MALAYSIA

THE IMPACT OF TRAVEL &TOURISM

ON JOBSANDTHE ECONOMY
CHAIRMAN:
Sir Ian Prosser
Chairman
Six Continents PLC
VICE CHAIRMEN:
Donald Carty
Chairman, President & CEO
American Airlines
Jean-Marc Espalioux
Chairman of Management
Board & CEO
Accor S.A.
André Jordan
Chairman
Lusotur S.A.
Jonathan S. Linen
Vice Chairman
American Express Company
Vincent A.Wolfington
Chairman
Carey International, Inc.
EXECUTIVE
COMMITTEE:
Peter Armstrong
President & CEO
Rocky Mountaineer Railtours
Steve Bollenbach
President & CEO
Hilton Hotels Corporation
Sebastián Escarrer
Vice Chairman
Sol Meliá
Edouard Ettedgui
Managing Director
Mandarin Oriental Hotel
Group
Maurice Flanagan
Group Managing Director
Emirates
Michael Frenzel
Chairman
Preussag A.G.
David House
Group President,
Global Network and
Establishment Services
American Express Company
Richard R. Kelley
Chairman
Outrigger Enterprises, Inc
Geoffrey J.W. Kent
Chairman & CEO
Abercrombie & Kent
J.W. Marriott, Jr.
Chairman & CEO
Marriott International, Inc
David Michels
Group Chief Executive
Hilton International
P.R.S. Oberoi
Chief Executive
The Oberoi Group
© 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
Henry Silverman
Chairman
Cendant Corporation
Jonathan Tisch
Chairman & CEO
Loews Hotels
Brett Tollman
Vice-Chairman
The Travel Corporation
GLOBAL MEMBERS:
Akbar Al Baker
Chief Executive Officer
Qatar Airways
David Azema
Chairman & CEO
Eurostar
David Babai
Managing Director
Gullivers Travel Associates
Phil Bakes
Chairman & CEO
FAR&WIDE Travel
Corporation
Ted Balestreri
Chairman & CEO
Cannery Row Company
Gordon Bethune
Chairman of the Board &
CEO
Continental Airlines
Paul Blackney
President & CEO
Worldspan
Marilyn Carlson Nelson
Chairman & CEO
Carlson Companies, Inc
Alun Cathcart
Non-Executive Chairman
Avis Europe Plc
U. Gary Charlwood
Founder, Chairman & CEO
Uniglobe Travel
(International) Inc.
Jennie Chua
President & COO
Raffles International Ltd.
Rod Eddington
Chief Executive
British Airways plc
Bernard D. Frelat
President & CEO
Rail Europe Group, Inc.
William H. Friesell
Chairman
Diners Club International
Dato’ Gan Eng Kwong
Group Chairman
Reliance Pacific Berhad
Laurence Geller
CEO
Strategic Hotel Capital
Maurice H. Greenberg Paul McManus José Antonio Tazón
Chairman & CEO President & CEO President & CEO
American International The Leading Hotels of the Amadeus Global Travel
Group, Inc. World Distribution
Philip Haan Mark Miller Jeffrey Toffler
Executive VP International, President & CEO Chairman
Sales & Information Services Galileo International The Coventry Group
Northwest Airlines
Alan Mulally Mustafa Türkmen
Anthony Harris President & CEO CEO & Managing Director
Chief Executive Boeing Commercial Airplanes Enternasyonal Tourism
Hilton International The Boeing Company Investments, Inc.
Yapi Kredi Bank of Turkey
Richard Helfer John M Noel
President & CEO President & CEO Patrice Vinet
Raffles Holdings Ltd. Travel Guard International Partner
Accenture
James Hensley Tom Nutley
President Managing Director Trevor de Vries
Allied Europe Reed Travel Exhibitions Deputy Managing Director
Mondial Assistance S.A.
Stephen Holmes Alan Parker
Chairman & CEO, Managing Director Jurgen Weber
Travel Division. Whitbread Hotel Company Chairman
Vice Chairman Lufthansa German Airlines
Cendant Corporation Dionísio Pestana
Chairman Hani A. Z.Yamani
Raimund Hosch Group Pestana Executive Chairman
President & CEO Air Harbour Technologies
Messe Berlin GmbH Stefan Pichler
Chairman & CEO HONORARY MEMBERS:
Dieter Huckestein Thomas Cook AG Lord Marshall of
President, Hotel Operations, Knightsbridge
Owned & Managed Antonio Manuel Pinto Chairman
Hilton Hotels Corporation CEO British Airways plc
Sonae Turismo Gestao
Xabier de Irala Servicos Sir Frank Moore, AO
Chairman & CEO Chairman
Iberia Jay Rasulo Taylor Byrne Tourism Group
Chairman & CEO
Clive Jacobs EuroDisney S.C.A. Frank Olson
Chairman & CEO Chairman of the Board
Holiday Autos Group Carl Ruderman The Hertz Corporation
Chairman
Sol Kerzner Universal Media Gérard Pélisson
Chairman Co-Chairman,
Sun International Hotels Ltd Teresa Santos Supervisory Board
Managing Director Accor S.A.
Craig Koch Group Espirito Santo
President & CEO Tommaso Zanzotto
The Hertz Corporation Robert Selander President
President & CEO TZ Associates Ltd.
Krishna Kumar MasterCard International
Managing Director CHAIRMAN EMERITUS:
The Taj Group of Hotels Per Setterberg James D. Robinson III
Chief Executive Officer Chairman & CEO
Paulo Faceira Lages Global Refund Holdings A.B. RRE Investors, LLC
CFO
Sonae Turismo Gestao Mr Eric Speck IMMEDIATE PAST
Servicos Group President Travel, CHAIRMEN:
Marketing and Distribution Harvey Golub
Hans Lerch Sabre Holdings Corporation Chairman, AirClic
President & CEO Former Chairman & CEO,
Kuoni Travel Holding Ltd Barry Sternlicht American Express Company
Chairman & CEO WTTC Chairman
Fabio Mantegazza Starwood Hotels & Resorts (1996 – 2001)
Chairman Worldwide, Inc
AVRO Plc Robert H. Burns
Lalit Suri Chairman
Paolo Mantegazza Chairman & Managing Robert H Burns Holdings
President and CEO Director Limited
Globus & Cosmos Inc Bharat Hotels Ltd WTTC Chairman
(1994 – 1996)
Manuel Martin Ian Swain
Partner Chairman & CEO PRESIDENT:
CyberDodo Productions Ltd Swain Travel Services Inc Jean-Claude Baumgarten
Isao Matsuhashi Kathleen Taylor
Chairman of the Board President,Worldwide Business
JTB Corp. Operations
Four Seasons Hotels and
Resorts Correct as at February 14 2002
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
delighted to have collaborated on this research, the first simulated
Tourism Satellite Account for Malaysia. This ground-breaking research
makes Malaysia one of the first nations in the world to quantify the far-
reaching contribution of Travel & Tourism by implementing this new
concept recently endorsed by the United Nations. Research was
supplied by DRI-WEFA and the Malaysian Institute of Economic
Research (MIER).
This new TSA research quantifies all aspects of Travel & Tourism
demand, from personal consumption to business purchases, capital
investment, government spending and exports. It then translates this
information into economic concepts of production such as gross
domestic product, employment and taxes that can be compared with
other industries and the economy as a whole to provide credible
statistical information that will assist in our policy and business decision
processes.
The message from this report is clear:Travel & Tourism is one of the
largest industries and employers in Malaysia, expected to generate 4.7 per
cent of gross domestic product and 393,600 jobs in 2001. Travel &
Tourism is also a major government revenue producer, accounting for
RM5,304 million (US$1.4 billion) in taxes in 2001. Looking ahead, the
forecast is very strong with expectations of 6.4 per cent real growth per
annum between 2001 and 2010.
The forecasts in this report highlight the need for Malaysia to
address factors such as the macro-economy, employment, investment,
government expenditures, sustainability, safety and security and
marketing and promotion. Malaysia is a nation with outstanding natural
resources and, with the information and recommendations in this report,
has the opportunity to make the most of these advantages.
We hope that by raising awareness of the enormous potential of
Travel & Tourism in Malaysia, this report will act as a catalyst,
encouraging industry and government to continue to work together to
create the conditions necessary for this potential to be realised.
Please note that the research prepared for this report was finished in
August 2001, before the tragic events of September 11, 2001. Therefore,
the end-of-year estimates for 2001 and forecasts for future years provided
in this report may require adjustment when more information on the
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
beaches, including some 700 kilometres of almost
deserted coastline on the east coast of peninsular
Malaysia and literally hundreds of tropical islands
away from the popular, traditional circuits. It is an
ecotourist’s paradise boasting 19 national parks,
jungles, hill resorts and Southeast Asia's highest
mountain, Mount Kinabalu in the East
Malaysia/Borneo state of Sabah. In addition it is a
harmonious blend of centuries-old cultures, arts and
traditions, and of multi-racial and multi-ethnic
communities.
Nevertheless, while industry analysts and foreign
tour operators have long been predicting that
Malaysia is on the point of experiencing a tourism
boom, its actual performance over the past decade has
not been outstanding. Despite reported strong
growth in arrivals and international tourism receipts
in 1999 and 2000, arrivals grew by only 37 per cent
in the ten years to 2000, and by just 6.5 per cent from
1990 to 1999.
The main problem seems to be one of image.
The country has never succeeded – at least until now
4
– in developing a clear product appeal as, for
example, Thailand has. It does not have the draw of
Bangkok's nightlife, nor that of Singapore's
entertainment possibilities. As a result, Malaysia still
lags behind other leading competitive destinations in
the region, particularly in terms of international
tourism receipts.
Nevertheless, future prospects for Travel &
Tourism are good.There is widespread recognition of
its contribution to the national economy, and the
Malaysian Government at its highest level is fully
committed to the long-term development of the
industry. This should help ensure that, despite the
significant challenges still to be addressed, Travel &
Tourism reaches its enormous potential as a catalyst
for future economic and social development across
the whole of the country. Measures already
undertaken by the government also augur well for
the sustainable development of Travel & Tourism –
achieving a healthy balance between business
imperatives, the protection of cultural heritage and
environment, and the well-being of local
communities.
