Concurrent Session: Policy and Planning of Tourism Product Development in Asian Countries

POLICY AND PLANNING OF THE TOURISM INDUSTRY IN

MALAYSIA
___________________________________________________________
Amran Hamzah
Course Coordinator, Tourism Planning Programme
Department of Urban and Regional Planning, Faculty of Built Environment
Universiti Teknologi Malaysia, Skudai, Johor
MALAYSIA

ABSTRACT

Tourism is currently the second highest contributor to Malaysia’s Gross Domestic Product
(GDP) after manufacturing. Despite its relatively late entrant as a ‘big time’ tourism player,
the tourism industry in Malaysia has grown by leaps and bounds since the early 1990’s. This
paper will, firstly, trace the development of the tourism industry in Malaysia viz-a-viz its
performance, institutional framework and policy planning initiatives. Secondly, it will discuss
Malaysia’s efforts, successes and failures in promoting regional cooperation in tourism.
Thirdly, the role of budget airlines, development of thematic/transborder heritage trails and
growth in youth tourism will be evaluated in the light of multi-destination visitation. Fourthly,
a SWOT Analysis will be used to discus the potential of improving regional cooperation in
tourism as an economic venture as well as a tool for Asian cohesion. Finally, a list of action
plans will be recommended to provide a systematic mechanism for enhancing regional
cooperation in the region.

INTRODUCTION

Malaysia is a relatively new entrant into tourism in relation to its ASEAN neighbours.
Serious efforts in developing and promoting tourism began only with the
establishment of the Tourist Development Corporation Malaysia (TDCM) in 1972 and
it took another 15 years before a specific ministry, the Ministry of Arts, Culture and
Tourism (MOCAT) was set up in 1987. In April 2004, MOCAT was split to facilitate
the establishment of a separate ministry responsible solely for matters related to
tourism i.e. the Ministry of Tourism (MOT). This latest development reflects the
government’s seriousness in promoting tourism as the second major income earner for
the country after manufacturing.

Prior to the Visit Malaysia Year (VMY) campaign in 1990, Malaysia was frequently
marketed as only an element of a wider ‘tourist circuit’, including the neighbouring
countries of Thailand, Singapore and Indonesia (King, 1993:107). At that time,
Malaysia’s share of the Far Eastern Asia-Pacific tourism market was only in the
region of 10% to 13%. Although the market share increased to 17.6% during the
campaign year of 1990, it fell again to around 13% in 1991 (MOCAT, undated). In
those days, many tourists spent only a part of their holiday in Malaysia, which was the
main reason why Malaysia did not appear in the list of top tourism earners.
Malaysia’s late entry presented it with the problem of selecting a distinct tourism
product/image for the country, the way the Singapore Girl is synonymous with
Singapore, or Thailand is the Land of Smiles or Bali is all culture. The following
extract from a PATA (1991 quoted in MOCAT, 1992: 1) editorial summarised
Malaysia’s obscure tourist image at that time:
‘Malaysia’s greatest strength is its tourism product diversity…but like a double
edged sword, Malaysia’s product diversity has proven to be a marketing stumbling

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Concurrent Session: Policy and Planning of Tourism Product Development in Asian Countries

block. As it has a little of everything, Malaysia has failed to cut a distinct image in
the international tourism arena’.

Over the years, the tourist image that Malaysia portrayed had changed from ‘Beautiful
Malaysia’ to ‘Only Malaysia’, followed by ‘Fascinating Malaysia’ and currently
‘Malaysia, Truly Asia’. Consequently, tourism promotion materials ranging from
billboards to brochures and CNN advertisements often portray a bevy of local
beauties representing the Malays, Chinese, Indians and other ethnic groups – all
exotically dressed in their traditional costume. In essence, Malaysia is currently
‘selling’ its multiculturalism and cultural diversity representing all the major
civilisations in Asia as its tourism image (Malays, Chinese, and Indians), projected by
the promotion tag line, ‘Malaysia, Truly Asia’.

TOURIST ARRIVALS TO MALAYSIA

In 2002, the bulk of tourist arrivals to Malaysia was from the Southeast Asia region
(73%), in which tourists from Singapore formed the largest group (57%), followed by
Thailand (9%). Between 2001 to 2002, tourists from Singapore and Thailand grew by
8.6 % and 15.4% respectively but the biggest increase was recorded by arrivals from
the emerging tourist markets of India and China, which grew by 27.8% and 23%
respectively (Table 1). Another significant tourist market is from the Middle East,
which grew by 14.8%. The big increase in tourist arrivals from China and India is due
to the aggressive promotional blitz carried out by the government while the increase
in arrivals from West Asia is a direct consequence of September 11 and the invasion
of Iraq, which diverted Middle Eastern tourists to the safe Muslim country of
Malaysia.

Table 1: Tourist Arrivals To Malaysia, 2001 - 2002

JANUARY-DECEMBER (%) CHANGE JAN-
COUNTRY OF
2001 2002 DEC 2002/JAN-DEC
RESIDENCE
2001
Singapore 6,951,594 7,547,761 8.6
Thailand 1,018,797 1,166,937 15.4
Indonesia 777,449 769,128 -1.1
Brunei 309,529 256,952 -17.0
China 453,246 557,647 23.0
Japan 397,639 354,563 -10.8
Taiwan 249,811 209,706 -16.1
Hong Kong 144,611 116,409 -19.5
South Korea 66,343 64,301 -3.1
India 143,513 183,360 27.8
West Asia 114,776 131,779 14.8
Canada 38,935 34,996 -10.1
U.S.A 145,827 127,920 -12.3
Australia 222,340 193,794 -12.8
United Kingdom 262,423 239,294 -8.8
Denmark 19,770 17,297 -12.5
Finland 15,284 12,908 -15.5
Norway 12,530 11,589 -7.5
Sweden 35,053 29,044 -17.1
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Germany 70,401 54,645 -22.4

Russia 4,276 5,067 18.5
Italy 20,636 16,805 -18.6
France 32,922 27,434 -16.7
South Africa 20,766 13,720 -33.9
Others 1,246,602 1,148,954 -7.8
GRAND TOTAL 12,775,073 13,292,010 4.0
Source: Tourism Malaysia, 2003

In contrast, tourist arrivals from Australasia, Europe and the USA experienced a
decrease, mainly influenced by the invasion of Iraq and the SARS outbreak. Despite
the significant drop in tourist arrivals. the traditional markets such as the United
Kingdom (239, 294 tourists in 2002) and Australia (193, 794 tourists) are still bigger
than the emerging markets of India, China and the Middle East respectively. In the
near future, the number of tourist arrivals form the United Kingdom is expected to
rise again given the recent establishment of direct flights from Heathrow Airport in
London to Langkawi Island.

