Slightly more off the beaten path than South-east Asia’s mainstream holiday destinations, Sarawak has plenty to offer those seeking a slightly less conventional travel experience. With its lush rainforests, plentiful wildlife and diverse patchwork of ethnic groups, the state is positioning itself as a culture, adventure and nature (CAN) destination. It has successfully managed to leverage this proposition to grow not only the leisure segment, but also increase its share of the globally lucrative meetings, incentives, conferences and exhibitions (MICE) market as organisers and planners pursue more unique and exotic locales to stage their events.
Although tourism, estimated to have contributed 15% of Sarawak’s real GDP, has emerged as the third-largest contributor to the local economy, the industry remains in relative infancy. As a larger number of international festivals continue to be added to the calendar year, airline routes are secured and promotional activity is ramped up, visitor numbers are expected to show sustained growth. Logistical and capacity constraints will likely prevent Sarawak from ever becoming a mass tourism player. However, this is not the authorities’ ultimate objective. Its appeal lies in the fact that it is not overly commercialised and offers a more authentic experience.
PERFORMANCE: Sarawak received 4.86m visitors in 2014, an increase of 11.1% over the 4.37m arrivals that were recorded in 2013, and significantly higher than the 4.1m people who visited the state in 2012. On the one hand, the year’s performance can be viewed as unexceptional and to be expected when considering that 2014 was celebrated and showcased as Visit Malaysia Year, and coincided with an aggressive national marketing campaign. Yet on the other hand, it could be interpreted as a sign of resilience as the year was beset with setbacks, following two airline tragedies and a series of armed attacks in the neighbouring province of Sabah. While it remains difficult at this point to fully quantify the impact of these events, they likely had a detrimental effect on perceptions of the country.
DISSECTING THE NUMBERS: Foreigners accounted for approximately 60% (3m) of visitors in 2014. Sarawak shares land borders with Brunei and Indonesia, whose nationals represented 64% and 17% of recorded foreign visitors, respectively. However, it could be debated whether or not land crossers should be separated from tourist arrival figures, as many who do so are migrant labourers. Equally, though, a significant chunk of both Indonesians and Bruneians who visit Sarawak come for retail, recreation and medical purposes, and are in turn making a contribution to tourism-related expenditures.
The next largest arrival grouping comprised short-haul markets from the ASEAN region, primarily consisting of the Philippines – also a source of foreign workers – Singapore and Thailand. These were followed by medium-haul arrivals from China, South Korea, Japan and India. As growing and lucrative source markets, India and China have both shown significant potential and are in turn receiving targeted promotional efforts. The largest non-Asian source markets to the state are the UK and the US, followed by Australia and New Zealand.
Tourism receipts for the year came to a total of RM10.89bn ($3.25bn), compared to RM9.59bn ($2.92bn) in 2013, with the average per capita expenditure from a foreign visitor, at RM2545 ($774), which was significantly above the per-visit spend of their domestic equivalent, at RM1644 ($500).
Under the Malaysia Tourism Transformation Plan, the federal government is aiming for the country to receive 36m tourists and earn RM168bn ($51.11bn) in tourism receipts by 2020. Of the 25.72m visitors to Malaysia in 2014, around 17% either visited Sarawak alone or included it as part of their Malaysian itinerary. However, Abang Johari Openg, Sarawak’s minister of housing and tourism, has indicated that this ratio could rise to between 20% and 30% by 2020 based on current projections, as well as improved visibility and connectivity.
NATURAL POSITIONING: Looking to build on the momentum of Visit Malaysia Year in 2014, 2015 has been dubbed as the Malaysia Year of Festivals, or MyFest 2015. The year’s programme, spearheaded by the national tourism body, Tourism Malaysia, aims to generate excitement by showcasing the variety of colourful festivals that take place each year throughout the country. Sarawak has submitted 10 events of its own to be hosted in conjunction with the national campaign.
Sarawak-hosted events include, in order of date: the ASEAN International Films Festival and Awards (April), the Mukah Kaul Festival (April), the Borneo Jazz Festival (May), the World Harvest Festival (May), the Babulang and Bisaya Buffalo Racing Festival (June), the Rainforest World Music Festival (July), the Borneo Cultural Festival (August), the Borneo International Kite Festival (September), the Sarawak Regatta (September) and the Sarawak International Dragon Boat Regatta (September).
Local tourism industry promotion and development is being conducted by the Sarawak Tourism Board (STB), which is overseen by the Sarawak Ministry of Tourism (MoT). Private sector stakeholders have come together under the Sarawak Tourism Federation (STF), an umbrella organisation that works closely with the official agencies in the state. Established in 2006, the state-backed Sarawak Convention Bureau (SCB) has been tasked with the organisation, development and marketing of conventions, conferences and corporate events.
