Malaysia Tourism Report Q3 2008

Steady Start To 2008 Malaysia has seen a steady start to 2008, with visitor numbers hitting 5,342,291 for the first quarter of the year, an increase of 1.2% year on year (y-o-y). This modest rise is very much in line with BMI's own thinking on the subject; that 2008 and 2009 will be years of relative consolidation, following the stellar performance in 2007.

We remain bullish on the longer-term prognosis for Malaysian tourism, which continues to benefit from strong government support and a relatively secure and stable political situation. However, the increasing influence of Islamic parties in the country's political arena is one area we will continue to monitor closely over the coming months.

Increasing Islamisation A Concern For Tourism? Recent events have called into question the previously sacrosanct secular model employed successfully in Malaysia over the past 50 years. BMI had already reported in 2007 on the country's Islamic morality police - which has far-reaching powers under Malaysian law - being accused of breaking into hotel rooms occupied by mixed-race foreign couples and demanding to see marriage certificates.

Since that time, we have seen the success of the Islamist party Parti Islam SeMalaysia (PAS) in the elections of April 2008. The PAS increased its representation in parliament from six, to 23 seats and also gained control of some state governments at the same time.

Now, a new government proposal aims to curb the rights of women to travel abroad on their own. State media have reported that women intending to travel abroad may soon have to obtain a written letter of consent from either their families or their employers before being allowed to go abroad. Foreign Minister Rais Yatim claims that the proposal is aimed at sheltering vulnerable young women from being used as drug mules, quoting a statistic that 90% of cases where Malaysian women had been jailed abroad involved drugs.

However, women's groups have expressed outrage at the plan, saying it infringes women's rights. One organisation, the Sisters in Islam, called the proposal 'totally ridiculous and regressive'. Several commentators have also pointed out that these letters of consent would be very easy to forge.

Certainly, these new proposals, if implemented, would represent a retrograde step in women's rights.

BMI is continuing to monitor the situation on the ground in Malaysia but at the present time believes that tourism is too important a source of foreign exchange for the authorities to start adopting a less womenfriendly approach to visiting tourists. Conversely, of course, an increasing adherence to Islamic values could see more Arab tourists coming to the country, which may offset any downturn in visitors from Western nations.

Kuala Lumpur-Singapore Liberalisation Welcome The long-awaited liberalisation of the lucrative Singapore-Kuala Lumpur route commenced on 1 February 2008. Malaysia's Air Asia now operates two daily flights, with Singapore-based Tiger Airways and Jetstar Airways having one daily flight each. To celebrate the launch, the budget carriers even offered some seats free of charge (before taxes).

This opening up of a route that was previously the sole domain of Malaysia Airlines and Singapore Airlines should have great benefits to the travelling public, as more flights are allowed and prices are lowered. Full liberalisation of the KL-Singapore route is expected by December 2008 in accordance with an ASEAN agreement. Singapore and Malaysia have very well-developed bilateral tourist ties and the opening of the key KL-Singapore route to competition can only benefit the tourism industries of both countries. The Sydney-based Centre for Asia Pacific Aviation believes that traffic on the KL-Singapore route could triple within two years of full liberalisation.

Of interest now will be the reaction of the two flag carriers, MAS and SIA. Will they use their deep pockets to fuel a price war, trying to knock the budget carriers out of the market? Or will they prefer to concentrate on business travellers, who are happy to pay higher prices for the direct centre-to-centre links provided by the major airlines?