Tourist Receipts

Prior to the success of the Visit Malaysia Year (VMY) campaign in 1990, the revenue
from tourism was in the range of RM 1000 m. to RM 2000 m. from 1981 to 1988
(Table 2). In 1989, the tourist receipts rose by 39% to RM 2803 m. and by 61%
during VMY 1990 (RM 4500 m), when tourism became big time in Malaysia. By
1994, revenue from tourism again increased significantly (RM 8298 m.), boosted by
Visit Malaysia Year II campaign. By this time, tourism had became the second major
contributor to the nation’s Gross Domestic Product (GDP). More importantly,
Malaysia had caught up with Singapore, Thailand and Indonesia in terms of tourism
arrivals and tourist receipts, making it a tourism destination in its own right rather
than an element in the wider ‘tourist circuit’ mentioned earlier (King, 1993).

Table 2: Malaysia Tourist Receipts (1989 – 2002)

YEAR REVENUE (RM million) GROWTH (%)
1989 2, 803 39.3
1990 4, 500 60.5
1991 4, 283 -4.8
1992 4, 595 7.3
1993 5, 066 10.2
1994 8, 298 63.8
1995 9, 174 10.5
1996 10, 354 12.9
1997 9, 699 -6.3
1998 8, 580 11.5
1999 12, 321 43.5
2000 17, 335 40.7
2001 24, 221 39.7
2002 25, 781 6.4
Source: Tourism Malaysia, 2003

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In 1996, the tourist receipts breached RM 1 b. for the first time (RM 1.4) and RM 2 b
in 2001 (RM 2.4 b.). In 2002, the country earned RM 2.6 b. from tourism despite the
real and perceived threat from militants associated with the Jakarta bombing.

TOURISM ORGANISATION

The tourism planning organisation in Malaysia is complex and influenced by the

three-tier form of government i.e. Federal government, State governments and Local
Authorities:

The National Tourism Organisation

Essentially, tourism is a Federal affair and the overall policy planning is carried out by
the Ministry of Culture, Arts and Tourism (MOCAT) (Ministry of Tourism as from
April 2004). Meanwhile, the Malaysia Tourism Promotion Board (MTPB or Tourism
Malaysia) is responsible for the marketing and promotional aspects of tourism. In
addition to the MOCAT/MOT and Tourism Malaysia, Federal government agencies
related to rural development are also involved directly in tourism development. These
agencies are as follows:
• Department of Agriculture (agrotourism)
• Department of Forestry (ecotourism)
• Department of Fisheries (coastal tourism)
• Department of Wildlife and National Parks (ecotourism)
• Department of Aborigines’ Affairs (ethnic tourism)
• Department of Museums and Antiquities (heritage/cultural tourism).

In the light of the above situation, it is not surprising to note that overlapping
jurisdiction does occur between these Federal government agencies. For instance,
jurisdiction over agro tourism/homestay programme is problematic given the active
involvement of both MOCAT/MOT and the Department of Agriculture. Similarly,
both MOCAT/MOT and the Ministry of Education (together with PAMPENA, a
subsidiary company of MOCAT/MOT) are responsible for the Program Pelancongan
Pelajar (PPP) (Students Tourism Programme). As such, it can be surmised without
cynicism that MOCAT/MOT’s real task is not merely to provide the overall
framework and direction for tourism product development but to integrate the
fragmented programmes formulated by the related agencies.

As tourism is a Federal responsibility, almost all revenues from tourism such as the 10
% sales tax and 5 % service tax are collected by the Federal government for
redistribution to the 13 states in Malaysia. Due its limited budget, Tourism Malaysia
markets and promotes only 13 major tourism destinations in Malaysia during their
participation in travel marts abroad. This has caused resentment amongst the State
governments who would like the various tourism attractions/products within their
states to be equally promoted. As a consequence, several State governments, notably
Melaka and Penang, have taken the proactive step of carrying out their own
promotion to the extent of participating directly in travel marts and printing as well as
distributing their own promotional materials. Melaka, for instance, is currently using
the promotional tag line, Visit Melaka Means Visiting Malaysia, which is frowned
upon by both MOCAT/MOT and Tourism Malaysia (pers.comm. Tourism Malaysia
Director of Planning and Research, 2004).

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State Tourism Organisation

In Malaysia, land is a State matter and the State Economic Planning Unit (SEPU) is
entrusted to formulate strategies and policies related to tourism development within
each state. As tourism in Malaysia is private-sector led, both the Federal and State
governments are only required to provide the infrastructure to facilitate private
investments. By way of practice, however, the provision of tourism infrastructure
include not only the ‘hard’ infrastructure such as roads, airports and jetties, etc. but
also the ‘soft’ infrastructure in the form of the organisation of special events.