SUMMARY
OF KEY TRENDS
1 - Malaysia attracted 10.2 million
international tourist arrivals in 2000
staying an average of 5.8 nights in the
country. The total represented a 29 per
cent increase over the previous year, but
was only 37 per cent up on 1990's level –
highlighting the fact that arrivals over the
past decade have grown by a mere 3 per
cent per annum.
2 - Over the same period average per
capita expenditure increased by 11 per
cent a year, and average daily per capita
spending rose by more than 8 per cent.
International tourism receipts totalled
RM17.3 billion in 2000 (US$4.6 billion),
while total visitor exports – including fare
receipts – reached RM24.0 billion
(US$6.3 billion).
3 - Domestic tourism accounts for around 15
million trips a year – of which more than 8
million overnight trips – generating a total
estimated spending of some RM2.4 billion
(US$634.5 million). The annual growth in
domestic trips is currently around 15 per cent
and domestic tourists account for an
estimated 50 per cent of all hotel bednights.
4 - Asia generates 85 per cent of total
international tourist arrivals, with
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
behind by the USA and Germany.
5 - An estimated 43 per cent of arrivals
are for holidays, 15 per cent visits to
friends and/or relations (VFR), 8 per cent
business trips and 3 per cent for
conferences and conventions. The VFR
share is significantly higher than for
competing destinations in Asia.
6 - Only about 30 per cent of all tourist
arrivals are by air. Kuala Lumpur
International Airport (KLIA) and Subang
(the former international airport of the
Malaysian capital) handled 16.8 million
passengers in 2000, up 11 per cent on the
previous year – and representing more
than 50 per cent of all passenger traffic
through Malaysian airports.
7 - In 2000 there were 125,000 rooms in
1,460 hotels in Malaysia, of which 33,000 in
greater Kuala Lumpur. Despite a continuing
oversupply of rooms since the height of the
Asian economic and financial crisis in 1998,
hotel performance has picked up steadily,
both in terms of occupancy and yield.
8 - While sun & beach tourism continues
to attract increasing numbers of tourists
from abroad, the fastest growth segment of
the leisure market is nature-based tourism.
In the business sector, the meetings,
incentives, conferences and exhibitions
(MICE) market is showing above average
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
in Malaysia needs improvement,
both in terms of quantity and
quality.
This is especially true of economic data on the
industry, such as tourist expenditure patterns. The
lack of good data makes it difficult to measure trends
in Travel & Tourism demand and reduces the
industry's ability to ensure accurate forecasts of future
trends. This weakens both government's and the
and an upturn in the electronics sector. Also positive
is the fact that unemployment is low, hovering
around 3.0 per cent, as is inflation, subdued at below
2.0 per cent. However, the weakness of the yen and
other Asian currencies could erode the
competitiveness of Malaysia's exports given the
ringgit's peg to the US dollar. Malaysia is still
considered a low-cost destination but the strength of
the US dollar/ringgit could soon undermine its
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
the private sector.
Monitor trends in Travel & Tourism demand so
as to anticipate and adapt products to changing
demand.
Focus on market and product diversification in
order to reduce the heavy dependence on traditional
markets and to increase yield.
Market and promote more effectively to spread
the benefits of tourism to all parts of the country and
Work more closely with the private sector to
address existing concerns and develop public-private
sector partnerships in areas such as marketing and
promotions, product development, and education and
training.
Anticipate future investment needs by
introducing new incentive schemes for private sector
capital investment and small business development,
especially to encourage heritage and nature-based
tourism enterprises.

HIGHLIGHT THE STRATEGIC IMPORTANCE OF

TRAVEL & TOURISM.
Recognise Travel & Tourism's impact across
the wider economy and its ability to diversify
Malaysia's economy, and ensure this is measured
on an annual basis by means of a national
tourism satellite account.
Reflect Travel & Tourism in mainstream
policies for employment, trade, investment and
education, ensuring that the underlying policy
framework is conducive to dynamic growth.
Communicate the strategic importance of
Travel & Tourism to all levels of government
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
provider of jobs and career opportunities for all Malaysians.
Take advantage of Travel & Tourism's potential to provide jobs for
young people, first-time job seekers, minority groups and women
looking for part-time employment.
Recognise that Travel & Tourism employment is concentrated in
ENCOURAGE OPEN MARKETS AND SKIES AND REMOVE BARRIERS TO
GROWTH
Progressively liberalise trade, transport and communications,
both through regional trading regimes such as ASEAN and the
World Trade Organization's General Agreement on Trade in
Services.
Open up air transport markets by providing increased incentives
to attract more long-haul services, and improve regional networks
by expanding liberal aviation accords.
Upgrade marketing and promotions to match prevailing
MATCH PUBLIC AND PRIVATE INFRASTRUCTURE TO CUSTOMER DEMAND.
Develop an agreed process for forecasting Travel & Tourism
infrastructure demand – especially in the accommodation sector, which
will have high credibility in the industry and with the investment and
financial community.
Develop new conference/convention facilities to meet the growing
demand from this high-yield sector.
Continue to expand infrastructure, including airports and air traffic
control, and streamline immigration and border clearance facilities.
Co-ordinate with state governments to improve road networks
across the country, opening up new areas for tourism development.
Encourage state governments to improve land-use planning and
FAVOUR TECHNOLOGICAL ADVANCEMENT.
Provide support for local Malaysian companies so that they can
develop access to technological advances and compete more effectively
with foreign-owned companies.
PROMOTE RESPONSIBILITY IN NATURAL, SOCIAL AND CULTURAL
ENVIRONMENTS.
Ensure that the procedures and guidelines for planned and
sustainable tourism expansion incorporated in the National
Ecotourism Plan are communicated to all stakeholders and
implemented as widely as possible.
Adopt the principles of Agenda 21 for the Travel & Tourism
Industry developed by WTTC, the World Tourism Organization and
the Earth Council.
Ensure that the socio-economic, cultural and environmental
small businesses and local communities throughout the country and
across the whole employment spectrum.
Continue to place education and training at the forefront of Travel
& Tourism development, introducing it in the high-school curricula and
adopting measures to improve skills.
competitive approaches and restructure the MTPB as a public-
private sector partnership, co-ordinating national, state and local
efforts.
Build safety and security provisions into national, state and local
strategies, and place special emphasis on Travel & Tourism in overall
policing strategies.
Develop fiscal regimes that encourage tourism growth, exports,
investment, infrastructure, business innovation and job creation.
protection to ensure that the patterns of flow do not adversely affect the
natural or built heritage.
Introduce increasing incentives for the rapid modernisation and
upgrading of Malaysia's rural infrastructure in order to spread the
benefits of Travel & Tourism across the country.
Highlight the dangers of excessive, unplanned development, which
can result in unhealthy competition, declining operating performances
and profits.
Develop access to capital resources and encourage capital
investment in Malaysia's Travel & Tourism industry from domestic and
foreign sources.
Take the lead in the development of a national tourism portal,
together with partners from the private sector, so as to improve
distribution of Malaysia's tourism products and develop e-marketing skills
benefits of Travel & Tourism are spread equitably across the
population in all parts of the country, and actively encourage local
community engagement and empowerment.
Introduce new financial programmes to provide incentives for
local community-based sustainable tourism enterprises.
Seek branding for Malaysia's key natural and cultural resources
through international designations and create new national
designations.
13
MALAYSIA’S
TRAVEL & TOURISM
OVERVIEW OF RECENT TRENDS AND DEVELOPMENTS
A Major Sector of the Economy
Tourism was virtually unknown in Malaysia until the late-1960s.
Since then it has developed into a major sector of the economy – the
second largest foreign exchange earner after manufacturing – thanks in
no small part to the role played by the Malaysian Government in Travel
& Tourism’s growth.
In addition to the more traditional goals of generating foreign
exchange, increasing employment, fostering regional/rural development
and diversifying the country’s economic base,Travel &Tourism is seen by
government as one of the keys to promoting a greater understanding of
the various cultures and lifestyles of Malaysia’s multi-ethnic population.
A Rich Diversity of Attractions
Probably one of the country's greatest assets, Malaysia's population
is a pot-pourri of different races comprising three main groups – Malays
and other indigenous peoples, known as bumiputras (62 per cent),
Chinese (28 per cent) and Indian and other races (10 per cent).Yet in
Sabah, for example, there are actually over 30 different races with more
than 80 different languages or dialects – all distinguishable by their
religion, language, work, clothes or type of home. This mix of ethnic
groups gives the country an enormously diverse culture that is reflected
in its festivals, food and general way of life.
Malaysia covers an extremely large land area of around 330,000
square kilometres, almost equally divided between the peninsula and the
two states of Sabah and Sarawak on the island of Borneo.Administratively,
the country is divided into 13 states, 11 in the peninsula and two in North
Borneo. In addition, there are three federal territories: Kuala Lumpur, the
capital, and free port of Labuan Island off Sabah and Putrajaya, the new
administrative centre of the federal government. Each state has its own
government and almost all support the federal government's efforts to
attract tourism – although the two East Coast Malaysian states have
increasingly gone their own way in terms of tourism promotions abroad.
The most popular and well-established region in the country for
tourism, apart from Kuala Lumpur, is the island of Penang, which
attracts sun and beach tourists as well as those interested in Malaysia's
colonial heritage. Penang has possibly lost share of leisure tourism over
recent years, but it has increasingly attracted business travellers as a result
of its growing importance as a high-tech centre.The new, favourite sun
and beach holiday spot, meanwhile, is Langkawi Island, seen by many as
a showcase for sustainable tourism development, and Sabah and Sarawak
are gaining in popularity as adventure travel destinations.
The country enjoys an excellent climate. Even during the rainy
season – which hits the east coast of the peninsula and north-eastern
Sabah during the months of November to February and the west coast
of the peninsula during April, May and October – the weather is never
wet for long, and there is always some part of the country that is dry.