Public and private sector stakeholders alike are aware of the state’s tourism assets and shortcomings, and appear to be united in trying to stay clear of positioning Sarawak as a mass-market beach destination. On the other hand, tourists in the CAN category generally hold greater appeal as higher spenders. Moreover, they are also seen as a less disruptive source as they seek out an authentic and untouched experience, with the trade-off being that they are fewer in volume and harder to reach.
Speaking with OBG, Audry Ullok, president of the STF, explained that although there is considerable potential for CAN growth from nearer markets such as South Korea and Japan as their citizens’ travel pursuits evolve, countries in Western Europe and North America have remained the mainstay source markets for this segment. In terms of competition with other locations, Sarawak is at a geographic disadvantage to Africa for attracting the former, and to South America for attracting the latter.
“The Chinese, Indian and Middle East markets have been some of the fastest-growing and highest-spending source markets for the country as a whole, yet enticing them to Sarawak has remained a challenging task as they are more interested in the luxury shopping, dinning and entertainment best found in Peninsular Malaysia,” Ullok told OBG.
For many tourists with a thirst for adventure, according to one travel agent OBG spoke with, Borneo, like the African Kalahari or Central American rain-forest, is regarded as a “once in a lifetime trip”. While this perception could provide an important advantage over other sea-and-sun or shopping destinations, the downside is that ecotourists are less prone to repeat visits as they tend to seek out fresh experiences on their next holiday.
BANG FOR BUCK: According to Ullok, while Sarawak still has a great deal of catching up to do with other countries in the region such as Nepal and Cambodia in registering awareness on the international leisure tourism radar. The STB has already been making significant strides in its efforts to promote Sarawak. Indeed, most industry participants OBG has spoken with applaud the resources allocated to the sector by state authorities, and are in agreement with their tourism strategy.
Perhaps the one grievance that was expressed by many industry participants had to do with their concerns about the continuing restrictions over permitting foreign film crews into the state, likely stemming from concerns by some in the government that they could be seeking to expose sensitive issues, such as deforestation and logging. However, global media exposure through nature documentary channels, such as National Geographic could have a considerable positive impact and create invaluable marketing opportunities for the state in the longer term.
MAKING CONNECTIONS: Kuching, Sarawak’s capital as well as its main embarkation point, is separated by nearly 1000 km of sea from Kuala Lumpur, and is only accessible from the federal capital by air.
Travelling overland to cover the 800 km separating Kuching from Sabah’s gateway city of Kota Kinabalu, while technically possible, is a challenging proposition as the much discussed pan-Borneo highway has yet to be competed.
At present, Singapore is the only major international destination from where travellers can fly directly into Kuching. Malaysia Airlines flies to Kuching from Singapore daily, Air Asia flies four times per week, while Silk Air services three times per week. Express Air also operates a flight three times per week between Pontianak, Indonesia and Kuching.
Miri, the state’s second-largest city, receives four flights per week from Singapore on a route operated by Air Asia. “Over the past few years, flights from Jakarta, Bali and Macau have been discontinued. Sabah, in contrast, has direct flights to South Korea, Japan and Hong Kong,” Ullok told OBG, pointing to the advantage Sabah holds in terms of facilitating medium-haul connectivity.
Malaysia Airlines and Air Asia both fly more than 70 times per week between Kuching and Kuala Lumpur, and for long-haul visitors, the lack of direct flights is less of an issue so long as heavily trafficked gateway destinations like Singapore and Kuala Lumpur continue to offer ample hub-and-spoke routing options. Accordingly, a number of stakeholders OBG has spoken with would like to see flights to one or both of Bangkok and Hong Kong added, as these two cities handle a substantial share of inbound medium and long haul arrivals into the region.
In March 2014 Kuching hosted the annual Routes Asia conference. Regarded as the largest event of its kind, the conference, which focuses on the development of regional air services, attracted over 500 representatives from international airports, airlines and tourism bodies. The event was leveraged to showcase the state’s aviation credentials and ambitions in an effort to secure more international connections. Indeed, the MoT has revealed that organisers of charter flights into the state can benefit from a range of incentives including free parking at the airport. “Discussions are still ongoing and by 2016 and 2017 we anticipate new airlines serving the airport as ASEAN Open Skies takes effect. We are not at full capacity and have available slots,” Mohd Nadzim Hashim, the airport manager at Kuching International Airport, told OBG.
