The government’s Malaysia Tourism Transformation Plan aims for 36 million tourist arrivals by 2020, Michael Taylor writes.

The Malaysian tourism industry showed signs of recovery in 2016 following a downturn in 2015, the Malaysia Tourism Promotion Board reports, with tourist arrivals up 4 per cent for the year. The country received 26.8 million tourists in 2016 compared to 25.7 million tourists the year before.

In terms of tourism receipts, the news was even better, with a healthy rise of 18.8 per cent. Tourists stayed an average of 5.9 nights in the country, up 0.4 per cent over 2015.

Southeast Asian countries accounted for 75.8 per cent of tourism arrivals. Medium haul markets accounted for 18.5 per cent of visitors, long haul markets, 5.8 per cent.

Singapore led the pack, with 13.3 million visitors, followed by Indonesia (3.1 million), China (2.1), Thailand (1.8 million), Brunei (1.4 million), India (0.64 million), South Korea (0.44 million), the Philippines (0.42 million), Japan (0.41 million), and the United Kingdom (0.40 million).

Thailand accounted for the largest regional increase, registering 32.5 per cent growth, followed by Laos, up 27 per cent; Brunei, up 22.7 per cent; Indonesia, up 9.4 per cent; and Singapore, up 2.6. In terms of medium haul markets, China registered 26.7 per cent growth, Saudi Arabia 24.2 per cent growth, and Iraq 12.1% growth.

The increases were attributed to improved flights schedules and travel facilitation. Favourable foreign exchange rates also played a part.

Tourism Transformation Plan

The government’s Malaysia Tourism Transformation Plan aims to attract 36 million tourists to Malaysia and generate RM168 billion in revenue by the year 2020.  In line with this initiative, the Malaysian Investment Development Authority (MIDA) will continue to focus on promoting high-yield tourism in a bid to create jobs and drive economic growth. Industry insiders are generally supportive of the move.

The Amari Johor Bahru is the Thai-based Onyx International Group’s first hotel in Malaysia. It opened in May 2017. A five-star property, it is located just steps from the immigration checkpoint from Singapore, major shopping malls, the Johor Heritage Trail and the convention centre.

“I believe this is a realistic plan, and one which will benefit our growing presence in Johor state in particular,” says Wayne Lunt, General Manager, Amari Johor Bahru. “Having lived in Johor Bahru for over a year, I have seen this destination transform and its appeal enhance within a short time. There is extensive public and private sector investment and commitment towards making Johor Bahru and Johor state the destination of choice for both leisure travel, business travel and events.”

Tourism Tax Act

A controversial Tourism Tax Act was passed by the Malaysian Parliament in April. It goes into effect on 1 July 2017. As a result of the initiative, hotel guests will be charged a room tax of between RM2.50 and RM20 per night, depending on how many stars the hotel has. Could the plan backfire?

The Langkawi Tourism Association (LTA) predicts that the popular tourist destination will suffer a 20 per cent drop in domestic tourism hotel occupancy as a result of the new tax. “I strongly object to the implementation of the tourism tax now as it would not be suitable to promote the industry under the current economic situation,” says Zainudin Kadir, Chief Executive Officer, LTA.

According to the New Straits Times, a daily newspaper in Singapore, three other major hotel associations have also come out against the plan.

“It is unfair for the hotel industry to collect this tax as tourists only spend 25 per cent of the expenses on accommodation and the rest goes to shopping, transportation and food,” says Cheah Swee Hee, President, Malaysian Associations of Hotels.

Malaysia Budget Hotel Associations President P.K Leung concurs. “If hotels were to collect the tax, it must then be placed in a special fund which should be used to promote hotels only,” Leung says.

Malaysian Association of Hotel Owners Executive Director Shaharuddin M Saaid suggested that instead of putting a tax on hotel rooms, a one-time entry or exit tax of RM20 should be collected at airports and borders, which is what is done in Japan, he says.

But not everyone thinks the bill is a bad idea. Kanchana Ganglani is Marketing Communications Manager of the Avani Sepang Goldcoast Resort, which stretches out almost a kilometer into the sheltered waters of the Straits of Malacca. With 315 over-the-water villas and seven food and beverage outlets, the luxurious hotel is just a 45-minute drive from Kuala Lumpur International Airport and a 90 minutes’ drive from the nation’s capital. He is upbeat about the tax.

“The Tourism Tax Bill should be viewed positively as in the long-run this would help to improve the infrastructure of the tourism industry,” Ganglani says “Although for five-star resorts, the RM20 per night might seem high, but looking forward, this would benefit the growing number of tourists.”