So seasonality is not a problem for the country as a whole.
Despite its undisputed attractions, Malaysia's tourism industry has
struggled to achieve the kind of growth it deserves. In fact, although
growth rates have picked up strongly over the last couple of years, the
country is still a long way from reaching its full tourism potential.
The World Tourism Organization ranks Malaysia as the third most
popular destination in the Asia Pacific region in terms of international
tourist arrivals, yet it ranks only tenth in terms of receipts (1999) – well
behind some of its major competitors.This is attributed to the fact that
average length of stay in the country is only 5.8 nights, and the vast
majority of its tourists are from relatively low-yield, neighbouring
markets. Only about 30 per cent of Malaysia’s arrivals are by air.
KEY TRENDS, 1990-2000
The Malaysian Government first became aware of Travel & Tourism’s
potential in the late 1960s/early 1970s, when it offered the first incentives
for private sector investment in the industry. But the first strategic plan for
tourism was not developed until the 1980s.
In 1980 Malaysia attracted a fairly modest 2.3 million international
tourist arrivals. Ten years later the total had more than tripled and the
country appeared to be firmly established on the world tourism map.
1990's strong performance – up 54 per cent on the previous year – was
attributed largely to increased government spending on overseas
promotions in conjunction with Visit Malaysia Year 1990. However, in
1991 arrivals fell dramatically as a result of the Gulf War and, over the next
five years, while international tourism receipts almost doubled, the arrivals
count showed hardly any improvement. This was despite the country’s
launching a second Visit Malaysia Year in 1994.
The fall in international arrivals continued from 1996 to 1998,
exacerbated by the Asian financial and economic crisis and less than
cordial relations at that time between Malaysia and Singapore, its leading
tourism source. In addition, outbreaks of different diseases in Penang and
East Malaysia caused health scares and potential tourists were also
deterred by the smoke haze that affected the region, caused by the illegal
burning of forest fires in Indonesia.As a result, the country recorded only
5.6 million arrivals and RM8.6 billion (US$2.5 billion) international
tourism receipts (excluding fare receipts) in 1998.
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 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

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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.

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
dominated by low-yield markets. Singapore’s 4.9 million tourists to
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
tourist arrival. By comparison, 136,000 arrivals from the UK resulted in
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
international tourism receipts. As an example, tourists from Thailand
stayed an average of 4.4 nights ten years ago. By 2000 their average
length of stay had risen to 13.7 nights. For Indian tourists the average
increased from 7.7 nights to 11.5 over the ten-year period, and for
Indonesians from 7.3 to 10.2.
Purpose of Trip
According to an inbound visitor survey conducted by the MTPB
in 1998, 43 per cent of tourist arrivals in Malaysia are for holidays, 15
per cent for VFR and 8 per cent for business. Conferences and
conventions account for a very modest share of around 3 per cent.
Despite the fact that it has fallen sharply since the early-1990s, the
VFR share is still unusually high – it compares with 5 per cent for Hong
Holidays (42.5)
Transit (12.6)
Conferences (2.7)
VFR (14.8)
Business (8.1)
VFR = visits to friends and/or relations
Source: MTPB
shopping influences tourist activities within the country. While in
Malaysia, some 66 per cent of all visitors go shopping, with the main
shopping items being clothes and textiles.
In 1997, shopping accounted for around 22 per cent of all tourism
receipts from foreign visitors, third after accommodation and food and
beverages – and up from 19 per cent in 1992. Other items or activities
that generated increased spending over the five years were local
transport, domestic air travel and entertainment, according to the
MTPB's inbound visitor survey. But a change in categories from one
year to another makes strict comparisons difficult.
Distribution of Tourist Expenditure, 1997 (%)
Other (4)
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
good longer-term prospects. These were highlighted by a Visa
International survey, conducted in the mid-1990s, which cited in
particular the destination's affordability and wide range of attractions.
Organisation of Travel
Only 15 per cent of tourists to Malaysia are on package tours.This
again is a relatively low share compared with that for other Asian
destinations – also attributable to the Singapore factor – although it is
up from 11 per cent in 1990. The predilection of Singaporeans for
AIR TRANSPORT
In 2000 airline traffic to, from and within Malaysia increased by
11.7 per cent to a record 32.7 million passengers – the second best year
ever after 1997. Of the total passengers around 40 per cent were on
international flights, with Southeast Asia as a source/destination
accounting for the largest share.
This average masks different performances from one airport to
another.Among leading airports the strongest growth was for Langkawi
(20 per cent) – albeit from a low base – Kuching and Kota Kinabalu (14
and 12 per cent respectively). Kuala Lumpur International Airport

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

18
economic slowdown, which caused a decline in tourist arrivals and a
subsequent drop in demand for hotel accommodation.At the same time
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.
Malaysia’s Hotel Supply,
1995-2000
line with Penang's development as a high-tech centre, a rise in business
clientele compensated to some extent for the fall-off in leisure guests.
MAJOR ATTRACTIONS
Peninsular Malaysia attracts around 90 per cent of foreign arrivals,
although it has been losing share in recent years to the East Malaysian
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

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

19
 offshore islands. In addition to Penang and Langkawi,Tioman, Redang,
Perhentian and Pangkor are among those attracting increasing interest
from international and also domestic tourists. There are a variety of
activities, such as snorkelling and scuba diving, or picnicking and
camping for the locals.
Nature-Based Activities
Recent statistics suggest that nature-based activities are the fastest-
growing tourism product in Malaysia.A World Wildlife Fund for Nature
(WWF) Malaysia study estimated that ecotourism is growing at 35 per
cent a year in terms of arrivals and currently makes up 10 per cent of
the country's tourism revenues.
Malaysia has 19 national parks, the most widely known probably
being Taman Negara, Endau Rompin, Mulu – famous for its caves – and
Kinabalu, home of Southeast Asia's highest mountain of the same name.
Activities available include fishing, swimming, bird-watching, mountain
climbing and limestone caving. Malaysia boasts abundant wildlife and large
areas have been set aside for wildlife reserves, bird sanctuaries and marine
parks. The government has also established a network of virgin jungle
reserves to save as permanent nature reserves and natural arboreta and as
undisturbed natural forest for general, ecological and botanical studies.
Malaysian jungles are older than those found in the Amazon and Africa.
The country's hill stations were originally developed as sanatoria –
an escape for colonials living in the hot, humid climate of the lowlands.
In the post-colonial period, many of these have been converted into
tourist resorts, such as Genting Highlands, Fraser's Hill and the Cameron
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
Sarawak and Sabah are some highly unique native communities where
people live in longhouses – entire villages housed under a single long
roof. These are fast becoming major attractions for adventure travellers
looking for unusual and authentic holiday experiences.
The Malaysian Government's commitment to the development of
sustainable, nature-based tourism is reflected in its National Ecotourism
Plan developed in 1996. The Plan was a follow-up to the National
Conservation Strategy conducted by the Economic Planning Unit in
the Prime Minister's Department and was based on discussions with all
sectors involved – government, business, tourists and local residents. It
recognises that tourism is private sector led and indicates roles for all
sectors of federal, state and local government, private businesses, non-
government organisations and other players. It was intended to cover the
duration of the Seventh and Eighth Malaysia Plans, up to 2005.
At the same time, the World Tourism Organization is currently
drawing up a Rural Tourism Master Plan for Malaysia with funding
from the United Nations Development Programme. As indicated in the
forward to the Draft Policy Document, the Plan is intended to meet the
expectations of "tourists who are seeking a deeper experience of
Malaysia than the typical visitor to the cities and beach resorts.They will
have a strong interest in scenery, nature and tranquillity, but not to the
extent of spending their whole holiday experience exploring the rain
forest, like a committed ecotourist."
20
GOVERNMENT’S ROLE IN TOURISM
Since the mid-1980s and the decision to allocate a high priority to
tourism, the Malaysian Government has been increasingly generous
with its budgets for marketing and promotions. In 1999/2000 (fiscal
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
current fiscal year, to RM200 million (US$52.6 million). However, this
still compares somewhat unfavourably with the budgets of other
national tourism organisations (NTOs) in the region.
The MTPB, more often known as Tourism Malaysia, is responsible
for the implementation of tourism policy as well as the development
and promotion of the industry. It is a 100 per cent subsidiary of, and
fully financed by, government and reports to the Ministry of Culture,
Arts and Tourism. There are 18 overseas offices, with two new offices
scheduled to open in 2001, in Dubai and Jeddah. Around 12
representative offices are also due to be added.
A major reorganisation of the MTPB is currently awaiting
government approval.This would involve a big increase in staff numbers
– of around 70 per cent on the current 500 – recruited largely from the
private sector. The stated aim is to turn the NTO into a much more
professional marketing body.
In addition to the federal government's involvement in tourism,
each state also has its own tourism body. A lack of co-ordination
between the respective authorities has sometimes resulted in the
duplication of efforts in terms of marketing and promotion abroad, with
a resulting dilution of valuable marketing dollars.
CURRENT OUTLOOK
Malaysia is one of the few countries in the world that had its own
laws for controlling the environment long before the term
'environmentally responsible tourism' became widespread. As the
international market becomes increasingly aware of the environmental
friendliness of Malaysia, this should encourage further tourism growth.
It should also help Malaysia to clarify its image generally.
The experience of the last ten years has shown that tourism growth
cannot be taken for granted, even if the basic tourism product is sound.
Malaysia's best prospects for tourism, and for developing a brand image
that differentiates it from competitive destinations in the region, is to
promote its culture, heritage and nature-based attractions.
There are a number of threats to future growth as highlighted in
the Policy Recommendations contained in this report. But there are also
positive signs that could help Malaysia exceed its growth projections. A
total of RM1.2 billion (US$309 million) is being allocated for tourism
development under the Eighth Malaysia Plan, 2001-05. It now requires
the full determination of government to create a policy framework that
continues to induce investment, stimulate demand and encourage
quality, and the commitment and application of the private sector to
develop and deliver globally competitive products and ensure high
quality service standards.
