212.9 12,316.3 15,349.7 16,323.6 17,391.8 34,597.3
Business Travel 1,496.5 1,442.9 1,530.5 1,827.7 2,238.8 2,612.9 5,992.0
Corporate 931.4 871.7 926.3 1,106.1 1,182.4 1,273.0 2,471.5
Government 565.1 571.1 604.2 721.6 1,056.4 1,339.9 3,520.4
Gov't Expenditures - Individual 219.2 181.5 265.4 323.4 473.5 600.6 1,578.0
Visitor Exports 13,322.7 13,054.5 18,660.3 23,952.9 25,121.3 27,525.9 61,655.9

Travel & Tourism Consumption 26,770.7 25,891.7 32,772.5 41,453.8 44,157.1 48,131.3 103,823.2

Gov't Expenditures - Collective 269.0 222.7 325.7 396.9 581.1 737.1 1,936.7
Capital Investment 9,744.3 12,026.6 10,780.3 10,407.3 11,086.6 11,692.3 20,800.6
Public 421.0 348.7 372.0 726.1 773.4 815.7 1,451.1
Private 9,323.3 11,677.9 10,408.3 9,681.2 10,313.2 10,876.6 19,349.4
Exports (Non-Visitor) 7,554.1 11,851.6 12,200.5 13,341.2 13,933.3 15,146.8 31,652.4

Travel & Tourism Demand 44,338.2 49,992.7 56,079.0 65,599.2 69,758.2 75,707.5 158,212.8

Travel & Tourism Industry Aggregates (Direct Impact Only)


Employment 258.9 276.9 349.4 390.6 393.6 403.1 520.7
Gross Domestic Product 10,451.8 11,222.8 13,140.8 15,718.7 16,901.9 18,309.8 38,712.8
Indirect Taxes 810.7 540.3 704.9 796.4 852.1 926.1 1,980.2

Travel & Tourism Economy Aggregates (Direct and Indirect Impact)


Employment 591.5 721.4 794.6 814.7 822.9 837.9 1,038.5
Gross Domestic Product 25,318.8 31,694.2 32,888.7 36,381.8 39,053.9 42,123.8 86,285.0
Imports 19,029.4 18,306.8 23,202.3 29,232.1 30,725.8 33,611.0 71,999.6

Indirect Taxes 1,963.8 1,525.7 1,764.1 1,843.4 1,968.9 2,130.6 4,413.6


Personal Taxes 577.6 772.1 689.2 746.8 801.7 864.7 1,771.3
Corporate Taxes 1,499.4 1,935.2 1,709.9 1,749.4 1,877.9 2,025.5 4,149.1
Other Taxes 657.2 651.5 547.6 610.7 655.5 707.1 1,448.4
Total Taxes 4,698.1 4,884.5 4,710.9 4,950.4 5,304.1 5,727.9 11,782.3
Note: Employment in ‘000s of jobs

T&T Accounts as % of National Accounts


Personal Consumption 9.2 9.5 9.9 10.6 10.6 10.6 11.1
Gov't Expenditures 1.6 1.5 1.8 2.0 2.1 2.1 2.2
Capital Investment 8.0 15.8 16.2 11.9 12.0 12.0 12.4
Public 2.7 1.9 1.5 3.1 3.1 3.1 3.2
Private 8.8 20.2 25.1 15.3 15.3 15.4 15.9
Exports 7.9 7.6 8.4 8.7 8.8 8.9 10.0
Merchandise 3.5 4.2 3.8 3.6 3.6 3.6 3.9
Services 30.1 28.8 41.1 44.3 44.4 44.9 47.9
Imports 7.3 6.9 8.0 8.1 8.1 8.1 8.5

Travel & Tourism Industry Aggregates (Direct Impact Only)


Employment 3.0 3.2 3.9 4.2 4.2 4.2 4.8
Gross Domestic Product 3.7 4.0 4.4 4.6 4.7 4.7 5.3
Indirect Taxes 3.5 3.5 4.0 4.3 4.3 4.4 4.9

42
1997 1998 1999 2000 2001E 2002E 2010P
Travel & Tourism Economy Aggregates (Direct and Indirect Impact)
Employment 6.9 8.2 8.8 8.8 8.8 8.8 9.6
Gross Domestic Product 9.0 11.2 11.0 10.7 10.8 10.8 11.9
Indirect Taxes 8.5 10.0 10.1 10.0 10.0 10.1 10.9
Personal Taxes 9.0 11.2 11.0 10.7 10.8 10.8 11.9
Corporate Taxes 9.0 11.2 11.0 10.7 10.8 10.8 11.9
Other Taxes NA NA NA NA NA NA NA
Total Taxes 8.8 10.8 10.6 10.4 10.5 10.5 11.5

