One niche at a time: Government-backed development plans continue, building on existing competitive strengths

Over the past decade Malaysia’s tourism sector has become an increasingly important contributor to the economy. In 2011 the country welcomed 24.7m visitors and pulled in RM58.3bn ($18.8bn) in tourism receipts over the course of the year, up from just 12.7m visitors and RM24.2bn ($7.8bn) in receipts in 2002, according to data from the Malaysia Tourism Promotion Board (MTPB), the government’s sector promotion agency. The industry’s rapid growth in recent years is primarily the result of a series of ambitious government-led development and investment initiatives, and the sector figures prominently in the country’s plans ahead. Indeed, tourism is a cornerstone of the Economic Transformation Programme (ETP), the government’s overarching strategy through 2020, as well as the 10th Malaysia Plan (10MP), which runs through 2015.

CHALLENGES: Despite the growth of tourism in recent years, the sector faces a number of challenges. Foremost among these is the issue of yield. According to the ETP, the country is currently a “high arrivals, low yield” market, in that it has had great success in attracting new visitors, but less when it comes to encouraging them to spend. Similarly, the great majority of tourists in Malaysia are short-haul visitors, mainly from neighbouring markets. The government is working to boost the number of medium- and long-haul arrivals as well.

STRENGTHS: Despite these issues, the future of Malaysia’s tourism sector looks bright. The country is home to a handful of internationally competitive attractions, bustling shopping districts, picturesque landscapes and unique cultural areas. Other advantages include price competitiveness compared to many other markets in the region; political stability; and a national transport network which is among the best in Asia (see Transport chapter). Additionally, Malaysia’s location, at the heart of South-east Asia and just a short distance from some of the world’s fastest-growing economies, bodes well for the sector’s future. The country has seen steady expansion in the number of tourists from China, in particular. Finally, the government’s development plans are expected to play a major role in supporting growth. Under the ETP the state plans to attract 36m visitors and generate RM168bn ($54.2bn) in tourist receipts on an annual basis by 2020. While these targets are ambitious, the industry’s performance in recent years suggests they may well be met.

OVERSIGHT & REGULATION: A substantial number of government and private sector organisations are involved in tourism. The Ministry of Tourism (MoT), the primary public entity that deals with the industry, has a mandate to develop Malaysia as an international tourism destination. In addition to formulating and implementing tourism policy, the MoT coordinates, monitors and regulates individual tourism-related projects and programmes in both the public and private sectors. The ministry offers a variety of courses and training modules, including programmes aimed at tour guides, customer service representatives at hotels, taxi drivers and other groups that interact with tourists on a regular basis. Additionally, the organisation works alongside other government entities to develop incentives with the goal of boosting investment in tourism.

The MoT oversees a number of other public entities and programmes. The Malaysia Tourism Promotion Board (MTPB), for example, was founded in 1992 as a result of the MTPB Act. Since launching the successful “Malaysia Truly Asia” campaign in 1999, it has taken on a major role in the sector. The MoT also oversees the Malaysia Tourism Centre (MaTiC), a venue in KL that hosts cultural performances and demonstrations.

“We promote traditional Malaysian culture and art, primarily at the domestic level,” said Haslina binti Abdul Hamid, director of MaTiC. “We also provide planning and other services as a one-stop tourist centre.”

Other programmes currently overseen by the ministry include the Malaysia My Second Home (MM2H) initiative, which assists foreigners looking to relocate to the country; the Go2Homestay project, which offers home-stay experiences for visitors; and a student tourism programme, among others. In addition to the MoT, the other government entities involved in tourism include the Ministry of Environment and Natural Resources, which plays a major role in the burgeoning ecotourism segment; the Malaysia Convention and Exhibition Bureau (MyCEB), which is involved is the meetings, incentives, conventions and exhibitions (MICE) segment; as well as a variety of smaller-scale organisations that are active at the state level in some areas.

BY THE NUMBERS: Malaysia has seen rapid growth in both the total number of visitors and tourist receipts in recent years. The country hosted some 24.7m tourists in 2011, up from 24.6m in 2010, 23.6m in 2009 and 22m in 2008, according to MTPB figures. Over the past decade and a half annual tourist arrivals have nearly quadrupled – in 1998 the nation attracted just 5.5m visitors. Tourist receipts have grown even more rapidly over the same period. In 2011 Malaysia earned RM58.3bn ($18.8bn) from the industry, up from the RM56.5bn ($18.2bn) recorded the previous year, RM53.4bn ($17.2bn) in 2009 and RM49.6bn ($16bn) in 2008. The 2011 total is almost seven times higher than the 1998 figure of RM8.6bn ($2.8bn).