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
reflects a comprehensive simulation of the new international
standard adopted by the United Nations following the Enzo Paci
World Conference on the Economic Impact of Tourism (Nice,
France, June 1999), ten years of model development and TSA
experience by WTTC/DRI-WEFA, and application of DRI-WEFA’s
latest macro-economic forecasts.
TSA Economic Concepts
The Travel & Tourism Satellite Account is based on a ‘demand-side’
concept of economic activity, because the industry does not produce or
supply a homogeneous product or service like traditional industries
(agriculture, electronics, steel, etc). Instead, Travel & Tourism is an
industrial activity defined by the diverse collection of products (durables
and non-durables) and services (transportation, accommodations, food and
beverage, entertainment, government services, etc) that are delivered to
visitors.There are two basic aggregates of demand in the TSA:
I Travel & Tourism Consumption represents the value of
products and services that have been consumed by visitors. It is the
basic demand-side aggregate used to construct an explicitly defined
production-side ‘industry’ equivalent for comparison with all other
industries.Travel & Tourism Consumption includes:
• Personal Travel & Tourism, more formally known as consumer
expenditures, which captures spending by Malaysia residents on
traditional Travel & Tourism services (lodging, transportation,
entertainment, meals, financial services, etc) and goods (durable
and nondurable) used for Travel & Tourism activities.
• Business Travel by government and industry, which mirrors
Personal Travel & Tourism’s spending on goods and services
(transportation, accommodation, meals, entertainment, etc), but
represents intermediate inputs used in the course of business or
government work.
• Government Expenditures (Individual) by agencies and
departments which provide visitor services such as cultural (art
museums), recreational (national park) or clearance (immigration/
customs) to individual visitors.
• Visitor Exports, which include spending by international
visitors on goods and services.
II Travel & Tourism Demand builds on Travel & Tourism
consumption to include Travel & Tourism products and services
associated with residual components of final demand. It is used to
construct a broader ‘economy-wide’ impact of Travel & Tourism.
The residual elements of Travel & Tourism demand are:
• Government Expenditures (Collective) made by agencies
and departments associated with Travel & Tourism, but generally
made on behalf of the community at large, such as tourism
promotion, aviation administration, security services and resort
area sanitation services.
• Capital Investment by Travel & Tourism providers (the private
sector) and government agencies (the public sector) to provide
facilities, equipment and infrastructure to visitors.
• Exports (Non-Visitor) which include consumer goods sent
abroad for ultimate sale to visitors (such as clothing, electronics
or petrol) or capital goods sent abroad for use by industry service
providers (such as aircraft or cruise ships).
By employing input/output modelling separately to these two
aggregates (Travel & Tourism Consumption and Travel & Tourism
Demand), the Satellite Account is able to produce two different and
complementary aggregates of Travel & Tourism Supply: the Travel &
Tourism Industry and the Travel & Tourism Economy.The former
captures the explicitly defined production-side ‘industry’ equivalent,
direct impact only, for comparison with all other industries, while the
latter captures the broader ‘economy-wide’ impact, direct and indirect, of
Travel & Tourism.Through this process, the Satellite Account is also able
to determine that portion of supply, which it Imports from abroad.
Next, the Satellite Account breaks down both aggregates of supply
(Industry and Economy) into the direct and indirect impacts of Gross
Domestic Product (GDP), the main descriptor of economic
production, as well as the various components of GDP (Wages &
Salaries, Indirect/Transaction Taxes, Operating Surplus,
Depreciation and Subsidies). Beyond the regular TSA accounts, a
separate analysis is also provided of Personal Income Taxes paid by
Travel & Tourism generated employment and Corporate and
Property Taxes paid by Travel & Tourism companies.
Finally, one of the most important elements of the Travel & Tourism
Satellite Account is the Employment results which can now be
quantified for the basic Travel & Tourism Industry and the broader Travel
& Tourism Economy.
• T&T Industry Employment generally includes those jobs with
face-to-face contact with visitors (airlines, hotels, car rental,
restaurant, retail, entertainment, etc).
• T&T Economy Employment includes T&T Industry
Employment plus those faceless jobs associated with:
• Industry suppliers (airline caterers, laundry services, food
suppliers, wholesalers, accounting firms, etc).
• Government agencies, manufacturing and construction of capital
goods and exported goods used in Travel & Tourism.
• Supplied commodities (steel producers, lumber, oil production,
etc).
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
economic activity (Total Demand) and is forecast to grow to US$8.7
trillion by 2010.
Travel & Tourism Total Demand in Southeast Asia is expected to
total US$100 billion in 2001, growing to US$257 billion in 2010.
In Malaysia in 2001, Travel & Tourism is expected to post
RM69,758 million (US$18.4 billion) of economic activity (Total
Demand), growing to RM158,213 million (US$36.9) billion by 2010.
In 2001, the T&T Industry should contribute 4.2 per cent to
worldwide Gross Domestic Product (GDP).The broader T&T Economy
should contribute 10.7 per cent to 2001 GDP.
In Southeast Asia, the Travel & Tourism Industry is expected to post
a GDP contribution of 4.1 per cent in 2001, while the Travel & Tourism
Economy contribution totals 9.1 per cent.
In Malaysia, the T&T Industry is expected to contribute 4.7 per
cent to GDP in 2001 (RM16,902 million or US$4.4 billion), rising to
RM38,713 million or US$9.0 billion (5.3 per cent of total) by 2010.
The T&T Economy contribution should grow from 10.8 per cent
(RM39,054 millions or US$10.3 billion) to 11.9 per cent (RM86,285
million or US$20.1 billion) in the same period.
Travel & Tourism is a high growth activity, which is forecast to
increase its total economic activity by 3.9 per cent per annum
worldwide in real terms over the next ten years.
In Southeast Asia, Travel & Tourism is expected to post average
annualised gains of 6.2 per cent between 2001 and 2010.
For Malaysia, Travel & Tourism economic activity is expected to
grow by 6.4 per cent per annum, in real terms, between 2001 and 2010.
Travel & Tourism is human-resource intensive, creating quality jobs
across the full employment spectrum. In 2001, one in 12.2 jobs is
generated by the T&T Economy.The T&T Industry accounts for 3.1 per
cent of global employment.Today there are 78.2 million T&T Industry
jobs and 207.1 million jobs in the T&T Economy, rising to 96.7 million
T&T Industry jobs and 253.7 million T&T Economy jobs by 2010.
The Southeast Asia Travel & Travel Industry is expected to generate
7.3 million jobs in 2001 (3.2 per cent of total employment), while the
broader Travel & Tourism Economy produces 18.3 million jobs (8.0 per
cent of total employment).
In Malaysia in 2001, T&T Economy employment is estimated at
822,900 jobs or 8.8 per cent of total employment. By 2010,
this should grow to 1.0 million jobs, 9.6 per cent of total employment.
The 393,600 T&T Industry jobs account for 4.2 per cent of total
26
employment in 2001 and are forecast to rise to 520,700 jobs or 4.8 per
cent of the total by 2010.
Travel & Tourism is a major exporter, with inbound visitors
injecting foreign exchange directly into the economy.Travel & Tourism
exports in Southeast Asia are expected to represent 8.0 per cent of total
exports in 2001.
In Malaysia, exports make up a very important share of Travel &
Tourism’s contribution to Gross Domestic Product. Of total Malaysian
exports, services and merchandise, Travel & Tourism is expected to
generate 8.8 per cent (RM39,055 million or US$10.3 billion) in 2001,
growing to RM93,308 million or US$21.8 billion (10.0 per cent of
total) in 2010.
Travel & Tourism is a catalyst for construction and manufacturing.
In 2001, the private and public sectors combined are expected to spend
US$656.7 billion in new Travel & Tourism capital investment worldwide
– 9.0 per cent of the total – rising to US$1.3 trillion by 2010 – 9.2 per
cent of the total.
Southeast Asia Travel & Tourism capital investment is expected to
total US$17.1 billion in 2001 or 9.9 per cent of total regional capital
investment.
Year 2001 capital investment in the Malaysian T&T Economy is
estimated at RM11,087 million (US$2.9 billion) or 12.0 per cent of
total investment. By 2010, this should reach RM20,801 million (US$4.9
billion) or 12.4 per cent of total.
Travel & Tourism is both a generator and receiver of government
funds. Globally in 2001, Travel & Tourism is expected to generate
US$787.8 billion of taxes – 10.6 per cent of total – while channelling
US$216.2 billion of government expenditures – 4.2 per cent of total. By
2010, taxes should increase to US$1.5 trillion – 10.8 per cent of the total
– and government spending to US$391.9 billion – 4.4 per cent of the
total.
Taxes from Travel & Tourism in Malaysia in 2001 are expected to
total RM5,304 million (US$1.4 billion) or 10.5 per cent of total
taxation. In contrast, government T&T operating expenditures are
forecast at RM1,076 million (US$283 million) or 2.1 per cent of the
total government spending.
Over the next ten years, Malaysia Travel & Tourism taxes are
expected to grow to RM11,782 million (US$2.7 billion) or 11.5 per
cent of total taxes. During this period, government T&T spending is
forecast to grow to RM3,586 million (US$836 million) or 2.2 per cent
of overall expenditures.
 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
Personal Travel & Tourism consumption
by residents of Malaysia (10.6 per cent of
total personal consumption);
• RM2,239 million (US$589 million) of
Business and Government Travel by
resident companies and government
employees;
• RM1,076 million (US$283 million) of
Government Expenditures, 2.1 per
cent of total government spending in
Malaysia, to provide individual and
collective services to the Malaysian
Travel & Tourism Industry and its
visitors;
• RM11,087 million (US$2.9 billion) of
Capital Investment, 12.0 per cent of total
in Malaysia, in personal, commercial and
public Travel & Tourism facilities,
equipment and infrastructure by
residents, Travel & Tourism companies,
and government agencies;
• RM25,121 million (US$6.6 billion) of
Visitor Exports, 5.7 per cent of total
exports in Malaysia generated from
international visitor markets; and
• RM13,933 million (US$3.7 billion) of
Merchandise Trade Exports, 3.1 per cent
of total exports in Malaysia.