Special events such as the Malaysia Mega Sale Carnival, Citra Warna Carnival,
Malaysia Open House, etc. are huge events that attract up to 100, 000 tourists, which
are held with the intention of filling up hotel rooms, boosting consumer demand and
establishing Malaysia as a destination of never ending festivities and merriment
(Tourism Malaysia promotional brochures). However, although the calendar of events
are well planned beforehand, the integration of events into the overall planning and
product development framework is lacking. As competition between the various states
increases, the lack of coordination in implementing promotional blitzes sometimes
experienced clashes in timing. For instance, last year saw the simultaneous launching
of the Visit Sarawak Year, Visit Johor Year and Visit Perlis Year. The aggressive but
fragmented promotional blitzes carried by the various State governments fail to take
into account the fact that the majority of tourists to Malaysia only stay at 2 different
locations during their visit (Oppermann, 1992).

In response to the State governments’ request for more representation on tourism

matters, the Federal government set up the State Tourism Action Council (STAC) in
2002 for each and every state in Peninsular Malaysia. Established under MOCAT, the
STACs are supposed to form a link between the Federal government and the various
State governments on tourism related matters. With a small operating budget, the
STACs are empowered to carry out product development and organising events but
their efforts, so far, have been focussed mainly on the latter.

Local Tourism Organisation

At the local level, the local authorities are now required to not only ‘Think Tourism’
but also to ‘Act Tourism’ (KPKT, 2003). However, MOCAT/MOT’s call for local
authorities to be more proactive in the planning, management and promotion of
tourism has not been well received by the local authorities, citing the lack of funding
and qualified personnel as the major constraints. Moreover, local authorities do not
regard tourism as their core business since their establishment under the Ministry of
Housing and Local Government is for the purpose of providing and maintaining
public facilities such as recreational areas, landscaping and garbage disposal. Another
main reason for their reluctance to be actively involved in tourism is the lack of
mechanism for direct revenue capture given that almost all income from tourism are
channelled back to the Federal government coffers.

At the local authority level, the bulk of the tourism-related projects carried out are in
the form of street improvement and beautification programmes. Modelled on the
successful Bintang Walk project in Kuala Lumpur, several local authorities have
embarked on their own programmes to create a vibrant focal point cum tourist

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attraction within their cities/town (e.g. Hang Tuah Mall in Melaka, Star Walk in Alor
Star, Batu Pahat Walk in Batu Pahat, Meldrum Walk in Johor, etc.). However, these
projects have not been able to emulate the success of Bintang Walk due to the lack of
critical mass.

TOURISM POLICY PLANNING

The following section will trace the development of policies related to tourism policy
planning in Malaysia. Subsequently, it will discuss the implications of Malaysia’s
tourism strategies and policies on cross-border tourism and regional cooperation.

i. Five Year Economic Plans

The planning policies covering tourism development in relation to the other

economic sectors are contained in the country’s Five Year Economic Plans.
Tourism only came into prominence in the Sixth Malaysia Plan (1991 – 1995)
which recognised the country’s ‘image/identity problem’ and subsequently
recommended that ‘the tourism industry will place increasing emphasis on
developing a more distinct Malaysian image and identity (GOM, 1991:
240).The ‘distinct Malaysian image and identity’ recommended was identified
as the ‘Malaysian way of life’, which was later cemented in the Seventh
Malaysia Plan (1996 – 2000), in which rural tourism and community-based
tourism and nature-based tourism were identified as new tourism products.
The Seventh Malaysia Plan (GOM, 1996: 520) also recommended that ‘nature-
based tourism which includes eco- and agro-based tourism that projects the
country’s tropical climate and terrain will also be developed and
promoted…these will include areas encompassing hot springs, waterfall, lakes,
rivers, forest reserves, agricultural parks and fishing villages as well as oil
palm and rubber estates’.

The Eight Malaysia Plan (2001 – 2005) reflects Malaysia’s growing maturity
and confidence as a top draw tourism destination (GOM, 2001). Significantly,
the Malaysian government is no longer contented to play second fiddle to
Singapore and Thailand within the ‘tourist circuit’ . This is reflected by the
Eight Malaysia Plan’s strategy of expanding ‘international access in new
strategic tourist markets as well as to promote the Kuala Lumpur International
Airport (KLIA) as a regional hub (GOM, 2001: 452). In addition, the Eight
Malaysia Plan proposed the development of cruise tourism, yachting and
leisure boat activities to ‘tap the expected growth of Asia as a vacation and
cruise destination (GOM, 2001: 449). The Plan further recommends the
enhancement of economic linkages by developing fly-cruise packages for
medium – and long-haul markets. Central to this strategy is the completion of
the ASEAN Cruise Working Group study which is supposed to outline the
strategies to develop cruise tourism and the development of a joint-marketing
plan for ASEAN.

ii. National Tourism Policy (1992)

In 1992 the Federal government prepared the National Tourism Policy Study
(NTPS) which recommended broad policies for the planning, development and

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marketing of tourism. This study is currently being reviewed given that its
contents are mostly dated. Nonetheless, the policy objectives in the NTPS are
still being used as guiding principles and they can be summarised as follows:
• generate foreign policies;
• encourage equitable economic and social development;
• promote rural enterprises;
• generate employment;
• accelerate urban/rural integration and cultural exchange;
• encourage participation in the tourism sector by all ethnic communities;
• create an improved image of Malaysia internationally; and
• forge national unity.

The significant departure from the traditional sea, sand and sun market
segment is evident in the NTPS which recommends new areas for product
development namely:
• fly drive holidays;
• riverine tourism;
• ecotourism;
• agrotourism;
• cultural and heritage based tourism;
• MICE; and
• special interest tourism.

Essentially, tourism product development in Malaysia over the past 10 years

had focused on the exploitation of its diverse nature and culture based
attractions. The nature/culture theme is taken up by most state governments,
for instance, Sarawak uses Culture, Adventure and Nature (CAN) as its
promotional tag line. Melaka and Penang, on the other hand are heavily
promoting their cultural heritage notably the distinct cultural potpourri that is
a legacy of a cosmopolitan past. The only major addition to the policies
recommended in the NTPS is the promotion of Malaysia as a shopping
destination exemplified by the heavy investment in promoting Malaysia as a
shopping haven, mainly through the thrice yearly Mega Sale Carnivals.

iii. National Ecotourism Plan (1996)

The National Ecotourism Plan was prepared in 1996 by a leading

environmental NGO, Worldwide Fund for Nature Malaysia (WWF Malaysia)
for MOCAT. It contains strategies and guidelines for the development and
management of ecotourism in Malaysia, based on the principles of
sustainability. Due to its comprehensiveness and very specific guidelines,
notably Section 3, the National Ecotourism Plan can be considered more of a
blueprint rather than a strategic policy document.