ECONOMIC IMPACT: According to statistics from the World Travel & Tourism Council (WTTC), an independent tourism organisation, Malaysia’s travel and tourism sector had a direct economic impact of RM57bn ($18.4bn) in 2011 – slightly lower than MTPB estimates – which was equal to around 6.7% of GDP. The council forecast that this figure would rise by around 4% to RM59.3bn ($19.1bn) in 2012.

The WTTC calculated the tourism sector’s total economic impact – the direct impact plus investment spending, government spending and domestic spending on tourism-related goods and services – as around RM125.4bn ($40.5bn) in 2011, equal to some 14.8% of GDP at the time. This number is expected to rise to RM130.8bn ($42.2bn), or 15.1% of GDP, in 2012.

The tourism sector employs a substantial percentage of Malaysia’s population. According to the WTTC the industry directly supported 753,500 jobs in 2011, equal to 6.3% of the national workforce. Including those employees who are indirectly supported by the sector brings this number up to 1.6m, or nearly 13% of the workforce, according to the WTTC.

VISITOR PROFILE: South-east Asian nationals accounted for the majority of tourist arrivals. In 2011 some 13.4m visitors – or around 54% of total arrivals – came from Singapore, according to MTPB data. This is in line with recent trends – in 2010 13.2m tourists from Singapore travelled to Malaysia, up from 12.7m in 2009 and 11m in 2008. Indonesia accounted for the second-highest number of arrivals in 2011, with 2.13m, followed by Thailand (1.4m), China (1.25m) and Brunei (1.24m). A substantial number of visitors also came from India ( just over 693,000), Australia (558,411), the UK (403,940), Japan (386,974) and the Philippines (362,101).

While neighbouring countries will likely account for the majority of arrivals for the foreseeable future, the government is targeting new source markets, including China, India and the Middle East. Together, these three account for around 48% of the global population, and all of them are within a few hours’ flying time. Substantial percentages of Malaysia’s population are of Chinese and Indian descent, which gives the country a leg up in terms of attracting visitors from these two growing markets. Similarly, around 17m Malaysians are Muslims, making Islam the most widely practised religion in the country, which is a draw for tourists from the Middle East region, many of whom prefer to visit predominantly Muslim countries.

MUSLIM TRAVELLERS: Indeed, Muslims account for a steadily growing percentage of travellers worldwide. The value of the global Muslim tourism market in 2011 was estimated at around $126bn, or more than 12% of global outbound tourism expenditure and nearly double China’s total tourist spend in the same period. In a mid-2012 survey carried out by DinarStandard, a US-based research and media company that focuses on emerging Muslim markets, Malaysia was named the world’s most popular destination for Muslim tourists. The “Global Muslim Lifestyle Travel Market: Landscape and Consumer Needs Study” surveyed nearly 1000 Muslim tourists in early 2012. After Malaysia, the top destinations for Muslim tourists were Turkey and the UAE, followed by Singapore, Russia, China, France, Thailand and Italy. Some 67% of survey respondents reported that having access to halal food options was an important factor in deciding upon travel itineraries, and this was an area in which Malaysia scored highly.

The government has worked to cater specifically to Muslim visitors in a formal capacity since 2009, when the state launched the Islamic Tourism Centre (ITC), which has a mandate to carry out research and formulate policy in support of the Muslim travel industry. The centre – a joint venture between the MoT and the government of Melaka – serves in an advisory capacity on the national level and functions as a one-stop shop for visitors and potential visitors looking for information. It also offers training courses for tourism operators.

There is considerable overlap between efforts to boost Muslim tourism and the focus on the Chinese and Indian markets. China is an increasingly important source of Muslim tourists: the country is home to an as-yet untapped market of more than 30m Muslims, many of whom have benefitted from rising incomes and, consequently, increased mobility in recent years. India is home to more than 160m Muslims, and the country has seen a rapidly expanding outbound tourism market in recent years. Malaysia is working to tap into this. Malaysia Airlines, which offers direct connections between KL and a handful of major Indian destinations, including Mumbai and Bangalore, announced in July 2012 that it would expand its operations to service other locations on the sub-continent.