This apportionment of Malaysia Travel &
Tourism demand clearly illustrates what may
be common knowledge to some and news to
others, and that is Visitor Exports by
international visitors makes up more than
one-third of the Malaysian Travel & Tourism
economy.
Over the past 12 years (1988-2000),
Malaysia has grown its Travel & Tourism
activity a remarkable 118 per cent in real
terms. This compares with the Southeast Asia
regional results of 68 per cent cumulative
growth during this same period. Few Travel &
Tourism economies around the world have
matched this level of cumulative growth.
The long-term outlook for growth in
Malaysia’s Travel & Tourism demand is
expected to be strongly positive following the
late 90s’ financial crisis and the major recovery
of 1999-2000. It is expected that all indicators
will positively contribute to healthy and
continued growth, helping to produce a gain
of 4.4 per cent in overall Travel & Tourism
demand for 2001.
Over the next ten years, Malaysia’s Travel
& Tourism demand growth is expected to
average 6.4 per cent per annum, well exceeding
world average expectations for 3.9 per cent
per annum and slightly bettering gains in
regional Southeast Asia expected at 6.2 per
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
expected to be generated across the broader
spectrum of the Travel & Tourism Economy
including:
• Travel company employment;
• Government agency employment; and
• Supplier company employment.
The first category represents Travel &
Tourism Industry jobs, while all three
categories represent Travel & Tourism
Economy jobs.
The 2001 Travel & Tourism Industry jobs
in Malaysia totalling 393,600 represent 4.2 per
cent of the total workforce. By 2010,Travel &
Tourism Industry employment is expected to
increase by 127,100 jobs in Malaysia to 4.8 per
cent of total.
The 2001 Travel & Tourism Economy
jobs in Malaysia totaling 822,900 jobs represent
8.8 per cent of the total workforce. By 2010,
Travel & Tourism Economy employment is
expected to increase by 215,600 jobs in
Malaysia to 9.6 per cent of total.
Over the past 12 years, Travel & Tourism
in Malaysia has created more than 383,200
jobs. In 2001, due to the moderation of
economic growth, the jobs outlook for Travel
& Tourism is positive, but only marginally
better than year 2000 totals. However,
assuming a resumption of stronger economic
growth in next few years, there is a strong
potential over the next decade to create more
than 22,000 new jobs each year. Employment
growth is expected to total 2.5 per cent per
annum between 2001 and 2010.
The charts below reveal a few interesting
points. First, Malaysia’s Travel & Tourism
employment growth has been strongly
positive during periods of economic stability
and nominally flat during periods of
uncertainty. Second, among its Southeast Asia
neighbours, Malaysia’s current level of Travel
& Tourism employment as a percentage of
total employment ranks at the middle-tier of
the list, suggesting an average or comparable
contribution. Last and most important,
Malaysia’s Travel & Tourism employment
growth rate, expected over the next ten years,
is on the low end of the regional list and
about one-third the growth of its overall
Travel & Tourism demand.This situation may
suggest requisite increases in productivity or
possible shortages of Travel & Tourism
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
(direct and indirect) is expected to produce
2001 GDP of RM39,054 million (US$10.3
billion) or 10.8 per cent of total. The long-
term expectations for Travel & Tourism GDP
growth are positive (6.1 per cent annualised
real growth). By 2010, the Travel & Tourism
Economy GDP is forecast to gain 1.1
percentage points to total 11.9 per cent or
RM86,285 million (US$20.1 billion).
The Travel & Tourism Economy results
and forecasts illustrate the massive economic
stimulus effect of Travel & Tourism. In the first
set of charts (stacked bar), it is easy to
recognise how the tourism industry acts as a
leading economic catalyst as its contribution
permeates through Malaysia’s Travel &
Tourism Economy. These charts also
illustrate how positive and negative changes
in the Travel & Tourism industry result in a
much larger impact on the broader Travel &
Tourism economy. In general, the near-term
results for Southeast Asia Travel & Tourism
GDP have followed regional uncertainties
and rebounds.
In the second set of charts (Cumulative
Real Growth), Malaysia’s Travel & Tourism
Economy shows the dynamic growth that it
has produced over the past ten years. Also
evident are two periods of short-term loss
(1992 and 1996), which temporarily caused
concern for Malaysia’s Travel & Tourism
growth. Overall, this level of dramatic growth
is in sharp contrast to the Southeast Asia
regional history and forecasts, where Travel &
Tourism Economy growth is much stronger
and quicker to recovery.
The third set of charts (right), comparing
Malaysia with the WTTC estimates for the
Southeast Asia countries, illustrates how its
Travel & Tourism Economy GDP as a
percentage of total GDP compares with its
peers. Ranked at number 4, between Laos at
number 3 and Singapore at 5, Malaysia is
clearly among the top-tier tourism intensive
countries. Additionally, the second league
table extract illustrates that Malaysia’s
prospects for GDP growth are about average
within the region, where it is ranked 7th.

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
investment originates from the private sector,
which is expected to invest RM10,313 million
(US$2.7 billion) in new plants and equipment,
while the public sector is expected to invest
RM773 million (US$204 million) in new
Travel & Tourism infrastructure in 2001.
This represents a small gain on year 2000
results and the first gain in three years,
illustrating the returning optimism about
Malaysia’s overall economy this year. Over the
next ten years (2001-2010), the average
contribution of Travel & Tourism to Malaysia’s
capital investment account is expected to grow
at a strong rate of 5.0 per cent per year in real
terms.
Examination of Travel & Tourism capital
investment results and forecasts lends greater
insight into the market forces at work in a
given economy and the expectations by the
public and private sectors to meet the
challenges and opportunities in the years
ahead. For the most part, Travel & Tourism
capital investment tends to be cyclical, with
strong links to major public policy initiatives,
the business/market cycle, major events (ie
natural disasters) and significant socio-political
changes.
Worldwide, Travel & Tourism capital
investment is expected to total 9.0 per cent of
total investment in 2001. Global growth
expectations for 2001-2010 are 4.4 per cent
per year (constant dollars). In the Southeast
Asia region, the respective figures are 9.9 per
cent of total capital investment in 2001 and 6.1
per cent real growth over the coming decade.
The charts below illustrate several
interesting points. First Malaysia’s Travel &
Tourism capital investment growth is expected
to re-ignite in 2001 following the difficult
years of 1999 and 2000. Even after considering
these circumstances, Malaysia’s cumulative
historical and forecast growth well exceeds
that of Southeast Asia. Second, based on a
ranking with the individual Southeast Asian
countries, Malaysia ranks high in investment
percentage terms for 2001.At 12.0 per cent of
total investment, Malaysia is in 3rd position,
just after Burma. However, unlike its average
GDP growth, Malaysia’s Travel & Tourism
capital investment growth (prospects for 2001-
2010) ranks at the lowest level of the WTTC
league table for Southeast Asia, between Laos
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
expected to total RM2,239 million or
US$589 million (53 per cent corporate, 47
per cent government).
Unlike visitor exports, which depend upon
international markets for consumers, the
business generated in these two categories
depends on the Malaysian economy itself.As the
Malaysian economy grows, Malaysian consumer
and business travel follows suit. Malaysian
personal Travel & Tourism has grown a
remarkable 76 per cent since 1998 – clearly
indicative of the economy’s recent development.
Over the next decade (2001-2010), personal
Travel & Tourism in Malaysia is expected to
grow at an annual rate of 5.8 per cent, while
business/government travel is expected to grow
at an annual rate of 5.4 per cent.
Although most of this Travel & Tourism
takes place within Malaysia, a portion takes
place abroad. When the spending does take
place abroad, the Satellite Account generates a
corresponding ‘import credit’, providing for
an accurate assessment of Travel & Tourism
‘produced’ in Malaysia and Travel & Tourism
‘produced’ by the rest of the world.
Analysis of Malaysian results illustrates a
few interesting points. First, Malaysian
residents have recently spent about 10.6 per
cent of their personal expenditures on Travel
& Tourism. This percentage is right on target
for the world average of 10.4 per cent and
significantly higher that the regional Southeast
Asia average of 6.1 per cent. Generally, the
level of personal Travel & Tourism spending
has a direct relationship to the development of
the resident economy, as per capita income
increases, then Travel & Tourism spending
follows suit. Second, Malaysia’s overall macro-
economic situation in the late 1990s
manifested itself in reduced Malaysian resident
spending on Travel & Tourism as illustrated in
the stacked bar and cumulative growth charts
below for 1998 and 1999. Nevertheless, the
cumulative growth charts for Malaysia and
Southeast Asia below illustrate the
overwhelming growth of Malaysian and
regional Travel & Tourism spending. Second, if
as expected the economy continues positive
growth, Malaysian residents’ spending on
personal and business Travel & Tourism is also
likely to return to steady growth. Last, the
league table extracts illustrate a consistent
message of spending priority: the current
situation where Malaysia ranks above each of
the Southeast Asia countries in terms of Travel
& Tourism spending vis-à-vis total personal
consumption; and the future situation where
Malaysia ranks 2nd in terms of Travel &
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
merchandise exports for Malaysia RM39,055
million or US$10.3 billion (64 per cent by
visitors, 36 per cent by exported consumer and
capital goods) are expected to represent 56 per
cent of total Travel & Tourism demand.
Without question, as this category grows and
contracts, the health and vitality of Malaysia’s
Travel & Tourism sector will grow and
contract.
In 1999 and 2000, the gains for Travel &
Tourism visitor exports have been enormous.
In constant dollars, gains for 1999 visitor
exports totaled 45 per cent, while year 2000
gains totaled 27 per cent. Over the longer-term
(1988-2000), Malaysia’s visitor exports have
tripled (200 per cent) in real terms, well above
and beyond the regional growth of 86% during
this same period, illustrating the strength of
Malaysia’s international appeal and product. In
real terms over the next ten years, Malaysian
visitor exports are expected to grow 7.4 per
cent per annum, while Travel & Tourism
merchandise exports (non-visitor exports) are
expected to follow just behind at 6.6 per cent
per annum. Clearly, based on these forecasts,
Malaysia is well positioned in the long term to
grow its Travel & Tourism exports.