Travel & Tourism Real Growth (% per annum, except 2010 which is 10 year annualised)
Personal Travel & Tourism 2.9 -6.9 7.0 20.2 4.1 4.4 5.8
Business Travel 4.1 -7.9 5.2 13.2 7.9 4.6 5.4
Gov't Expenditures 15.7 -17.3 43.3 14.5 13.6 5.1 6.3
Capital Investment 14.0 12.6 -3.7 -8.6 3.0 3.1 5.0
Visitor Exports -7.0 -21.0 45.4 27.4 4.7 6.5 7.4
Other Exports -1.4 26.4 4.7 8.5 4.2 5.7 6.6
Travel & Tourism Demand 1.4 -1.1 13.1 13.3 4.4 5.2 6.4

Travel & Tourism Industry Aggregates (Direct Impact Only)


Gross Domestic Product 3.5 0.7 18.2 13.2 5.6 6.0 6.5
Employment -3.2 6.9 26.2 11.8 0.8 2.4 2.9

Travel & Tourism Economy Aggregates (Direct and Indirect Impact)


Gross Domestic Product 6.7 17.4 4.8 4.7 5.4 5.5 6.1
Employment -0.9 21.9 10.2 2.5 1.0 1.8 2.5

Travel & Tourism - US$ mn


Personal Consumption 4,170.4 2,857.2 3,241.1 4,039.4 4,295.7 4,417.8 8,068.0
Business Travel 532.0 367.7 402.8 481.0 589.1 663.7 1,397.3
Non-Market Products - Individual 77.9 46.2 69.8 85.1 124.6 152.6 368.0
Visitor Exports 4,735.8 3,326.5 4,910.6 6,303.4 6,610.9 6,992.0 14,378.0
Travel & Tourism Consumption 9,516.1 6,597.7 8,624.3 10,908.9 11,620.3 12,226.1 24,211.2
Non-Market Products - Collective 95.6 56.8 85.7 104.5 152.9 187.2 451.6
Capital Investment 3,463.8 3,064.6 2,836.9 2,738.8 2,917.5 2,970.0 4,850.6
Exports (Non-Visitor) 2,685.3 3,020.0 3,210.6 3,510.8 3,666.7 3,847.5 7,381.2
Travel & Tourism Demand 15,760.8 12,739.0 14,757.6 17,263.0 18,357.4 19,231.0 36,894.7

Gross Domestic Product


Travel & Tourism Industry 3,715.3 2,859.8 3,458.1 4,136.5 4,447.9 4,651.0 9,027.7
Travel & Tourism Economy 9,000.0 8,076.2 8,654.9 9,574.2 10,277.3 10,700.2 20,121.4

Indirect Taxes 698.1 388.8 464.2 485.1 518.1 541.2 1,029.2


Personal Taxes 205.3 196.7 181.4 196.5 211.0 219.7 413.1
Corporate Taxes 533.0 493.1 450.0 460.4 494.2 514.5 967.5
Other Taxes 233.6 166.0 144.1 160.7 172.5 179.6 337.8
Total Taxes 1,670.0 1,244.6 1,239.7 1,302.7 1,395.8 1,455.0 2,747.6

Travel & Tourism - 1990 Constant US$ mn


Personal Travel & Tourism 3,429.5 3,193.8 3,418.8 4,108.1 4,277.8 4,465.8 7,225.2
Business Travel 442.1 406.9 428.0 484.6 522.9 547.1 818.6
Gov't Expenditures - Individual 67.5 55.9 80.1 91.7 104.1 109.5 168.0
Visitor Exports 3,967.8 3,133.0 4,555.4 5,803.5 6,074.9 6,472.8 11,891.3
Travel & Tourism Consumption 7,907.0 6,789.6 8,482.2 10,487.8 10,979.7 11,595.2 20,103.1
Gov't Expenditures - Collective 82.9 68.6 98.3 112.5 127.8 134.4 206.2
Capital Investment 3,078.1 3,464.6 3,338.0 3,051.8 3,142.9 3,241.4 4,973.2
Exports (Non-Visitor) 2,249.8 2,844.3 2,978.4 3,232.4 3,369.4 3,561.8 6,104.7
Travel & Tourism Demand 13,317.8 13,167.0 14,896.8 16,884.5 17,619.9 18,532.9 31,387.2

Gross Domestic Product


Travel & Tourism Industry 3,006.7 2,975.6 3,485.7 3,980.1 4,153.4 4,355.6 6,950.3
Travel & Tourism Economy 7,270.3 8,533.4 8,939.9 9,362.7 9,869.1 10,416.6 16,855.7

43