DEVELOPMENT STRATEGIES: Tourism figures prominently in the government’s ongoing planning initiatives. The sector is expected to benefit from 12 focused entry-point projects (EPPs) under the tourism National Key Economic Area (NKEA), which itself is one of 12 NKEAs that make up the ETP. To reach the goal of attracting 36m visitors and generating RM168bn ($54.2bn) in tourism receipts by 2020, the tourism NKEA aims to leverage Malaysia’s competitive advantages to fuel growth. In particular, the NKEA is meant to boost arrivals, receipts and yield (receipts per arrival). The 12 EPPs are organised into five themes, which are broadly representative of the government’s tourism priorities for the next decade. These include the following segments: luxury; nature adventure; family; events, entertainment, spa and sports; and business tourism.

In addition to the EPPs, the ETP describes three business opportunities for private sector players that would contribute to the sector’s expansion. These include potential prospects in the food and beverage segment, as well as in local transport and for tour operators. The state has made considerable progress on the tourism initiatives described in the ETP since it was introduced in 2010. Provided everything goes to plan, by 2020 Malaysia is expected to create an additional 497,200 jobs in the sector, a 30% jump on 2009.

ALL PART OF THE PLAN: Tourism is also a cornerstone of the 10MP, which was developed with the ETP in mind. The 10MP aims to push Malaysia into the top 10 globally in terms of tourism receipts by 2015, which would have the added effect of creating up to 2m new tourism jobs. The plan identifies a handful of goals to achieve these results, including attracting more visitors from expanding economies such as China; focusing on niche areas, especially ecotourism; developing new iconic attractions and products on a public-private partnership basis, if possible; and introducing a certification system for tourism products and services to ensure that the country is meeting international standards.

NICHE MARKETS: Malaysia’s strategy for the tourism sector moving forward involves developing a handful of niche tourism markets. The country is already a major destination in several segments, including medical tourism (see analysis) and business and MICE tourism. Under the government’s long-term strategy the sector will further develop these existing areas and move into a handful of new ones, such as the luxury segment.

In particular, the government is pushing for Malaysia to build on its reputation as a regional shopping destination. With this in mind, in February 2012 the MTPB launched “Luxury Malaysia”, a new tourism brand, with the goal of attracting a greater percentage of high-income visitors. The initiative represents a major step towards the state’s long-term goal (as described in the ETP) of more than doubling visitor yield from RM2260 ($729) per visitor in 2009 to RM4675 ($1508) per visitor by 2020 (see analysis).

ECOTOURISM: Another major focus under the ETP is ecotourism, also known as nature tourism. Malaysia has substantial resources in this area. Nearly 60% of the country’s landmass is covered by virgin jungle and forests, the majority of which is strictly protected from any sort of development. This untouched ecosystem has incredible biodiversity; the country is home to 286 species of mammals, 150,000 species of invertebrates, 4000 species of fish and more than 15,000 species of flowering plants, making it one of the 12 most biologically diverse nations in the world. This is a big draw for nature-loving tourists. In 2009, according to the ETP document, around 10% of total arrivals came to Malaysia at least in part for ecotourism-related reasons.

While Peninsular Malaysia boasts a wide variety of ecotourism areas, the country’s major nature destinations are to be found on the island of Borneo. Many local and regional organisations are working alongside national entities to develop this area, including the Sabah Tourism Board (STB), Sabah Parks and the Sarawak Tourism Lab. While Sarawak is much larger than Sabah, the latter region is home to a more developed tourism industry that is growing rapidly. Indeed, according to recent estimates from the STB, the ecotourism segment is expanding by 20% annually in Sabah.

Kinabalu Park, located in Sabah, is home to Mount Kinabalu, one of the highest peaks in South-east Asia and a popular tourist destination. The park, which is also a site for bird watching, is one of two natural UNESCO World Heritage sites in Malaysia. The other, Sarawak’s Gulung National Park, is also an ecotourism area, and in the past few years has become a major destination for adventure tourism activities, including caving and hiking. While the number of visitors arriving in Sarawak has not increased much of late, activities such as these have helped to boost revenues considerably. In addition to these World Heritage sites, UNESCO recently recognised Langkawi Island, located in northern Peninsular Malaysia, as a geopark, in reference to the area’s unique geological landscapes.

BIODIVERSITY HUB: Under the ETP, which includes one EPP aimed at establishing the country as a “global biodiversity hub” (GBH), the government plans to establish a network of natural areas to highlight local ecosystems. The sites, which will be developed and managed primarily by private bodies and rural communities, will be held to international ecotourism standards by a body of sector representatives.