The National Ecotourism Plan is divided into 5 sections, namely:

• Section 1 - issues, strategies and actions plans
• Section 2 - site listing
• Section 3 - development guidelines
• Section 4 - status of ecotourism

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• Section 5 - Malaysia’s position in Asia Pacific Region

A brief summary of the three most important sections of the National

Ecotourism Plan is given below:

Section 1 Issues, Strategies and Action Plans

Section 1 recommends 21 action plans covering aspects such as planning,

management and capacity building to make Malaysia an international
ecotourism destination. The aims of the action plans are:
• to protect and manage protected areas;
• to integrate agency support and self financing of
ecotourism projects;
• to involve local community participation;
• to encourage pilot projects as models for best practices; and
• to focus on the joint marketing.

Section 2 Site Listing

Section 2 identifies 48 sites within the country of potential for ecotourism

development and another 4 general project recommendations, namely:
• establishment of Visitor Information Centre on the islands of Johor and
Terengganu;
• provision of institutional assistance to strengthen the growth of
ecotourism;
• improving the quality of interpretive and promotional materials on
ecotourism; and
• establishment of pilot ecotourism projects.

Section 3 Development Guidelines

The development guidelines recommended in Section 3 are produced as

manual-type booklets covering a wide range of aspects from site management
to solid waste disposal. The guidelines are produced under 4 headings, namely:
• General Guidelines According to Site Category
• Carrying Capacity
• Guidelines According to Ecological Systems
• Specific Guidelines

Officially, the National Ecotourism Plan has never been accepted/endorsed by

MOCAT but the lack of official recognition has not stopped the document
from being the source of guiding principles for the development and
management of ecotourism in this country for the past 8 years.

iv. Rural Tourism Master Plan (2001)

The Rural Tourism Master Plan (RTMP) was prepared for MOCAT, by a
consultant team from Ireland, on behalf of the United Nations Development
Programme (UNDP) and the World Tourism Organisation. The RTMP Study

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proposes a challenging target of increasing visitor spending in rural areas from

the current RM 350 m. to RM 1 b. over a five year period. This is to be
achieved by removing ‘obstacles’ such as poor product quality, proliferation of
litter, poor service quality, and by building on the two main strengths of
Malaysia, namely its beautiful countryside and friendly people (RTMP, 2001:
I). The Strategic Vision for Rural Tourism, according to the RTMP document
is to create a ‘new brand of tourist experience for visitors, particularly long
stay/high spend visitors:
• featuring the attractive scenery of lush tropical landscape;
• presenting activities and amenities to participate in, and enjoy
in safety;
• providing new and improved ranges of accommodation; and
• offering a smiling and friendly customer care approach (rtmp, 2001:ii).

Rural tourism is defined in the RTMP Study as:

‘tourism that provides opportunities to visitors to visit rural areas and
rural attractions, and to experience the culture and heritage of
Malaysia, thereby providing socio-economic benefits for local
communities…the proximity of many of these rural areas to the
hinterland of jungle and rainforest also offers visitors an opportunity
to extend their holiday and enjoy those unique natural resources’
(RTMP, 2001: 22).

The above definition of rural tourism shows the distinction between rural
tourism from eco/nature-based tourism in Malaysia and suggests that
eco/nature-based tourism should be the progressive extension of the visitors
travel itinerary. Inherently, however, it also reflects the difficulty in
segmenting the various components of the tourism product in Malaysia as
there is a big overlap between rural tourism, ecotourism and even
coastal/island tourism given that most coastal areas and islands are rural in
nature and outlook. Consequently, the RTMP includes islands such as Pulau
Perhentian as a potential rural tourism sites notwithstanding the fact that the
island is being aggressively promoted by the Terengganu State government
for island tourism.

The main approach recommended by RTMP to transform rural tourism in

Malaysia is ‘Starting Small to Grow Big’ (RTMP, 2001: III), which can be
interpreted as an incremental approach based on a number of selected
destinations at one time. A list of Priority Districts (one in each state) are also
suggested and the Kuala Pilah District is selected as a Pilot Model Area.
Besides the recommended improvement in rural tourism infrastructure, RTMP
also proposed HRD programmes and capacity building. All in all, Rural
Tourism Product Development is expected to cost RM 75 m. over a 5-year
period while Human Resource Development will cost RM 5 m. However, the
implementation has been delayed due to financial constraints.

v. Second National Tourism Policy (2003 – 2010)

Currently, the Second National Tourism Policy (SNTP) is in the final stage of
completion. As it would not be appropriate to reveal the content of a study

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which has not be officially accepted by MOCAT/MOT, it would be suffice to

say that the main output of the study to provide the mechanism for
transforming the Malaysia’s ‘low yield tourism’ to that of ‘high yield’. In
addition, intra-region cooperation is seen as a major course of action in
increasing tourism receipts.

vi. Implications

It can be seen from the above discussion that the policy planning of tourism
development in Malaysia is comprehensive and top-down in nature. As
tourism is a Federal matter, MOCAT/MOT has provided the overall
framework and direction for tourism product development since 1992,
coinciding with the advent of ‘big time tourism’ in Malaysia.