Globally and for Southeast Asia, visitor
exports are expected to grow at 5.1 and 7.5
per cent per annum respectively over the next
ten years (2001-2010).
Although long-term expectations for
Malaysia’s Travel & Tourism export growth
(2001-2010) are positive, these forecasts, like
any other, depend on future events and are
therefore not guaranteed. The 1998 financial
crisis, which had a short-term negative impact
on tourism, is a perfect example of uncertainty
inherent in forecasting.
Examination of the WTTC league tables
reveals that Malaysia is placed about average
among its Southeast Asia competitors, in terms
of visitor exports as a percentage of total
exports. On the second league table, Malaysian
visitor exports growth illustrates its future
potential, listed in third place at 7.4 per cent
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
government expenditures in providing
individual and collective government Travel &
Tourism services to visitors, travel companies
and the community at large. Over the next ten
years (2001-2010), Travel & Tourism
government expenditures in Malaysia are
expected to increase 6.3 per cent per year in
real terms.
Globally, the average government is
expected to contribute 4.2 per cent of
government expenditures to Travel & Tourism
related functions and increase this spending by
3.1 per cent per annum over the next ten
years.The corresponding figures for Southeast
Asia is 5.4 per cent of total government
spending and 4.7 per cent real growth for the
coming decade. Based on these results,
Malaysia’s 2001 government contribution of
2.1 per cent suggests that it is falling well short
of its regional and global competition for
Travel & Tourism support and services.
In this WTTC report, 2001 government
expenditures include: individual expenditures
RM474 million (US$125 million) which
can be linked to individual visitors like
museum subsidies or immigration services;
and collective expenditures RM581 million
(US$153 million) that are undertaken for
the community at large like airport
administration or tourism promotion, but
have a logical service connection to Travel &
Tourism.
Intuitively, one would think that there
should be a direct link between the impact of
an industry/sector like Travel & Tourism on
the economy (in terms of GDP) and the
amount of funding allocated by governments
toward that industry/sector. In Malaysia,
the 2001 ratio of Travel & Tourism GDP
(percentage of total) to government
expenditures (percentage of total) is 5.2 to
1.0. Worldwide and in Southeast Asia, this
ratio is 2.5 to 1.0 and 1.7 to 1.0 respectively.
These results would indicate that the
Malaysian government authorities are
returning significantly less to Travel & Tourism
than the average country.
The graphics below reinforce all of these
points. First Malaysia government expenditures
are growing strongly compared to those of
other Southeast Asia countries (middle
graphics and second league table), but
Malaysia’s current contribution is well below
that of its competitors, showing up in 2001
in 9th position at 2.1 per cent of total
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
indirect taxes (RM1,969 million or US$518
million) paid in connection with visitor
purchases of goods and services. Next in size is
the RM1,878 million (US$494 million) of
corporate income taxes paid by Travel &
Tourism businesses and suppliers. Personal
taxes are paid by Travel & Tourism generated
emloyment, and other taxes include oil and
stamp taxes. All totaled, the Travel & Tourism
Economy is responsible for 10.5 per cent of
total taxes paid in Malaysia.
Over the next ten years, Malaysia’s Travel
& Tourism tax contribution is expected to
increase to RM11,782 million (US$2.7
billion). By 2010,Travel & Tourism will account
for 11.5 per cent of Malaysia’s tax revenue.
By definition, the economic success of
Malaysia’s Travel & Tourism Economy
dictates the tax contributions it makes to
national and local collections. As Travel &
Tourism Economy employment increases, so
do personal taxes. As visitor numbers and
spending increase, so do the indirect taxes
collected by Travel & Tourism companies. As
Travel & Tourism businesses expand, so do the
income taxes associated with those businesses.
A comparison of Malaysia’s Travel &
Tourism results relative to world results also
supports the analysis of government
expenditures on the previous page, showing
that it is generating taxes five times the total of
government Travel & Tourism expenditures.
The world average for Travel & Tourism taxes
is only three times the expenditure of
governments on Travel & Tourism. This
comparison would suggest that Malaysia’s
government expenditure for Travel & Tourism
relative to its tax collection is uncompetitive
with world standards. Travel & Tourism Taxes
for the other Southeast Asia countries are not
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 &
Tourism growth and there is clear recognition at the highest levels of
government of the pivotal role played by Travel & Tourism in terms of
sustainable growth, employment creation and social development across
the entire national economy.This is reflected by the prominence given
to Travel & Tourism in the 1998 National Economic Recovery Plan.
WTTC's forecasts indicate that the growth prospects for Malaysia's
Travel & Tourism are good – in line with forecast average annual GDP
growth and with projections for Southeast Asia's tourism generally.Yet
the potential impact could be even greater than forecast if the
underlying policy framework is conducive to growth – if Malaysia is
able to ensure the underlying conditions for market confidence,
dynamism and sustainability.
While the private sector can and must play an increasingly proactive
role in developing quality products and services geared to international
and domestic demand, the federal government needs to show leadership
by encouraging continued investment, building infrastructure and
streamlining and co-ordinating tourism-related policies and activities
with state and local governments.This will help ensure a more integrated
approach to tourism development and management.
Business confidence in the rapid growth of demand has generated
significant private sector capital investment. Continued efforts should be
made to encourage sustained demand and expand related infrastructure
accordingly, in particular opening up areas of the country that do not
yet enjoy the benefits of tourism.
Above all consumer interest must be maintained in a climate in
which the safety and security of tourists is guaranteed – and perceived
to be guaranteed. In today's world of discerning customers and
competitive destinations reputations have to be built carefully and
creatively.Yet with instant global communications they can be quickly
lost. This is a high-priority challenge if Malaysia's Travel & Tourism
potential is to be realised – together with the broadscale economic
wealth and job creation that will accompany it.
Against this background WTTC recommends that the Malaysian
Government:
PLAN FOR THE FUTURE
Long-Term Tourism Planning
Malaysia's future tourism development requires long-term
planning, including the elaboration of a National Tourism Policy, since
the industry can be fragile and is often adversely affected by short-term
political or commercial considerations.
As Travel & Tourism impacts all sectors of the economy – from
wholesale and retail business to real estate and construction – this
36
planning must involve all levels of state and local government and the
private sector, including local communities. This will help overcome
conflicting federal and state interests, as well as encouraging growth that
is sustainable economically, environmentally and socially. It will also help
spread the benefits equitably across the country to all stakeholders,
thereby stimulating support and commitment from all sectors.
The National Tourism Policy must start from a vision of what kind
of Travel & Tourism government and the citizens of Malaysia wish to
develop – in physical and marketing terms. The Policy must include
certain basic elements:
• Clearly defined goals, objectives and benchmarks
• Indications of best practice in tourism development
• Incorporation of Malaysia's National Ecotourism Plan elaborated
in 1999 and the Rural Tourism Master Plan for Malaysia being
developed by the World Tourism Organization
• Measures to support existing industry, as well as for the promotion
of new developments
• An articulated strategy for product diversification
• A long-term strategy for tourism marketing and promotion in line
with the Policy’s long-term goals and objectives
• Clear branding that reinforces the basic vision for Malaysia’s Travel
& Tourism development
Monitor Trends in Travel & Tourism Demand
In order to plan ahead better and anticipate changing demand, it is
important to track trends in past and current Travel & Tourism demand.
This implies ensuring good quality statistical data on Malaysia's Travel &
Tourism, including expenditure patterns and its overall economic
contribution.
A national Tourism Forecasting Council (TFC), established along
the same lines as Australia's successful TFC in which all stakeholders are
well represented, could be a useful tool for ensuring the credibility of
demand forecasts and help to mitigate serious supply shortages or
oversupply in the future.
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
has been plagued on an annual basis for the last few years, as well other
health scares, acts of violence against tourists, or perceived civil unrest.
Encourage Greater Market and Product
Diversification
Malaysia has traditionally suffered competition from other Southeast
Asian destinations, but it now also faces increased competition from a
growing number of destinations around the world. Given the strength of
the US dollar, the current ringgit:US dollar peg could have a negative
impact on demand from key source markets within the member
countries of the Association of Southeast Asian Nations (ASEAN), and
notably Singapore, which accounts for a significant 53 per cent of total
foreign arrivals. It is therefore important for Malaysia to focus on product
and market diversification to reduce its over-dependence on Singapore
and some other traditional markets.
As the Ministry of Culture, Arts and Tourism and the Malaysia
Tourism Promotion Board (MTPB) have already suggested, non-ASEAN
source countries would seem to offer the greatest potential for future
growth, at least in percentage terms. Long-haul markets, such as the
Middle East and Europe, are especially attractive as they generate longer
stays and higher yields. However, markets closer to home also have above
average growth potential. China and India are two that show great
promise. The easing of visa requirements and increased marketing and
promotion will stimulate demand
The MTPB has also recognised the importance of domestic
tourism. In addition to generating increased earnings for less well-known
parts of the country, local tourism can promote a greater understanding
of the various lifestyles and cultures of Malaysia's multi-ethnic
population, contributing to harmonious living and encouraging support
from local communities for tourism development.
The most promising growth sector is nature-based tourism, for
which Malaysia has unique selling appeal. It is also particularly important
for the future well-being of Malaysians themselves as it has the potential
of ensuring economic development and employment in rural areas that
would never attract manufacturing industries. The federal and state
governments should show leadership in stimulating the development of
new nature-based tourism products, providing incentives and matching
funding to the private sector in these areas and encouraging buy-in by
local governments and communities.
Two relatively undeveloped markets that the MTPB would like to
expand for international tourists are cruises and golf. Most cruise business
for Malaysia is currently booked out of Singapore, with the result that the
economic benefits to Malaysia's tourism industry are sometimes
questionable. However, the waters of peninsular Malaysia in particular are
a popular cruising ground and the potential for cruise development in
East Malaysia would seem to be enormous.