ACCOMMODATION: Based on figures from the licensing department at the federal Ministry of Tourism and Culture, there were 200 registered hotels in Sarawak as of the end of 2013 providing 12,171 available rooms. Five of the hotels were registered in the five-star category, 11 were four star, 27 three star, 19 two star and 15 one star, while 123 were categorised as Orchid, a grouping covering homestays and other accommodation types.
International management chains that have lent their names to locally owned properties include the Marriott, the Hilton, the Accor Group (via the Pullman brand) and Radius Hospitality, while serviced apartment brands including Citadines and the Ascott also have a presence. Over the past decade, the market has seen a lot of activity, with new hotels opening and a number of properties changing hands. For example, the Intercontinental Hotel Group had decided to pull out of three managed properties.
According to Ullok, the larger five-star hotels are more reliant on the corporate sector and conference traffic, while smaller properties, due to lower running costs, are better equipped to cope with occupancy fluctuations. Although there are concerted efforts by the STB and SCB to spread events throughout the year, seasonality is an issue. Naturally, rainforests are not formed or maintained without significant rainfall, and the state has a pronounced annual rainy season. According to one travel agent OBG spoke with, around 60% of his bookings take place during the three-month dry season that falls between June and August.
FESTIVALS APLENTY: Of the top annual events organised, the one that has arguably grown to become the most internationally recognised is the Rainforest World Music Festival, which features a wide array of performances. Now entering its 18th year, the weekend festival held at the Sarawak Cultural Village attracts over 20,000 attendees, of which 20% are said to hail from outside of the country.
Since 2006 Miri has been home to the Borneo Jazz Festival, an annual event that attracts around 9000 visitors, some 30% of whom come from abroad. According to the STB, the financial benefits of the festival for the local economy amounted to more than RM15m ($4.56m) in 2013. In keeping with this musical theme, in 2013 the first two-day Asia Music Festival was held in Miri, and attended by around 3000 people. It was then joined in the following year by the Country Music Fest, which attracted around 2000 visitors for its first staging.
Other flagship internationally oriented events hosted in the state include the ASEAN International Film Festival, which takes place every two years. Similarly, there is the Borneo Bird Race, in which birding enthusiasts from 11 countries traverse over 1000 km of rainforest connecting Sarawak, Sabah and Brunei in a race to spot as many of the 600 bird species to be found in the area as they can.
Gawai Dayak is the most prominent native Sarawakian festival, marking the end of the rice harvest on June 1, and continuing throughout the month. Many locals return to their family villages and longhouses for the festivities, where they feast and brew tuak (rice wine) and many wear traditional clothing.
June is thus a popular time for tourists to visit longhouses and witness the celebrations in full swing.
COASTAL POTENTIAL: The island of Borneo offers unparalleled biodiversity, and according to the Sarawak Forestry Corporation, 6% of the state’s birds, 20% of its snakes and 32% of its lizards are not found elsewhere in the world. Coastal biodiversity is also widespread, positioning the state as a potential diving destination. Neighbouring Sabah, which generates some RM260m ($79.09m) annually from diving activity, has already secured a leadership position in this market, as Sarawak is faced with the disadvantages that many of its more attractive dive spots are difficult to reach and weather patterns prevent smooth diving during some months of the year. In addition to marine ecology, Sarawak does also have a number of shipwrecks dating back to the Second World War on offer, and local dive schools feel confident that the state could emulate Sabah’s success to become an established diving hotspot.
CO-OPETITION: Another maritime-related tourism segment that Sabah has excelled in attracting is the cruise ship industry, as Kota Kinabalu’s deep seaport is equipped to handle large liners while Kuching’s main ports lacks the docking capacity. Ullok argues that while the two East Malaysian states share similar attractions, Sabah is ahead of the curve in exploiting its tourism assets. “We both have a UNESCO Heritage sites – Mount Kinabalu in Sabah and the Mulu Caves in Sarawak – and we both have orangutan sanctuaries and national parks. However, as of now Sabah’s parks are better run, while activities such as skydiving and seadiving tend to be better packaged and organised,” Ullok told OBG. “They have attracted more visitors and in turn attract more international airlines and big hotel names such as Le Meridien, Shangri-La and Hyatt.”
That said, Ullok believes that there is no reason to view Sabah as competition, and encourages the industry in both states to work with their counterparts in Brunei and Kalimantan to lure visitors already holidaying in South-east Asia onto the island. Indeed, while Borneo's name resonates among global travellers for its association with natural beauty and a hint of the exotic, most are largely unfamiliar with Sabah or Sarawak, two of the states making up the island. As a result, it benefits tourism marketing to promote Borneo as one single entity.