From then onwards, the major Unique Selling Proposition (USPs) identified in
the (First) National Tourism Policy were built upon, namely nature and
culture. The National Ecotourism Plan (1996), for instance, provided a
blueprint for the development of nature-based tourism based on the principles
of sustainability, with a strong emphasis on local participation. The strategies
and policies contained in the Rural Tourism Master Plan (2001) call for the
commoditisation of rural resources notably the rural ambience and warm rural
hosts. Finally, the Second National Tourism Policy (2003 – 2010) currently
being prepared is emphasising on Malaysia’s unique multi-culturalism as its
major selling point.

Inherent in all the above documents are two specific themes. The first is the
focus on transforming Malaysia’s ‘low yield’ to ‘high yield’ tourism. Second
is the stress on regional cooperation/ cross-border tourism/multi-destination
visitation as a catalyst for achieving the former. Given that tourism is an
industry, it is easy to understand the profit-motivated basis for supporting
regional tourism cooperation. Even so, the mechanisms suggested are more in
the form of the establishment of joint committees but lacking in tangible
measures in stimulating regional cooperation between the industry players
who are operating in a very competitive environment. Furthermore, it should
be pointed out that the other social benefits of cross-border tourism, such as
cultural exchange and social integration are rarely mentioned in these policy
documents. The following section will dwell on these issues in greater detail.

INTER REGIONAL COOPERATION IN TOURISM

Inter regional cooperation in tourism within the region exists in the form of economic
development growth triangles namely the Indonesia – Malaysia – Thailand (IMT –
GT), Singapore – Johore – Riau Growth Triangle (SIJORI) and the Brunei –
Indonesia – Malaysia – Philippines East Asian Growth Triangle (BIMP – EAGA)
(Grundy-Warr and Perry, 2001). These growth triangles are government-led initiatives
that involve the cooperation of the private sector to stimulate economic growth
between neighbouring countries. Conceptually, these growth triangles could be
interpreted as a shift towards a borderless world but in terms of actual
implementation, only the SIJORI growth triangle is making significant headway,

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mainly due to the heavy investments by Singapore – based firms in tourism projects
on the Indonesian islands of Bintan and Batam. Even so, the recent tourism
development on Bintan/Batam are catering for a largely Singaporean market, as a
‘playground’ for the islanders.

The prospects for regional cooperation took a back seat ever since events such as
September 11 and the SARS epidemic. To maintain its shrinking market then, the
Malaysian tourism industry had been forced to be more inward looking by focussing
its attention on the promotion of domestic tourism to cushion the impact of September
11 and SARS. Lately, however, the government and industry are reverting their focus
on niche European markets such as ‘soft ecotourists’ from Europe, ‘medical tourists’
and the emerging markets such as China, the Middle East and India.

Regionally, Malaysia is still lagging in terms of becoming a major tourism hub at the
same level with Singapore and Bangkok. Nonetheless, it has managed to capture
specific niche markets due to a long term marketing strategy and recent world events.
Most importantly the partial liberalisation of the airways within Asia and the rapid
growth of budget airlines within the region will have a significant impact on cross-
country visitation. A brief discussion of these changes are as follows:

1. Growth In Tourist Arrivals From Mainland China

The growth in tourist arrivals from Mainland China (as well as Hong Kong and
Taiwan) can be attributed to the aggressive promotional efforts by the Federal
government and certain State governments such as Melaka. Between 2001 –
2002, for instance, there was a 23 % increase in tourist arrivals from China, a
growth rate surpassed only by arrivals from India (28 %) (Tourism Malaysia,
2003). It is also interesting to note that Melaka was the second most visited
destination by Chinese tourists (55 %) after the capital/national hub, Kuala
Lumpur (95 %). This phenomenon has been closely watched by the Sumatran
(Indonesia) tourism industry. In an informal discussion with the North Sumatra
Tourist Board (12 June 2003) the Indonesian counterpart voiced their intention
of forming a tour package with the tourism industry in Malaysia to encourage
tourists from mainland China to extend their visit to the Indonesian island given
that it is located only 40 minutes away by air. However, this kind of cooperation
is plagued by the real or perceived image of Indonesia as an unsafe place for
tourists.

2. Growth In Tourist Arrivals From The Middle East

Ever since the September 11 event, Malaysia has become an oasis for tourists
from the Middle East as it is able to provide a safe haven for Muslim tourists as
an alternative to their traditional escapade to London (and Western Europe)
during their hot and humid summer months. The West Asian market is a
lucrative and much sought-after market as they are reportedly high spenders.
Between 2001 – 2002, the tourist receipts from West Asia experienced the
largest increase (19 %) although the actual spending was still the lowest among
the major tourist markets to Malaysia (RM 448 m. in 2002) (Tourism Malaysia,
2003). This is due to the fact that the arrival of tourists from the Middle East is
only limited to the months between June to September i.e. during the height of

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summer when the physical condition in that part of the world is unbearable.
However, the prospect of neighbouring countries benefiting from this niche
market is limited, with the exception of Indonesia given that the availability of
Muslim food is an important prerequisite.

3. Expected Increase In Tourist Arrivals From India

The Indian tourist market has been a specific target market for some time now
with aggressive promotion by the Federal government over the past few years.
Between 2001 – 2002, tourist arrivals from India recorded the highest increase
(28 %), the only other country besides China that recorded a growth rate of
more than 20 %. Recently, the Indian government had announced the
liberalisation of its airways for ASEAN carriers. Subsequently, Malaysia’s
national carrier Malaysia Airlines has announced the increase in the number of
flights to destinations is India such as Chennai and Mumbai. Ultimately,
Malaysia is expected to be the first Asian country to be able to tap the large
tourist market in India.

4. Mushrooming Of Budget Airlines

A recent but significant phenomenon that is likely to have serious implications

on the tourism industry in the Asian region is the mushrooming of budget
airlines operating within the region. Spearheaded by the Malaysian-based Air
Asia, budget airlines are now operating or planning to start intra as well as inter
regional routes at prices around 40% to 50% cheaper than fares of national
carriers. In Malaysia, Air Asia is using both the Kuala Lumpur International
Airport (KLIA) and the Senai Airport in Johor Bahru as its operating hubs.
Recently, Air Asia had started to operate regional flights from KL and Johor
Bahru to Bangkok and Phuket, as part of a joint-venture with Thai
telecommunications giant Shin Corp. This will be followed by connections to
Chieng Mai, Hat Yai, Vietnam, the Philippines, China and India using KLIA,
Penang, Johor Bahru and Kota Kinabalu as the operating hubs (NST, 13
November 2003). Interestingly, Air Asia’s operation in Thailand became
profitable only after 2 months of operation (The Star, 17 April 2004).