Golf is actually much more developed in Malaysia than many realise
– the country has 220 golf courses as against Thailand's 180 and
Indonesia's 125.Yet, until now, the country has not been able to establish
itself as a major golf destination, with only 2-3 per cent of international
tourists – a mere 300,000 – playing golf when in Malaysia.The country's
disadvantage is that rates are reportedly much less competitive than they
are in Thailand, and service also compares unfavourably. However, since
hotel rates are so much lower than they are in Thailand, Malaysia should
be able to overcome this handicap with the development of attractive,
fully inclusive packages.
Malaysia is still a relative newcomer to the world of meetings,
incentives, conference and exhibition (MICE) travel compared with
other leading Asian destinations. The MICE business accounts for a
modest 3 per cent of arrivals although it is showing stronger than
average growth. The development of the proposed National
Exhibition & Conference Centre (NECC) on the site of the former
Subang International Airport should help attract new year-round
demand and enable Malaysia to compete more effectively with other
destinations.
It is nevertheless important for the different centres to co-ordinate
their marketing and promotion activities to avoid unnecessary
competition. The best way of ensuring this is to set up a national
convention bureau, ideally an independent private sector body with an
initial injection of funding from the federal and state governments, or a
joint venture with the MTPB.
Complementing the growth in conferences and exhibitions,
Malaysia has also been increasingly successful at selling itself as a special
event destination.This is clearly a sector to develop further in the future
as it is relatively high yield and generates strong visibility for the
destination.Among the leading events hosted over the last few years have
been World Cup Golf, the Formula One Power Boat Race, Le Tour de
Langkawi, and the annual Malaysian Grand Prix, first organised in 1999
at the Sepang International Circuit.
In order to secure future business with guaranteed economic returns
for all stakeholders, the MTPB should develop a sophisticated capability
for the evaluation of special events and the related economic returns, in
order to assist in future targeting of events.
Invest More in Effective Marketing and
Promotion
Although the annual marketing and promotion budget of the
MTPB has increased significantly in recent years, it is still lower than for
national tourism organisations in Asia's leading tourism destinations.
This does not augur well for tourism growth. Foreign tour operators
tend to agree that Malaysia is a hard sell as it has so many different
images but no strong identity.
The 'Malaysia Truly Asia' campaign launched in October 1999 is
extremely professional and has been very effective. But it focuses on the
traditional appeal of Malaysia and does not adequately promote the rich
diversity of attractions and activities that constitute the country's wide
appeal as a tourism destination. Malaysia's natural resources are still
relatively little known in the international marketplace, for example.
Advertising and media marketing are important to sustain demand
in existing markets, as well as to generate demand from new markets and
to promote new products. Close to 700 events have been planned for
Malaysia in 2001, for example, yet the vast majority of these receive little
media attention.
The establishment of the National Committee on Tourism
Promotion and Co-ordination, chaired by the Minister of Culture, Arts
and Tourism and including state tourism ministers and umbrella Travel
& Tourism associations, is an important step forward. It is now important
to work in much closer partnership with state governments and the
private sector to facilitate the process and stretch advertising dollars, as
well as help promote tourism in the less developed rural parts of the
country.
A three- to five-year Tourism Marketing Plan should be
incorporated into the National Tourism Policy and updated on an
annual basis, or more frequently if warranted by changing market
demand and the operating environment.A number of countries, such as
Australia and Canada, offer best practice models of such plans.
37
 HIGHLIGHT THE STRATEGIC
IMPORTANCE OF TOURISM
Recognise Travel & Tourism’s Economic
Importance
Travel & Tourism has the potential to diversify Malaysia’s economy.
It can further enhance the country's ‘tourism balance of payments’,
stimulate entrepreneurship – particularly in small businesses – catalyse
investment, create large numbers of sustainable jobs and help social
development in local communities.
The government should undertake an image campaign to ensure
that all public and private stakeholders recognise Travel & Tourism's full
impact across the national economy – not just on hotels, restaurants and
retail business, but also on construction, real estate and other sectors of
the economy. Even more importantly, stakeholders should be made
aware of its untapped potential and of the spin-off benefits of tourism
that filter down through all levels of the community.
Make Travel & Tourism a Strategic Priority
Travel & Tourism should be factored into mainstream policies for
employment, trade, investment and education and environmental
protection, ensuring that the underlying policy framework is conducive
to dynamic growth. The strategic importance of Travel & Tourism
should be communicated to all levels of government, industry and local
communities.
All levels of government – federal, state or local – affected by, or
impacting on Travel & Tourism development should be closely involved
in elaborating and implementing the National Tourism Policy.
Implement Satellite Accounting
on an Annual Basis
Travel & Tourism needs to be effectively measured in order to
understand its full impact throughout the economy. As a new industry,
Travel & Tourism is not discretely identified in charts of national or state
accounts – its component parts are scattered throughout the accounts.
Public sector analysis and related policies tend to overlook, or understate,
the impact of the industry, or deal with its smaller individual components.
The technique of satellite accounting is designed to measure the new
service sectors. This new tourism satellite account (TSA) developed by
WTTC and DRI-WEFA for Malaysia, in collaboration with the Malaysian
Institute of Economic Research (MIER), is a significant tool for planning
and policy development. WTTC urges the Malaysian Government to
update it on an annual basis to ensure that adequate data are available to
factor Travel & Tourism into economic and employment strategies.
DEVELOP THE HUMAN CAPITAL
REQUIRED FOR GROWTH
Promote a Positive Image of the Travel &
Tourism Industry as a Provider of Jobs and
Careers
The Travel & Tourism industry directly generates around 4.2 per
cent of total employment in Malaysia, or some 393,600 jobs; the Travel
& Tourism economy overall accounts for an 8.8 per cent share, or
822,900. Although these shares are significant and are expected to rise
38
further by 2010, it is important to point out that the annual growth in
job creation will average only a modest 2.5-2.9 per cent. This is well
below the forecast annual rise in Travel & Tourism demand (6.4 per
cent) and capital investment (5.0 per cent) in Malaysia.
The situation could be exacerbated by the low level of
unemployment and by the preponderance of unskilled workers earning
low wages. As a result, it is likely that the Travel & Tourism industry will
have difficulty recruiting a sufficiently skilled workforce and this may put
pressure on productivity and labour costs, leading to reduced margins.
Take Advantage of Travel & Tourism's Ability
to Provide a Wide Range of Jobs
Career opportunities in Travel & Tourism can be extremely varied
– with upstream suppliers such as hotel designers or airport engineers,
or with downstream service companies like retail shops, gas stations,
clothing manufacturers and food suppliers.The former depend on travel
company purchases, the latter are driven by visitor expenditures. There
are also jobs in the public sector catering to visitors – such as border
inspectors, air traffic controllers and museum attendants.
Contrary to conventional wisdom, jobs created by Travel &
Tourism – both directly in and outside the industry – range across the
entire employment spectrum and, in many cases, have characteristics
which fit model employment patterns:
• The increasing sophistication of the industry means that there are
a growing number of high-level jobs in different sectors
• They can be created at low cost, with few barriers to entry, and
faster than most industries
• They are service and export related
• They provide an impetus to regeneration and social cohesion by
counter-balancing the flow of people to the cities from
disadvantaged rural areas
• They are often created in small and medium-sized enterprises, or
family-run businesses, encouraging traditional crafts and cultural
activities
• They provide significant opportunities for women, many of whom
want part-time jobs
• They are ideal for young or first-time employees
• They have good capacity for education, training and skills
development
• There are widespread opportunities for long-term careers rather
than mere jobs
Place a High Priority on Education &
Training
Given the projected growth in Travel & Tourism demand, it is
important to plan ahead to attract sufficient numbers of workers with
the appropriate skills. Special attention has already been paid to
placing education and training at the forefront of Travel & Tourism
development, introducing it into the school curricula and
implementing measures to improve skills, such as training accreditation
programmes.
A nation-wide educational campaign is also recommended to
enhance the image of Travel & Tourism, which is perceived by many as
offering low wages and poor working conditions. Emphasis should be
placed on informing all sectors of the community about the career
opportunities available.
WTTC encourages the Malaysian Government to promote the
scale, scope and characteristics of career opportunities created directly
and indirectly by Travel & Tourism, and to factor this into mainstream
employment, trade, investment and education policies. It also
recommends that the government pay particular attention to the
availability of low-cost accommodation for unskilled workers in or near
upmarket resort areas. This problem should be addressed as a matter of
priority by state governments and the private sector.
ENCOURAGE OPEN MARKETS AND
SKIES AND REMOVE BARRIERS TO
GROWTH
Open Markets and Improve Airline Access
Capital controls have in the past worked in favour of Malaysia's
tourism industry. But there is no guarantee that, if they were to be
reintroduced, the same thing would be true in the future. A liberal
international trading regime, with free-flowing markets for goods and
services, tends to help Travel & Tourism growth and, in turn, enhance
wealth and job creation. Increased trade encourages business trips, and
growing disposable income expands leisure travel.
The implementation of the ASEAN Free Trade Area (AFTA) in
January 2003 augurs well for free trade within the region as tariffs in
the founding member countries will have to be brought down to a
range of 0.0-5.0 per cent, which will ultimately increase consumers'
purchasing power and likely boost both international and domestic
tourism.
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
(KLIA) has struggled to retain existing services, let alone attract new
ones. Part of the problem, as the Malaysian Government is well aware, is
the difficulty for airlines in operating profitably to/from Malaysia
because of the low cost structure on the routes. KLIA's location is also
unfortunate, squeezed between Asia's two main hub airports, Singapore's
Changi and Bangkok's Don Muang.
The Malaysian Government should make even greater efforts to
open air transport markets to attract more long-haul services, and
improve regional networks by expanding liberal aviation accords and
according more Malaysian airports international status. It should
continue to encourage code-sharing, joint operations and block-seat
arrangements with Malaysian Airlines, paying particular emphasis to
routes where capacity is low and capacity growth running below the
growth in traffic demand. One notable example is routes to/fromChina.
