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The impacts of tourism sector on the Malaysian economy

Tourism is becoming the second important sector in Malaysia. Consequently, government of Malaysia have been putting in effort to promote the country’s tourism to others country in order to improve the number of tourist arrive in Malaysia throughout the year. Malaysia has quite a number of tourist sports and ministry of tourism Malaysia YB. Dato’ SriDr. Ng Yen Yen has implemented four new Malaysia tourism project. In the sport tourism, government has put our campaign to promote Malaysia as the organizer of various international sport competitions like Sepang F1 Circuit. Agro-tourism is to promote the rich agricultural resources in Malaysia and have developed the Agriculture and Agro-Based Industry Ministry. On the other hand, Malaysia aims to be known as a center for educational excellence so implement the educational tourism which promote higher education for foreign university. Lastly, health tourism which promotes modern therapeutic equipment with low medical fees and professional doctors. Traditional treatments are also available for those who seek for alternative medical healing. These projects have successfully attracted the attention from other countries and lead to an increase if the number if the total number of tourism arrived in Malaysia. Hence, the development allocation for this industry has been increasing over the years. It has been increased from RM605.5 million in the 7th Malaysian plan to RM1009.0 million in the 8th Malaysian plan period, experiences 60% increase in its allocation (EPU, 2001). In the 9th Malaysian plan period, the allocation reached to RM1367.0 million (EPU, 2006). The latest 10th Malaysia plan are still highlighting this industry where Prime Minister Datuk Seri Najib Razak mention that one of the initiatives to improve the quality of living in urban areas, the Lake Garden in Kuala Lumpur will be turned into a botanical garden while a Malaysia Truly Asia Tourism Centre will be created. The graph below shows the growth in tourist arrivals and receipts from the year of 2001 to 2008. The total of tourism arrivals during the years have been grown up at the average if 9% each year. At the year of 2003 the totals of tourism arrivals drop down to 10.5million because of the SARS and IRAQ war. Moreover the total receipts are increase year to year except at the year of 2003. The average of receipts increased at about 12.91% every year. The increase in the tourist arrivals and receipts will lead to an increase in the balance of payment of the year.

The bar chart below shows the total tourist visit Malaysia at the year of 2008 and 2009 from January until December. At the month of January of 2008, 1,780,134 tourist visit Malaysia and 2009 there are 1,871,099 tourist visit Malaysia. However at the month of February and May tourist visit Malaysia during 2008 is more than 2009 at about 129,159 tourists at the month of February and 5089 at the month of May. At the month of September tourist who visits Malaysia is about 1,997,535 compare to 2008, 1,599,418 tourists. This shows the highest different throughout the whole year compare with other month, the different is about 398,117 tourists. The figure below shows that the tourist arrives at the year of 2009 is mostly more then 2008. The average different between 2009 and 2008 is about 132808.5833 tourist per month. This is a very good view for the tourist sector in Malaysia. The increase of tourist in Malaysia is because Malaysia government is setting more and more tourism promotion agency at the targeting country such at Saudi Arabia, United Arab Emirates (UAE), Iran, China and Hong Kong to promote our country.

Figure below shows the market composition of the tourist arrival in Malaysia during 2008 and 2009 at the month of January unit December. The table clearly shows that ASEAN country represent 75.4% and 77.8% of all the tourist arrive during the year. However it shows a decline in the ASIA excl. ASEAN, AMERICA AND AFRICA at the year of 2009 which is only 12.5%, 1.5% AND 0.4% compare to 13.2%, 1.6% and 0.7% at the year of 2008. Other then that, OCEANIA, EUROPE each represents 2.2% and 4.6% at the year of 2008 and 2.5% and 4.9% at the year of 2009.