Other budget airlines such as the Indonesian-based ValuAir and Lion Air have
also started operation between Malaysia and Indonesia as well as Singapore –
Indonesia. This was recently followed by Singapore Airlines’s statement to
launch a budget airline in collaboration with Tiger Airways (The Star, 15
December 2003). By and large, the budget airline phenomenon should not be
interpreted as the beginning of the end for national carriers within the region.
Instead, it should be viewed as an opportunity to plan, organise and manage
cross-region and multi-destination travel within the region within the capacity of
hubs and gateways created by the liberalisation in air travel. In the medium and
long term, the implementation of the existing growth triangles will be facilitated
and hasten.

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5. The Establishment Of Transborder National Parks/World Heritage Sites.

Although ecotourism is still a niche market, its growth rate in the Asia-Pacific
region is phenomenal, averaging between 10 – 25 % annually (Hall and Lew,
1998). Lately, there has been a clear shift towards the development of
transborder tourism, notably involving nature-based tourism. While this type of
transborder tourism is still in its infancy, its potential in encouraging multi-
destination visitation is enormous. Currently, the Malaysian/Perlis State
government is trying to improve the planning, management and promotion of
Perlis State Park and the Thaleban National Park in Southern Thailand as a
transborder tourist attraction.

This trend is also evident in the Federal government’s nomination of 2

transborder natural sites in Borneo for inscription into the World Heritage List
(Bentung Karimun in Indonesia and Lanjak Entimau as well as Batang Air in
Sarawak, Malaysia). As argued by Hall and Piggin (2003), World Heritage
Listing is a form of branding that will inevitably attract more tourists to the area
upon listing, especially if the sites are already tourism attractions in their own
right. The economic potential of the World Heritage Site branding makes it
attractive for budget airlines to operate routes to such destinations from
regional hubs such as Kuala Lumpur, Johor Bahru and Bangkok.

6. Development in Cruise Industry/Tourism

The growth in cruise tourism is essential to multi-destination visitation within

the region. The cruise industry is also enjoying a healthy growth within the
region and the Malaysian scene is monopolised by Star Cruises, the 3rd. biggest
cruise ship operation in the world. Currently, the cruise along the Straits of
Melaka is highly popular with stopovers in Singapore, Melaka, Pulau Langkawi
and Phuket Island. As the development of cruise tourism is recommended in the
Eight Malaysia Plan, the creation of innovative cruises would further boost the
popularity of this form of travel. Recently, the Melaka State government is
trying to develop themed heritage trails based on Melaka’s glory days as a
major trading port or the ‘Emporium of the East’. To commemorate 600 years
of Admiral Zheng Ho’s maiden to Melaka, the State government have
organising special events based on the historical link between Melaka and China
such as In terms of potential, an ‘Admiral Zheng Ho Cruise’ and similar
themed cruises could be developed, promoted and sold as a themed cruise to
complement the luxury cruises operated by Star Cruises. In doing so, multi-
destination visitation within the region could be facilitated not only by air but
also by sea.

7. Development of Themed Heritage Trails

With the focus on heritage tourism in the National Tourism Policy Study
(1992), heritage trails have been developed notably in the historic cities such as
Melaka, Penang and Kuala Lumpur. Recent development in the design of
heritage trails is moving towards transborder trails based on common themes.
For instance, the Tun Teja (female warrior during Melaka Sultanate) stretches
from Melaka to Johore whilst the Mat Kilau (nationalist during British

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occupation) trail starts from the State of Trengganu and ends in the State of
Pahang. Currently, historical trails are being developed involving more than 2
states i.e. the Melaka – Negri Sembilan – Johore transborder tourism
development.

On a more regional level, the Parameswara Trail (extends from Melaka and
ends at Palembang in Indonesia, passing through historical sites in the Riau
Archipelago. Likewise, a transborder historical trail is being developed by the
Perak State government to trace the route of the Bunga Mas (tribute) procession
from Thailand to Perak. Although such trails currently appeal mainly to a niche
market, they have the potential to be professionally packaged and sold as
vibrant tourism products.

8. Extension of Educational Tourism Programme

As one of the measures to improve domestic tourism, an educational tourism

programme was developed by MOCAT and the Ministry of Education in 2001
to encourage local travel through the establishment of tourism clubs in schools.
By doing so, students/schoolchildren are being targeted as the catalyst to
persuade their families to travel more regularly within the country. Recently,
this Program Pelancongan Pelajar or Students Tourism Programme (PPP) has
managed to attract tour operators as partners in the implementation and
promotion of the programme. Potentially, this programme could be extended to
include educational establishments and tourism destinations within the region.
In the long run, it would be able to encourage more social contact and cultural
exchanges as well as understanding between the youths in the region.

9. Trans-Asia Rail Link from Singapore to Kunming, China

Finally, the Trans-Asia Rail Link between Singapore to Kunming in China is a

long term project that will have significant impact on inter-regional travel
within the Asia region. The 5, 500 km. rail link will pass through Malaysia,
Thailand, Vietnam and Laos but the implementation is bogged down by political
and financial problems (NST, 12 November 2003).Notwithstanding these
constraints, the rail link project offers an existing prospect for the growth of
multi-destination visitation within the Asian region in the long term.

