OBG talks to Ahmad Razlan, CEO, Sepang International Circuit (SIC)

Ahmad Razlan, CEO, Sepang International Circuit (SIC)

Interview: Ahmad Razlan

What has been the direct economic impact of the SIC since its inception? What were Sepang’s contributions to tourism receipts in 2013?

AHMAD RAZLAN: The SIC engaged PwC to do the first economic study on the impact of the Formula One race on the Malaysian economy back in 2011. We decided to engage consultants to give us the assurance that the Formula One race was bringing about a positive economic impact to the country. One of the conclusions from the study showed that tourists who come for the Formula One race spend four to five days in Malaysia, on average, and spend around RM7000 ($2185) per person. If you translate that to the number of spectators in 2011, the race contributed approximately RM244m ($76.2m), of which visitors generated 60%. Factor in the collective television and media exposure and the total comes to RM385m ($120m). In total, the return on investment based on what the government has spent on the race is three times cost. In June 2009 we were brought under the purview of the Ministry of Finance and as a subsidiary we have to justify our activities. We presented this report to the Ministry of Finance, and it is being used as a basis for a possible extension past the 2015 season, when the rights for the race will need to be re-negotiated.

What role can Malaysia play as a premier events tourism destination in the region?

RAZLAN: What we have put forth to the government and to Tourism Malaysia is that one of the platforms to attract tourists is events. Unfortunately, or fortunately, the events that attract huge volumes of tourists are either sporting or music, hence the hosting of the Formula One race here in Malaysia over the past 16 years. The government believes that the Formula One race and MotoGP, our other premier event, are very much relevant in putting Malaysia on the global events map. In the report produced by PwC, the consultants looked at what alternative events could attract similar global exposure and reduce reliance on Formula One, but a conclusion could not be drawn. The World Cup and the Olympics are two global events that would attract international recognition, however, they take place only once every four years and Malaysia would have to compete against a significant number of other nations in order to win the bid.

How has regional and international spectatorship grown since Formula One and MotoGP arrived?

RAZLAN: The MotoGP 2013 had a record turnout of 126,917 spectators over three days, an increase of 9% over the previous year. While Malaysians made up the bulk of the spectatorship (73%), we also had a strong turnout from Indonesians (10%), Australians (6%) and Singaporeans (2%). The Formula One race attracted 123,400 spectators during 2013, which was the second-largest number of attendees in track history. Foreign spectatorship made up 35% of all attendance statistics for the race. In 2014 we anticipate 90,000 visitors on race day, up from 88,450 in 2013.

What effect does the increase in tourism arrivals have on local infrastructure, and how has the SIC affected the development of the city?

RAZLAN: We are starting to see developers considering Sepang for projects. Malaysia Airports (MAHB) is developing the Mitsui Outlet Park in a joint-venture with Mitsui Fudosan. A Mövenpick hotel is also coming on-line soon. We did a property feasibility study of Sepang and its surroundings, the outcome of which indicated a population of 220,000 people within a 15-km radius and little infrastructure to meet that growth. There will be large developments in Sepang, making it an economic hub in the next five years. When it comes to public transport, the main access to the circuit is the MEX highway, which was built five years ago. MEX has reduced travel time from the Kuala Lumpur city centre to the circuit. The population density does not justify a network of feeder transport, but we hope the Express Rail Link will include the SIC.

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The Report: Malaysia 2014

Tourism chapter from The Report: Malaysia 2014

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