Economic Update

Malaysia: In search of broader tourist base

Asia | 21 Jan 2013

A focus to attract more tourists from growing regional markets will spearhead Malaysia’s efforts to boost visitor numbers in 2013. However, efforts to increase arrivals from certain key segments may not be enough to drive visitor figures up across the board.

Despite ranking as one of the world’s top 10 tourist destinations, the market base remains narrow, with more than half the visitors coming from neighbouring Singapore. This year will see Malaysia focus on broadening its reach to tap into emerging markets that are demonstrating significant growth, such as India.

Final figures still to be published are expected to show that despite global economic uncertainty, visitor numbers to Malaysia from India rose 36% in 2012, according to international media in mid-January.

A total of 514,926 tourists entered Malaysia from India in the first three quarters of 2012, already up 2.6% on full-year visitor numbers for 2011, according to the Tourist Development Corporation of Malaysia (TDC). Zulkifly Md Said, the director of the international marketing division for South Asia, East Asia and Africa at the Malaysia Tourism Promotion Board (MTPB), told reporters he expected the country to have met or topped its target of welcoming around 700,000 arrivals from India in 2012. Malaysia aims to push the number up to 780,000 this year, Said added.

The rise in visitor numbers from India is thought to be due to a combination of improved connectivity between the two countries and an increase in the range of packages and products being offered to Indian tourists. Reports also suggest that India’s population, especially its affluent middle class, are increasingly looking at medium-haul destinations, such as Malaysia, which remain more affordable than Europe and North America, long popular with the Indian elite.

Zulkifly said Malaysia was benefitting from well-formulated packages aimed at targeted groups in the Indian market, including families and honeymooners. The country also offered quicker visa processing, a wide range of tourist attractions and affordable food and travel costs, he added. With the world economy still struggling, and many tourists from emerging-markets on tight budgets, officials have suggested that Malaysia’s relatively low costs are also giving the country an important competitive advantage.

Air connectivity has risen to meet growing demand, with Malaysia Airlines (MAS), the country’s flag carrier, increasing capacity between India and Malaysia by 25% in 2012. The airline expects to continue expanding its routes to India this year. Malaysia’s low-cost AirAsia, which has strengthened its regional presence in recent years, is also looking to increase the frequency of flights to the Indian cities it serves.

China is another growing market that offers potential for Malaysia’s tourism industry in both the leisure and business segments. The TDC set a target of attracting 1.5m visitors from China in 2012, up by 20% on 2011’s figures. As of end-September 2012, 1.18m Chinese tourists had visited Malaysia, up from 933,540 in the same nine months of 2011. The country hopes to break the 2m-barrier by 2014.

Boosting visitor numbers from emerging markets forms a key component of Malaysia’s bid to maintain its position as one of the world’s leading destinations. The country attracted 24.7m international visitors in 2011, placing ninth in the world, according to the UN World Tourism Organisation (UNWTO), just below Turkey, which received 29.3m visitors from abroad, and the UK, with 29.2m. France topped the list, registering 79m international arrivals.

However, the total number of international tourists in 2011 was only up 0.4% from 2010 figures, which reached 24.6m. This figure was a 4% rise on the number of visitor arrivals in 2009, when Malaysia received 23.6m international tourists. Over the same period, earnings from tourism also increased, rising from $15.8bn in 2009 to $18.2bn in 2010 and reaching $18.3bn in 2011.

But broadening its narrow market base remains a challenge for the country. Visitors from Singapore are expected to continue dominating numbers in 2013 and 2014, according to officials. In the first six months of 2012, the top 10 markets, including Singapore, China and India, accounted for 87.55% of the 11.6m arrivals.

Tourism industry leaders in the private sector are keen for the TDC to continue broadening its promotional activities, targeting both emerging markets, including Russia, the Middle East and Eastern European countries, alongside well-established outbound segments such as France and the US. Plans to boost arrivals from diverse sources should also stand the tourism industry in good stead, despite its remaining sensitive to fluctuations in the international economy.

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