DISCUSSION AND SYNTHESIS

This paper has, firstly, summarised Malaysia’s gradual climb into the upper hierarchy
of the Asian tourist circuit. Secondly, it highlighted the state of tourism policy
planning in Malaysia viz-a-viz its 3 tier form of government. Finally it had discussed
the current and expected improvement in accessibility between Malaysia and the other
countries within the region, which will have exiting prospects for inter-regional
tourism, multi-destination visitation and cross-cultural exchanges. Ultimately, the
private sector is expected to respond to new opportunities brought about by more
liberal and collaborative government policies on tourism within the region but the
actual realisation will be highly dependent on the improvement in accessibility either
by land, sea or air (Fig. 1).

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Fig.1. MALAYSIA’S TOURISM POLICIES IN THE CONTEXT OF

REGIONAL COOPERATION
Economic
Development
Chinese Growth Triangles Indian
(IMT-GT/ SIJORI) Tourists

Transborder
National Parks

Trans Asia Educational MALAYSIA’S Cruise Growth of

Rail Link Tourism TOURISM Tourism Budget
(Singapore- (school POLICIES Airlines
Kunming) programmes
)

Themed
Heritage Trails

REGIONAL COOPERATION

Star Cruises

EMERGING MARKETS

Hub & Gateway Middle Eastern Tourists

In the short and medium term, the mushrooming of the so-called no-frills, budget
airlines will facilitate the implementation of multi-destination tour packages as
envisaged by the economic development growth triangles such as IMT-GT and
SIJORI. Needless to say, the implications of budget airlines on regional travel would
require a careful study so as to maximise new opportunities. In addition, another
level of transportation hubs and gateways will inevitably be created, potentially
competing but at the same time complementing the established hubs such as
Singapore and Bangkok. In relation to its neighbours, Malaysia, perhaps is in the best
position to capture a significant share of the emerging markets such as China, India
and the Middle East. As a consequence, KLIA and Johor Bahru (Senai) airport are
expected to function as what can be termed as ‘specialised hubs and gateways’ for this
market segment. Besides air transport, cruise tourism has the potential of providing
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better and more exiting itineraries by creating themed voyages based on the region’s
inter-connected history. Finally, the budget airlines will definitely boost student
travel within the region, which will not only bring about economic benefits but also
foster regional integration and cultural exchanges.

To surmise, the growth of budget airlines can be considered as the key towards
providing the missing link towards better regional cooperation in tourism.
Nonetheless, the aims of regional cooperation should not be for short-term economic
gains alone given that Asian cohesion and bonding are equally noble aims albeit less
tangible in their form. A SWOT Analysis is carried out to assess the strategic
strengths and weaknesses of the Malaysian tourism industry as well as the
opportunities and threats against improving regional cooperation with its Asian
neighbours. A summary of the SWOT Analysis is given below (Fig. 2):

Fig. 2. SWOT ANALYSIS

STRENGTHS WEAKNESSES
• Outstanding nature • Service quality
• Cultural diversity and multi- • Low profit margin
culturalism • Environmental degradation
• Good accessibility
• Good tourism facilities
• Safety
• English widely spoken

OPPORTUNUTIES THREATS
• Close proximity to Asian • Regional safety
neighbours • Ignorance and prejudices
• Better access through budget • Environmental degradation
carriers
• World Heritage Site branding
• Youth travel

From the SWOT Analysis, it can be seen that STRENGTHS of the tourism industry
in Malaysia are the outstanding natural beauty comprising tropical forests, lakes,
pristine islands, mountains, etc. In addition, the cultural diversity and multi-
culturalism are only unique to Malaysia, so much so that tourists from other parts of
Asia can at once be at ease with the familiarity of Malaysia and yet marvel at its
differences. Good accessibility provided by a first class expressway system, modern
airport facilities, quality accommodation, safety and the fact that English is widely
spoken are the other major strengths of Malaysia as a tourism destination. Overall,
Malaysia is ideal as a short break or a long stay holiday destination with a high
accessibility/connectivity factor to the other major tourism destinations in the region
(within 3 hr. flying time).

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The main WEAKNESS of Malaysia’s tourism industry is its ‘low yield’ economic
return, forced upon by the underselling of hotel rates, hence affecting the profit
margin of most 4 to 5 star hotels. (room rate of below USD 100/night). Consequently,
the low profit margin has affected HRD and training and hotel refurbishment
programmes, which in turn, has affected service quality. At sensitive areas such as
islands and hill resorts, environmental degradation has also worsened over the last few
years due to the lack of management and enforcement. Until the economic outlook for
hoteliers improve, the tourism industry is expected to play safe and ‘keep what they
have’ rather then embark on cross-border selling of tour packages.

As mentioned earlier, the OPPORTUNITIES for multi destination/cross border

tourism have been vastly improved by the advent of budget airlines which are able to
profitable serve destinations with a 3 hr. flying time radius. In addition, the branding
associated with World Heritage Sites and the growing interest in themed tours also
provide new opportunities for intra regional travel. In the long term, youth travel
within the country and possibly within the region will not only boost Asian cohesion
but also develop a travelling culture amongst the nation and region’ s youth. In turn,
the social benefit of youth travel has the potential to be transformed into an economic
benefits in the future.

However, THREATS remain in the form of wars, political diseases, outbreaks of

communicable diseases, etc. Other threats such as ignorance and prejudices are
present in any society which tourism has the potential to eradicate. Finally,
environmental degradation is likely to be a major threat together with the
displacement and marginalisation of the local population. Ironically, the areas that are
likely to face serious threats are the World Heritage Sites and other fragile areas.

RECOMMENDATIONS

Currently, regional cooperation within the region are in existence through the
activities of both PATA and the ASEAN Tourism Forum (ATF).However, based on
the above discussion and synthesis, a better collaboration can be achieved by building
on the strengths of each Asian country. Towards this end, several recommendations
are proposed, which are as follows:

Short Term (1 – 3 years)

In the short term, the main focus should be on the removal of obstacles than hinder
cross border travel. Based on the concept of ‘seamless travel’, some of the initiatives
that could be introduced are smart cards for frequent travellers to minimise delays at
immigration points, better arrangement for self-drive holidays and cross border
insurance policies, etc. Based on MOCAT/MOT’s ‘Think Tourism’ approach, the
related government department such as Customs and Immigration should be
educated on how to facilitate cross-border travel.