The government is also working to set up two nature centres, the Malaysian Rainforest Discovery Centre and the Malaysian Marine Discovery Centre, which are meant to be major destinations in their own right. In early October 2011 the regional government of Sabah announced the formation of a GBH centre as part of the Coral Triangle Initiative on Coral Reefs, Fisheries and Food Security, a multilateral venture developed by Malaysia and five other Asia-Pacific nations with the goal of protecting and managing the region’s coastal environment. The GBH in Sabah aims to protect the marine ecosystem, which is home to more than 3000 species of reef fish, not to mention six species (of seven known) of marine turtles. The GBH programme and the discovery centres are part of the government’s overarching goals of developing Malaysia as a leading international ecotourism destination; ensuring high-quality, sustainable ecotourism products and services to enable the country to charge premium prices; and empowering rural communities to move up the value chain.

CONSERVATION: Conservation is a cornerstone of Malaysia’s ecotourism strategy. Over the past decade the logging and palm oil industries, in particular, have attracted criticism for reportedly harsh environmental practices. Additionally, careless tourism management over the years has resulted in the virtual extinction of the leatherback turtle in Malaysia, according to the ETP document. Over the past few years the government has made a concerted effort to improve the country’s reputation in this area. In 2007 Malaysia joined the Heart of Borneo initiative, a trans-border agreement between it, Indonesia and Brunei to sustainably manage the island. The initiative was negotiated and is overseen by the World Wildlife Fund. In addition to these multilateral efforts, in June 2010 the government announced it had set aside 6m ha of forests in Sabah and Sarawak for conservation. For ecotourism to become a sustainable source of income, however, tourists must be able to get to and from Borneo easily. With this in mind, both the federal government and the state governments of Sabah and Sarawak are working to boost tourism infrastructure. Initiatives currently under way include building up to 1900 km of new roads in the area and ramping up the number of flights.

BUSINESS MARKET: Expanding the business and MICE market is a key focus for the government. The country is already considered to be a major destination for business and MICE travellers. In 2011 Malaysia welcomed 1.29m international business tourism visitors, up from 1.28m in 2010, 1.25m in 2009 and 1.23m in 2008, according to data from the Malaysia Convention and Exhibition Bureau (MyCEB). Despite the small increase in 2011, the country’s reputation as a business and MICE destination has continued to grow.

In 2011 KL jumped two places to reach 21st in the International Congress and Convention Association’s world convention city rankings for the year and rose three places in the Asia-Pacific region as a whole, from eighth in 2010 to fifth in the following year. KL hosted a total of 78 international association meetings in 2011, down slightly from the 79 it held the previous year, while Malaysia as a whole welcomed 126 such meetings in 2011, up from 119 in 2010. “The KL Convention Centre plans to expand capacity by 30% in the coming years,” said Frank P Stocek, general manager of the Mandarin Oriental Hotel in KL. “The country has done good business in the MICE market recently.”

MyCEB, which was launched by the MoT in 2009, has a mandate to strengthen Malaysia’s business tourism brand and promote the country as a MICE destination abroad. In November 2011 the bureau launched a new tourism brand with the slogan “Malaysia – Asia’s Business Events Hub”. Zulkefli Sharif, the managing director of MyCEB, told OBG, “Exhibitions are quite an important boost to the economy and we need to build and nurture our own base of them. The Malaysia International Furniture Fair is a good start in this regard as it has become a well-known event globally.”

The introduction of the new brand coincided with the launch of a raft of financial incentives for MICE organisers in certain sectors. Valued at more than $16.5m through the end of 2012, the incentives were meant to benefit conferences related to health, science and technology, education, and halal food, among other sectors. These investments are expected to result in a major boost in revenues in the coming years. According to MyCEB, in 2011 the average international business tourism visitor spent RM7418 ($2393) per trip and RM1268 ($409) per day, compared to spending of RM2257 ($728) per trip and RM337 ($109) per day among other visitors.

Business and MICE activity also tends to produce a variety of intangible benefits, including helping to develop Malaysia’s profile as a business destination and imparting new skills among local business networks.

Under the ETP, the government plans to roll out a number of projects, with the goal of boosting the number of business-related arrivals to 8% of total arrivals (or around 2.9m people) by 2020, up from around 5% of total arrivals in 2009.