Increases in airport and landing charges should continue to be frozen
until such time as demand picks up.
The introduction of new airline routes by local state or privately
owned airlines should also be encouraged. One such route, a direct link
between Kota Kinabalu in Sabah and Mulu in Sarawak, was recently
inaugurated and is expected to stimulate tourist demand. Prior to the
inauguration of the new direct link, visitors to Mulu had to transit via
the airport at Miri.
Restructure the Management and Promotion
of Travel & Tourism
While ultimate responsibility for Malaysia's Travel & Tourism at
national level should remain with the MTPB, the tourism marketing
and promotion function should be adapted to match prevailing
competitive approaches.
The Malaysian Government should take note of the existing,
highly successful examples of public-private sector partnership
developed in several countries around the world – in particular Canada
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
government tourism efforts.
For this partnership approach to be successful it will be necessary
to ensure the following:
• Top-level active political support and engagement
• A declared strategy – with clear targets and a detailed gameplan for
implementation
• The involvement of major stakeholders in the development process
• Strong public and private sector co-operation with outreach to
partners across the Travel & Tourism economy
• Substantially increased public sector funding and exceptional
inducements to attract matching private sector funding
• Private sector leadership in drawing up marketing strategies
• An integrated approach across government departments, and
particularly in co-ordinating national, state and local promotional
efforts
• A formal launch of the new body to raise the profile of the
campaign and media interest
Enhance Safety and Security
Public safety and security have been identified by tourists as areas of
concern. Although the problem is more one of perception than reality –
caused by unfair media reporting – safety and security provisions should
be built into national, state and local strategies, and special emphasis
should be placed on Travel & Tourism in overall policing strategies.
While conscious that there is a clear recognition of this aspect of
tourism development at the highest government levels,WTTC believes
its pivotal importance should be underlined. Successful law enforcement
could result in a more optimistic forecast scenario in the medium term.
But if the underlying problems are not addressed, this may negatively
impact the baseline forecast.
At the same time, health concerns should be addressed and clear
guidelines communicated for dissemination by the media.All too often,
Malaysia is too harshly judged by the media – as in the case of the
annual smoke haze, or when there have been outbreaks of infectious
diseases – when open discussion of the perceived problems could so
easily reduce their impact.
Tax Intelligently
Travel & Tourism taxes currently represent an estimated 10.5 per
cent of total taxation in Malaysia, according to estimates by WTTC and
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
negative impact on demand.There is an increasing tendency worldwide
for governments – whether national or state/local – to target Travel &
Tourism as a revenue generator to meet short-term budget objectives,
with little thought to the longer-term consequences on demand and
job creation.
While Travel & Tourism should pay its fair share of taxes, the growth
and prosperity of the industry – including the investment necessary to
generate these future revenue flows – will depend in no small part on the
competitiveness of Malaysia’s Travel & Tourism. This also depends on
whether it receives equitable treatment relative to other industries and to
competing destinations.
WTTC urges the Malaysia Government to ensure fiscal regimes
that continue to encourage tourism growth, exports, investment,
infrastructure, business innovation and job creation. The 'User Pays –
User Benefits' principle should be given priority, with funding collected
earmarked for Travel & Tourism infrastructure and promotion.
New fiscal programmes, such as tax credit schemes, also need to be
developed to encourage tourism growth, exports, investment,
infrastructure, business innovation and job creation.
MATCH PUBLIC AND PRIVATE
INFRASTRUCTURE WITH
CUSTOMER DEMAND
Expand Infrastructure
Infrastructure remains a critical component in Travel & Tourism
development if the full potential of employment generation, export
earnings and regional development effects are to be achieved. In most
cases public infrastructure that supports Travel & Tourism expansion will
anyway serve other urban and regional development purposes.
Quality infrastructure is also essential to diversify the product base,
remove bottlenecks, ensure good service and distribute the benefits of
tourism flows around the economy. It is not only a question of coping
with increasing numbers of visitors, but also of making sure that the
patterns of flow do not affect the natural or built heritage, nor run
counter to local interests.
Over the last few years a number of very large-scale infrastructure
projects have been completed by the federal government, primarily in
Kuala Lumpur.The Malaysian capital now has good transportation links,
including a network of highways and suburban rail lines and three mass
transit lines, while the new international airport is an architectural
triumph – even if it has been less successful than initially expected at
attracting new airline service. Since the 1997-98 economic crisis, some
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
the whole Klang Valley metropolitan area.
WTTC believes that there is a need to conduct an indepth
investigation into infrastructure needs and resources outside Kuala
Lumpur, whether air transport or road and rail infrastructure. This will
help open up new areas for tourism development. Particularly
important are rest-stops, or en route facilities for land-based travellers,
including basic accommodation along major routes. Communications
40
in the rural areas of the country should also be improved.
Airport expansion and air traffic control (ATC) system
modernisation are priorities for Travel & Tourism growth, as well as
streamlined immigration and border clearance facilities. The efficiency
of transport-related infrastructure can play a significant role in customer
acceptance of airport hubbing strategies.
Where land-based ATC systems are currently in use, these should
also be switched to satellite navigation as soon as possible to contain
operating costs, improve safety and reduce congestion.
Improve Land-Use Planning and Protection
In a decentralised political system, such as Malaysia, it is sometimes
difficult to reconcile the interests of federal, state and local governments.
This is evident in some cases of land-use planning. As an example,
Malaysia's island marine parks are the responsibility of the federal
government as far as administration and management are concerned, yet
they come under the jurisdiction of the respective state governments.
So over-development cannot always be prevented.
Better land-use planning by state governments and local
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.
Admittedly the federal government cannot enforce all types of
legislation, but it can show leadership and encourage buy-in for
legislation by state and local governments. Special incentives should also
be proposed for the rapid modernisation and upgrading of Malaysia's
rural areas in order to spread the benefits of Travel & Tourism across the
country.
Develop Access to Capital Resources and
Encourage Sustained Capital Investment
Capital investment in Malaysia’s Travel & Tourism is currently high,
at an estimated 12.0 per cent of total capital investment. Over the next
nine years it is also forecast to rise by about 5.0 per cent a year to reach
12.4 per cent. However, there is no room for complacency. Experience
has shown that investment – whether foreign or domestic – is extremely
sensitive to economic changes. To guard against this, continued efforts
need to be made, through the development of incentive schemes, to
attract sustained capital investment in the country's Travel & Tourism
industry from domestic and foreign sources.
At the same time, however, it is important to guard against the
dangers of excessive development that bears no relation to existing or
projected demand.This can result in cut-throat competition, leading to
declining operating performances and lower profits.
FAVOUR TECHNOLOGICAL
ADVANCEMENT
Telecommunications
An increasing share of Travel & Tourism operations – and virtually
all distribution and sales transactions – flow through telecommunications
circuits. Where telecommunications are monopoly controlled, there are
often restrictions on access, high costs and unreasonable operating
conditions. This in turn limits the potential of market-oriented
expansion of Travel & Tourism, with negative impacts domestically and
internationally in terms of cost, operational efficiency and customer
service.
WTTC recommends that the Malaysian Government should
continue pursuing its policy of open telecommunications markets,
which will help to lower costs and enhance services for travellers and
tourism companies.
E-Marketing and Distribution
In today's increasingly competitive global marketplace, there is a real
need for a strong national leadership branding which optimises resources,
focuses the myriad of interests – public and private sector, national, state
and local – and gets the attention of travellers.This will require particular
attention to a co-ordinated approach to internet marketing and
distribution to optimise Malaysia's visibility.
The Malaysian Government has already taken the lead in
developing a national tourism portal, to be operated by Pempena Sdn
Bhd, a subsidiary of the MTPB. A one-stop Malaysia website is being
developed, and this will provide an online booking facility.A total cost of
some RM26 million (US$6.8 million) is being invested in the portal's
development.
Experience in other countries around the world has shown that,
while public sector support for national destination databases is critical,
operation and marketing of these databases are best left to the private
sector. Best practice models include Ireland and the Netherlands. The
federal government should provide support for local Malaysian
companies so that they can promote and distribute their products through
the website, as well as developing access to other technology advances.
This will help them compete more effectively with foreign-owned
companies in Malaysia and with suppliers in competing destinations.
PROMOTE RESPONSIBILITY IN
NATURAL, SOCIAL AND CULTURAL
ENVIRONMENTS
Establish Clear Procedures and Guidelines
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
• Malaysia adopt the principles of ecological preservation as outlined
in Agenda 21, developed for the Travel & Tourism Industry after the
1992 Rio Earth Summit by WTTC, the World Tourism
Organization and the Earth Council
Sustainability will need a balance of private initiative, economic
incentives and regulation. Global principles should be reflected in local
action and market-based delivery mechanisms should be encouraged.
Pilot projects should be used to evaluate and demonstrate local
sustainability. It is important for sustainability to be accepted as a policy
across the industry as a whole, and not just as a policy for rural and
nature-based tourism.
Increase Branding through International
and/or National Designations
Malaysia boasts several examples of world-class natural and cultural
resources that are worthy of World Heritage designation. Its unique
landscape, including the world's oldest rainforests and a wealth of other
natural attractions, is one of its greatest assets. The declaration of Mulu
National Park in Sarawak and Kinabalu National Park in Sabah as World
Heritage sites has added to the image of these two states as the wild,
unexplored frontiers of Malaysia. Other attractions could be proposed as
candidates for international designation.
At the same time, the Malaysian Government could also consider
developing and promoting a national heritage designation, with clearly
defined criteria defined to support quality. Such a designation should be
accompanied by increased government funding for the development
and promotion of identified areas of particular heritage value.
Malaysia is a harmonious blend of centuries-old cultures, arts and
traditions, and of multi-racial and multi-ethnic communities that
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
terms of foods, arts and crafts. Efforts should be made to encourage all
stakeholders to be proud of this cultural heritage and to develop new
tourism attractions around it for the benefit and enjoyment of domestic
and international tourists.
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