In addition, a detailed study on the growth and regional implications of budget airlines
should be carried out to establish the data base for more accurate projections of tourist
demand and supply. Tourism Malaysia with the assistance of PATA, ATF and the
Association of Asia Pacific Airlines should take the lead in this particular research
given that the current hub for budget airline travel is located in Malaysia.

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Medium Term (3 – 5 years)

In the medium term, the packaging of transborder tour packages should be designed
with PATA or ATF as the Secretariat. Tour agents representing the region should
design innovative tours based on specific themes, preferably those that involve the
geographical boundary and heritage of more than one country. The nomination of
transborder World Heritage Sites should be further encouraged as it will not only
provide a boost for tourism through its branding but also because World Heritage
Sites are governed by development guidelines and visitor management programmes
incorporated into their management plans. In this way, the potential negative impact
of uncontrolled tourism development will be minimised and the principles of
sustainable tourism could be adopted in site management.

Currently, the potential transborder national parks/World Heritage Sites that can be
developed as pilot sites are:

Status Location

World Heritage Site (cultural and natural) Tanjung Tuan, Melaka and
Tanjung Berhala, Sumatra

World Heritage Site (natural) Batang Air, Sarawak and Lanjak

Entimau, Kalimantan, Indonesia

World Heritage Site (natural and cultural) Bujang Valley, Kedah, Perlis
State Park and Thaleban National
Park, Thailand

On the Malaysian side, the establishment of transborder World Heritage Sites will
involve collaboration between the Ministry of Education, Department of Museums
and Antiquities, Department of Forestry and the Department of Wildlife and National
Parks.

In the medium term, the PPP (Students Tourism Programme) programme should be
extended to cover the ASEAN region. Budget airlines will provide the catalyst for
regional student travel and PAMPENA (a subsidiary) of MOCAT/MOT should
continue its efforts as the facilitator for such programme. Among the facility that
should be developed by PAMPENA is a type of Central Reservation System (CRS)
for youth travel within the region.

Long Term (5 – 10 years)

In the long term, tourism regional tourism should be further developed as part of the
expansion of trade through AFTA. Further incentives for foreign direct investments
should be introduced and Asian-based hotel/resort chains should be encouraged. In
addition, Asia should further forge the Asian branding by providing incentives and
technical assistance to SMEs in the tourism sector, notably local artisans and cottage
industries producing high quality handicrafts. To this end, Thailand should be used as
the model for active local participation in the tourism industry given its success in
this particular field.

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In the long term, joint promotion should be further enhanced by developing

electronic portals, promotional blitzes and an efficient but affordable CRS covering
the whole of Asia. Finally, AFTA should take the initiative in extending its
commitment to sustainable tourism beyond the formulation of codes of conduct. This
could be done by developing and implementing accreditation programmes for
sustainable tourism that are tailored to the needs of both the formal sector (resorts,
hotels) as well as the informal sector (chalets, stalls, cottage industries).

CONCLUSION

Tourism is a fickle industry that promises a lot and yet delivers little and over a long
period. Regional cooperation in tourism too is an area of vast potential but requires
proper planning and coordination. In the light of globalisation and trade
liberalisation, cross border tourism could be used as a powerful tool for the economic
enhancement of Asian nations. Nonetheless, the expectation of positive economic
return from regional tourism should not cloud its intangible yet no less important
benefit i.e. Asian cohesion and cultural exchange.

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LIST OF REFERENCES

GOM (Government of Malaysia) (1991) Sixth Malaysia Plan, Government of

Malaysia Printers: Kuala Lumpur.

GOM (Government of Malaysia) (1996) Seventh Malaysia Plan, Government of

Malaysia Printers: Kuala Lumpur.

GOM (Government of Malaysia) (2001) Eighth Malaysia Plan, Government of

Malaysia Printers: Kuala Lumpur.

Grundy-Warr, C. and Perry, M. (2001) Tourism In An Inter-State Borderland: The

Case Of The Indonesian-Singapore Cooperation, in Teo, P., Chang, T.C. and Ho, K.C.
(eds.) Interconnected Worlds: Tourism in Southeast Asia, Pergamon:Oxford.

Hall, C.M. and Lew, A.(1998)(eds.) Sustainable Tourism: A Geographical

Perspective, Harlow: Addison-Wesley Longman.

Hall, C.M. and Piggin, R. (2003) World Heritage Sites: Managing The Brand, in
Fyall, A., Garrod, B. and Leask, A. (2003) Managing Visitor Attractions: New
Directions, Elservier: Oxford., pp. 204 – 219.

King. V.T. (1993) Tourism and Culture in Malaysia, in Hitchcock, M., King. V.T.
and Parnwell, M.J.G. (eds.) Tourism in Southeast Asia, London: Routledge, 96 – 116.
Lew, A. (1998)

MOCAT (Ministry of Arts, Culture and Tourism) (1992) National Tourism Policy
Study, Ministry of Arts, Culture and Tourism: Kuala Lumpur.

MOCAT (Ministry of Arts, Culture and Tourism) (2001) Rural Tourism Master
Plan, Ministry of Culture, Arts and Tourism: Kuala Lumpur.

Oppermann. M. (1992) International Tourist Flows in Malaysia, Annals of Tourism

Research, 19 (3), 482 – 500.

The New Straits Times, 12 November 2003

The New Straits Times, 13 November 2003

The Star, 15 December 2003.

The Star, 17 April 2004

Tourism Malaysia (2003) Profile of Tourists by Selected Markets, 2002, Tourism

Malaysia: Kuala Lumpur.

WWF Malaysia (Worldwide Fund for Nature Malaysia) (1996) National

Ecotourism Plan.

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