CULTURAL HERITAGE: Sarawak’s cultural tourism narrative focuses on the opportunities that tourists have to interact with the many indigenous ethnic groups and traditional tribal communities scattered throughout the state (see analysis). Yet it also contains places of interest for history enthusiasts, and various stakeholders are in the process of restoring relevant landmarks to commemorate the past. For example, the grandson of James Brooke, the first rajah of the Brooke dynasty that governed the Kingdom of Sarawak for over a century up until 1946, will be working with the state to construct a replica of the schooner his grandfather originally sailed on. Meanwhile, tour organisers are also creating “liberation route” packages for the families of Australian, New Zealand and British Second World War veterans interested in visiting some of the key battle sights where the Allied forces fought off Japanese occupation. “Fortunately for Kuching, and regretfully for Kota Kinabalu, the city did not suffer major bombing in the war and most heritage buildings remain intact,” said Ullok.
HEALTH & EDUCATION: Hard pressed to match Peninsular Malaysia, Thailand and Singapore, which have established themselves as the region’s top players in attracting global medical and health tourists, Sarawak does nonetheless boast four internationally accredited private hospitals and is well placed to receive Indonesians from the neighbouring provinces of East and West Kalimantan who are seeking better quality care close to home. According to the ministry, there were 19,266 foreign health tourists recorded in 2013, three-quarters of whom made use of Kuching’s Normah Medical Specialist Centre. With its high standard of education, affordable living costs, and a society that is multicultural and relatively safe, Malaysia is able to attract around 40,000 international students a year from over 100 countries. Sarawak’s tertiary educational institutions include two foreign branch campuses of Australian universities, Swinburne and Curtin, as well as the Universiti Malaysia Sarawak, which has been conferred status as Malaysia’s eighth university.
Aligned to this overall tourism proposition, Sarawak’s pristine setting and distinct social composition therefore appeals to international students who are keen to discover and understand a unique culture. As a result, it is considered a particularly compelling fit for those studying or conducting research in fields like biology and anthropology.
BRAIN DRAIN: Recruiting and retaining talent is a major challenge for all industries in the state, and is especially pertinent for the tourism sector as front-line Sarawakian staff are in high demand elsewhere. Many young people in the hospitality sector seek work in Peninsular Malaysia, as well as abroad, where their strong English-language skills can get them jobs with higher salaries and better prospects for career progression. As local industry grows, however, more opportunities for employment at home should reduce the temptation to pursue careers outside the state.
Even so, once the ASEAN Economic Community is successfully inaugurated by the end of 2015, labour mobility amongst ASEAN nations will be further liberalised. “As long as someone can earn two to three times more in, say, Singapore, it is difficult to prevent them from leaving. The only solution is to keep training up more people,” according to Ullok.
RISK PERCEPTION: Somewhat dampening the promotional buzz generated from Visit Malaysia Year in 2014 were two tragic unforeseen events. The disappearance of Malaysia Airlines Flight 370 in March 2014, followed by the shooting down of Malaysia Airlines Flight 17 over Ukrainian airspace in July of the same year, led many to change airlines or avoid flying into the country entirely. Concurrently, a spate of kidnappings and armed attacks that took place in resort areas of Sabah led some governments to issue warnings and advice against travelling to the region. “The kidnappings were highly localised, but the entire country’s safety unfortunately got painted with the same brush,” Ullok told OBG. Given that Malaysian Airlines Flight 370 had been flying to China, and that some of the Sabah kidnapping victims were Chinese nationals, China was the source market most affected by these incidents.
OUTLOOK: It appears that the tourism sector is on the upswing, as promotional efforts and the introduction of additional tourism products have translated into rising visitor numbers each year.
The MICE segment has in particular demonstrated that through the strategic leveraging of competitive advantages, as well as through joint government and industry investment and collaboration, Sarawak can emerge as a viable regional player in targeted segments. Indeed, the state has become one of ASEAN’s top players in this highly competitive arena. Its success in the segment has the potential to serve as a benchmark to be emulated when identifying future tourism segments to pursue (see analysis) Shortcomings in connectivity remain an obstacle to growth, as a lack of direct flight route and end-to-end state highway limit the ease with which people can reach and move around the state. That said, unrestrained growth has never been the government’s ambition, as turning into a mass-market destination would risk eroding the very natural and cultural attractions that have made Sarawak an appealing destination for visitors in the first place.
Tourism has thus been identified as a vehicle to be prioritised for the contribution it can make towards a more inclusive model of economic growth. State authorities are making a concerted effort to disperse visitors to more remote parts of Sarawak as a means of promoting the development of some more isolated communities. At the same time, they are working to ensure that sector development takes place in a sustainable and responsible manner.
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