Table below shows the top ten markets at the year of 2008 and 2009. Singapore is always the main contributors of the total tourist in Malaysia which increase from 11,003,492 to 12,733,082 and the percentage of changes between 2008 to 2009 is about 15.7%. Indonesia shows a decline in the total number of tourist arrived in Malaysia however it is still the top 2 country which contribute a large part of the total tourist arrived in Malaysia. Thailand and Brunei also shows a decline in the number of total tourist arrived and still top 3 and top 4 country who visit Malaysia at the year of 2008 and 2009. The top 4 market are our neighbor country which contribute a large part of our total tourist arrived at the year of 2008 and 2009 due to the convenient transportation provide by Malaysia and their home country, resident of the neighbor can visits Malaysia by car, train, airplane and ships. The top 5 country is chine continue with India, Japan, Australia Philippines and United Kingdom. Those countries show an increase in the total of tourist from their country except for Japan. “The China and Hong Kong market is one of our key markets, especially during the Lunar New Year. Over one million Chinese tourists travelled to Malaysia last year, signifying a 7.3% increase year-on-year, which placed China as one of the top five tourist generating markets for Malaysia in 2009. We look forward to once again welcoming guests from China and Hong Kong and helping them experience all the diversities that Malaysia has to offer,” said Madam Zaliha Zainuddin, Director of Malaysia Tourism Promotion Board (Hong Kong Office). This statement shows that china and Hong Kong have becoming more and more important at the total of contribution of the tourist arrived in Malaysia.

Table below shows the growth of tourist arrivals and the growth of tourist expenditure at the year of 2008 and 2009. The tourist arrivals have grown at the rate of 6.73% from the year of 2008 to 2009. The total expenditure at the year of 2008 is RM49, 561.20million and growth about RM3, 7647.9milions at the year of 2009. The expenditure per capita of 2008 is about RM2, 247.40 and decrease to RM2, 166.4 at the year of 2009.the expenditure per diem at the year of 2008 is RM351.20 and increase to RM367.2 and the average length of stay is about 6.4 nights at the year of 2008 and drop until 5.9 nights at the year of 2009. Overall the data shows that the growth of the tourist arrivals is increasing from 2008 to 2009. Malaysia government has been putting a lot of effort to promote tourism in Malaysia. Medical tourism in Malaysia is exponentially growing. The total of tourist arrived in Malaysia for medical tourism grows from 75,210 at the year of 2001 to 296,678 at the year of 2006. At the year of 2007 had reach 341,288 and the revenue of the medical tourism is about RM152 million at the year of 2005, RM195 million at the year of 2006 and RM254 million at the year of 2007. The growth is expected at the rate of about 30% at the year of 2010, projected by Association of Private Hospital of Malaysia APHM.

Problem Statement

Every year, United Nation World Tourism Organization (OUWTO) will compile the world tourism rankings. At the year of 2009 international tourism arrived in Malaysia had increase to 23.6 million and rank in the top ten country throughout the world which is 9th and followed by Mexico. From these data shows that the effort done by the government is very effective in attracting tourist from other country.

The tourism sector is said to be the fastest growing economic sector in the world. Tourism sector is getting important to the economic growth in Malaysia. It affects the GDP of Malaysia more and more throughout the year. This is because the growth in tourism sector not only rising the amount of it contribution on the GDP but also affect the unemployment, foreign exchange earnings, balance of payment and the other overall economic growth.

Although Malaysia had improve in the ranking of the international tourism in 2009 but the real GDP at the year of 2009 had decline to 4.60% compare to 6.30% at the year of 2008. The number of tourism at the year of 2008 is 22 million and 23.6 million at the year of 2009. Is the positive relationship exit between the tourism sector and the economic growth? Due to Malaysian Ringgit strengthening against US dollar, will it affect Malaysia tourism industry?

The pie above shows the percentage of the gross operating surplus and gross mixed income by sectors, Malaysia. From the data above, it shows that the services sector at the year of 1991 is about 48% and at the year of 2005 the percentage of the services sector have been grown up to 53%. The services sector is the largest component among the economic sectors. How is the growth of service sector effect the total GDP of Malaysia and what is the economic effect of tourism in Malaysia economy as it may causes direct and indirect effect to the economy.


The objective of this study is to determine the contribution of tourism towards the economy and determine the impacts of tourism sector on Malaysia sector.

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