MALAYSIA missed its Visit Malaysia Year 2014 (VMY2014) tourist arrivals target of 28 million, but still managed to welcome 27.44 million tourists, representing a 6.7% increase from 2013.

Although the 2014 figure is a commendable feat considering the country’s triple air tragedies and worst floods in 30 years, the lower-than-expected arrivals could trigger a need to review the target of 29.4 million tourist arrivals and RM89 billion tourism receipts set for the Year of Festivals 2015 campaign.

On March 6, Singapore revised downwards its target for tourist arrivals this year after a disappointing February — its first decline since the global financial crisis. The republic adjusted its projection to between 15.1 million and 15.5 million arrivals from 17 million previously, citing intensifying competition from regional destinations. Tourism receipts are expected to be lower at between S$23.5 billion (RM62.79 billion) and S$24 billion from an earlier projection of S$30 billion.

Will Malaysia revise its goal? Director-general of Tourism Malaysia Datuk Mirza Mohammad Taiyab says, “A review of our target arrivals seems necessary. However, it will be decided after a review of the tourism performance of the first quarter of 2015.”

If Malaysia Airports Holdings Bhd’s announcement is anything to go by, arrival numbers are already looking bleak. Kuala Lumpur International Airport, the main gateway for foreign tourists flying in, saw a 2.7% drop in passenger traffic last month on lower international and domestic travellers. International traffic fell 2.8% to 2.67 million.

Tourism Malaysia, the marketing arm of the Ministry of Tourism and Culture, has been tasked with achieving very high goals, in line with the Malaysia Tourism Transformation Plan of bringing in 36 million tourists and RM168 billion in revenue in 2020. Tourists are distinguished from excursionists as the former stay at least one night in the country while the latter are day trippers.

In order to hit this year’s forecasts, Mirza says Tourism Malaysia will focus on promoting the Year of Festivals 2015 campaign.

“It is a continuation of the VMY2014 campaign with emphasis on cultural events,” he says, adding that the strategies include sustaining and growing tourist arrivals from Asean and expanding market base to attract visitors from second and third-tier cities in major markets such as China and India.

In addition to using the social media platform for marketing and customer relations, there are plans to facilitate efforts to improve air accessibility and charter operations.

Meanwhile, data from Tourism Malaysia in cooperation with the Immigration Department shows that with the exception of December, tourist arrivals grew every month in 2014 despite the two Malaysia Airlines (MAS) mishaps — Flight MH370 in March and Flight MH17 in July.

The number of arrivals in December, which traditionally posts strong arrivals, dipped 12.8% to 2.45 million from 2.81 million a year ago. For the full year, arrivals from China fell 9.9% to 1.61 million from 1.79 million a year earlier.

“Many of the scheduled charter flights were cancelled after the MH370 incident and they have yet to resume. However, we are optimistic of a market recovery this year, barring any other unfortunate incident, due to the consistent marketing and promotional efforts in the months following the aviation incidents.”

Arrivals from Iran dropped 7.7% as Iran Air and Mahan Air reduced their flight frequency, and also because the visit pass for Iranians has been shortened to 14 days from 90 days. The decline in arrivals from Laos (down 25.4%) was a result of limited flights to Malaysia and improved border movements between Laos and its neighbours, particularly Thailand, which changed the Laotian outbound travel pattern.

Another market which saw a drop was Sweden. MAS cancelled its services to Stockholm and the Swedish Ministry of Foreign Affairs has issued a travel advisory against travel to certain areas in Sabah.

A particularly sharp drop in the month of December was in arrivals from Singapore, the nation which has always held the pole position in terms of arrivals into Malaysia. In 2014, Singapore’s population (citizens and permanent residents) totalled 3.87 million while the total arrivals into Malaysia was 13.93 million. This means that, on average, each Singaporean visited Malaysia 3.59 times last year.

According to Mirza, the decline in the number of arrivals from Singapore was due to the floods, which affected the northern and eastern Peninsular Malaysia, Kuala Lumpur, Perak, Johor and Sabah. Similarly, tourists from Brunei and Thailand preferred to stay away from Malaysia due to the floods and weather conditions. Arrivals from Brunei and Thailand slipped 27.8% and 13.7% respectively in December.

On the drop in arrivals from Australia (18.7%), Japan (14.3%) and the UK (14.6%), Mirza says Malaysia faced competition from other Asean countries, which were vying for tourists from Australia and the UK as they diverted their travel plans away from Malaysia following the aviation incidents last year.

“As for Japan, the depreciation of the yen and rising cost in Japan have reduced the desire to travel for the time being,” he says.

Independent economist Azrul Azwar Ahmad Tajudin points out that 2014 was a promising year for Malaysia’s tourism industry up until November, with an uninterrupted growth each month, proving its resilience despite the aviation disasters.

However, he adds that the weaker ringgit against the US dollar has failed to do much in luring foreign tourists, although Malaysia has since become a cheaper tourist destination.

“Notwithstanding 2015 declared as the Year of Festivals, a less upbeat economic outlook in top-generating tourist markets, stiff competition from neighbouring countries and the implementation of the Goods and Services Tax on April 1 may once again veer Malaysia away from hitting its official target of 29.4 million tourist arrivals. Although the minimum spending amount of RM300 is not onerous, other eligibility conditions under the Tourist Refund Scheme (TRS) appear quite demanding,” he says.

Under the TRS, tourists who have shopped in Malaysia and seek to obtain a tax refund must make their claims within three months of purchase from an approved outlet. They cannot claim for tax refund if they are exiting the country by land, nor can they obtain a refund on tax paid on purchase of alcohol, tobacco, jewellery, and precious metals and gemstones.

This article first appeared in The Edge Malaysia Weekly, on March 16 - 22, 2015.

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