FAMILY TOURISM: The state is also working to promote Malaysia as a family destination, primarily with the goal of attracting visitors from the rapidly expanding markets of China, India and the Middle East, where family tourism is on the rise. According to the ETP document, these three areas account for only around 13% of global tourism departures, but nearly 50% of the global population. Steadily increasing incomes over the past decade in China, India and the Middle East have resulted in the emergence of new middle-class populations.

By developing some new family-friendly attractions and promoting Malaysia as a family destination in these markets, the government plans to tap into unmet demand. Promotional efforts will focus on a range of niche segments. The state’s marketing materials include references to its thriving ecotourism segment, numerous theme and water parks, and KL’s many malls and other shopping options. Legoland Malaysia, which opened in mid-September 2012, is expected to be a major draw in this area as well.

Under the ETP, the government is in the early stages of developing Karambunai Integrated Resort City, a large-scale, sustainable resort in Sabah, that will include nature lodges, ecotourism attractions, hotels, waterfront villas, a golf course and a water theme park. According to the ETP document, it will cost up to RM6.7bn ($2.2bn), the majority of which will be covered by private investment.

Also under the ETP, the state is developing a blueprint to attract more cruise ships to Malaysian ports. According to the ETP, the global cruise market is growing twice as fast as the general tourism market. Malaysia has yet to seriously tap into the segment – numerous cruise ships pass by local ports every year without stopping. With the aim of at least tripling cruise passenger throughput by 2020, the state is in the early stages of developing cruise-related infrastructure and policies.

MEDICAL TOURISM: The medical tourism segment is also considered to be a significant potential growth driver. In 2011 the health care sector attracted more than 570,000 foreign patients, around two-thirds of whom came from Indonesia, where medical care is underdeveloped and relatively expensive. According to projections from the MoT, foreign health care spending in Malaysia will likely top RM600m ($194m) in 2012, up from RM511m ($164.8m) in 2011. The Malaysia Healthcare Travel Council, which falls under the oversight of the Ministry of Health, is working to develop this sector (see analysis).

EVENTS & ENTERTAINMENT: In addition to luxury, eco-, business, family and medical tourism, the ETP includes EPPs aimed at boosting the events, entertainment, spa and sports segments. International events in particular are considered to be a key growth area. The country currently hosts a number of major events – most notably the annual Formula 1 Malaysia Grand Prix – but not nearly as many as neighbouring Singapore, for example. In 2009 Malaysia hosted 95 major events, compared to 234 in Singapore. In an effort to boost this, the Malaysian government recently introduced an international events unit, to be overseen by the MyCEB, which will bid to host international events and develop major local ones at home. The state has also worked to boost attendance at the F1 Malaysia Grand Prix in recent years. In 2011 more than 104,000 F1 tickets were sold, up 7% from just under 98,000 the previous year.

According to the ETP document, liberalising the entertainment industry is a major challenge, due primarily to “overzealous moral policing”, which has resulted in the cancellation of a number of concerts and other performances in recent years. In an effort to address this, the state plans to develop a series of dedicated entertainment zones throughout the country. These areas, which are currently being developed in KL, Selangor and Pahang, will be designed to host performances by international artists that previously might not have been allowed to play Malaysia, thereby increasing entertainment revenues.

SPAS & SPORTS: Another EPP aims to support and develop the burgeoning spa industry, which has seen steady growth over the past half-decade, despite a lack of well-trained human resources and consistent accreditation. With this in mind, in 2011 Malaysia suspended a ban on employing foreign therapists through 2013, in an effort to encourage spas to hire foreign staff to develop training programmes for local employees. Additionally, the state is in the process of establishing three training centres for local therapists, in addition to a national spa council, which will regulate the industry.

Finally, the ETP includes an initiative that aims to boost the sports tourism segment, with a focus on golf tourism in particular. Malaysia is home to a number of international-standard golf courses, and it has hosted a handful of high-profile golf events in recent years (see analysis). The country also has the potential to become a regional centre for a variety of other sporting events. “Malaysia needs to improve its reputation on an international level as a venue for sports, cultural, commercial and entertainment events,” said Wan Nor Azinah Zaniby Wan Hashim, the chairman of Merdeka Stadium Board, which oversees the operation of Merdeka Stadium in KL. To enhance talent and increase participation in international sports facilities will be developed. Zolkples Embong, the director-general of the National Sports Council said, “The cabinet has approved the plan for the proposed 300-acre official Sports City of Malaysia to be developed, however various financing options are still being explored.”

BROAD DEVELOPMENTS: In addition to the EPPs aimed at developing specific niche segments, the ETP includes two freestanding, overarching goals, namely increasing the number of flights between Malaysia and a handful of priority medium-haul markets, as well as improving the country’s hotels and lodging infrastructure. The steady expansion of the tourism sector recently has been driven primarily by arrivals from close to home – the majority of tourists that visit Malaysia hail from Singapore, Indonesia and Thailand. Under the ETP the government is working to boost connectivity between KL and 10 priority medium-haul cities, namely Beijing, Shanghai, Delhi, Mumbai, Melbourne, Sydney, Osaka, Tokyo, Seoul and Taipei. Additionally, the state is in the process of working to attract new foreign carriers from medium-haul countries and liberalising the official air rights allocation policy.

HOTELS: The final EPP involves improving the rates, mix and quality of hotels, with the long-term goal of boosting hotel yields, which is closely related to the government’s push to develop the luxury segment. In particular, the state plans to link the star-ratings system with average room rates (ARRs). Beginning in 2013 the government will set a minimum ARR for four- and five-star properties.

Additionally, the MoT is working with the Malaysian Investment Development Authority to extend the investment tax allowance programme to foreign investors involved in the four- and five-star hotel segment. Other incentives are also being developed to boost hotel construction and refurbishment in key states. At the time of writing, several new luxury hotels were under construction, including the six-star St Regis hotel in KL. Whereas others have been completed, namely the RM75m ($24.2m) Pulau Gaya Resort in Sabah.

In general, Malaysia is expected to see a wave of hotel development in the coming decade. In 2011 the country was home to 2707 hotels in total, up from 2367 in 2010, according to data from the MTPB. The 2011 figure included 326 properties in Sabah, 292 properties in Pahang, 260 in KL, 257 in Sarawak and 234 in Johor, in addition to many others elsewhere. In 2011 there were a total of 193,340 rooms nationwide, up 14.7% from 168,497 in 2010, according to the MTPB. Despite these numbers, the country is still relatively undersupplied, especially in terms of international hotel brands. According to recent data from international real estate consultancy Jones Lang LaSalle Hotels, Malaysia is currently home to just one branded hotel per 1000 residents, compared to 11 in the US. This number is expected to rise in the coming years, however, as a number of global hotel brands – Doubletree, Best Western, Holiday Inn and Grand Hyatt, among others – are in the process of setting up shop or expanding their local operations.

INFRASTRUCTURE: Malaysia is well positioned in terms of transport infrastructure. KL International Airport (KLIA) is one of the busiest airports in South-east Asia. In 2011 it welcomed 37.7m passengers, up from 34.1m in 2010 and 29.7m in 2009. Malaysia Airports, the state-owned holding company that operates KLIA and four other international airports (not to mention a number of smaller domestic airports), is in the process of expanding capacity at many of its facilities. The firm has nearly completed work on KLIA 2, an RM3.9bn ($1.3bn) terminal that will replace the existing low-cost carrier terminal, which has been operating at capacity for some time. Malaysia Airports is also in the process of expanding Kota Kinabalu International Airport and Penang International Airport, among others.

The country’s state-owned flag carrier, Malaysia Airlines (MAS), has grown substantially of late, despite facing a number of challenges in recent years.

In an effort to cut costs, MAS recently announced that it would cancel a number of long-haul flights and instead focus on short- and medium-haul destinations closer to home. This is in line with the government’s overarching plans to boost connectivity with rapidly expanding medium-haul markets such as China, India and the Middle East. Other major airline players in Malaysia include Firefly, a low-cost carrier owned and operated by MAS; and Air Asia, which is widely credited with pioneering the low-cost airline model in the region. Additionally, KLIA is served by a variety of foreign airlines (see Transport chapter).

OUTLOOK: Taking into account developments now under way as part of the ETP as well as independent private sector activity, Malaysia’s tourism industry is poised for considerable expansion over the coming decade. The government is working to boost tourist arrivals in a wide variety of niche segments, with a particular focus on the luxury, ecotourism, and business and MICE markets.

At the same time, the state has taken the lead on a variety of tourism-related initiatives, including boosting the number of connections between KL and major international growth markets and increasing the quality (and therefore yield) of hotels. The tourism development initiatives laid out in the ETP are widely viewed as ambitious, but not necessarily unrealistic considering Malaysia’s competitive advantages in the market. With this in mind, revenues from the sector will most likely account for a steadily growing percentage of GDP in medium to long-term future.