Malaysia: Sunny outlook for tourism

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As regional rivals suffered from instability and violence over the past year, Malaysia has strengthened its position as South-east Asia's top tourism destination, posting strong visitor numbers. Keeping pace with the rising demand will require constant upgrading of the travel infrastructure.

Tourism has grown to be a lynchpin of the Malaysian economy, contributing around 13% of gross domestic product (GDP) and providing employment to some 1.3m people, according to the latest report by World Travel and Tourism Council.

Last year, more than 23.6m visitors went through passport control, a 7% increase from 2008. This generated some $16.7bn in revenue, a 3% rise on the previous year. Malaysia is looking to better these figures in 2010, as well as improve on its World Tourism Organisation ranking of ninth most popular destination in the world.

Estimates suggest that more than 25m tourists will visit Malaysia in 2010, compared to the 14m expected to make the trip to Thailand and 3.3m to the Philippines. Only China, which is projected to draw some 54m tourists this year, tops Malaysia as a tourist destination in Asia.

One of the factors that has bolstered Malaysia's appeal is its social and political stability. The tourism sector has no doubt benefited from extended civil unrest in Thailand that saw Bangkok's airports blockaded in late 2008 and the capital's central business and retail districts occupied for weeks earlier this year before a violent crackdown.

A recent hostage crisis in the Philippines, where nine people were killed in a shoot out after a gunman took control of a bus carrying tourists from Hong Kong, also highlights how delicate a country's tourism industry can be. According to some analysts, the Philippine travel sector could take years to recover from the setback, and numerous countries have issuing warnings over the incident.

While regional rivals scramble for damage control in their tourism industries, Malaysia is consolidating its lead.

On August 30, Prime Minister Najib Razak attended a ground-breaking ceremony to mark the construction of a new $800m terminal in Kuala Lumpur that will serve the increasing demand for budget air travel.

Located 2km west of the main Kuala Lumpur International Airport (KLIA), the low-cost carrier terminal, dubbed KLIA 2, can handle up to 30m passengers annually, more than the total number of tourists that visit Malaysia each year. The new terminal and other tourism-related infrastructure are part of the government's ambitious plan to boost the industry's profile and contribution to GDP.

KLIA 2 will be vital to achieving the goal set out in the state's plan to raising the tourism revenues to $53.3bn by 2020, more than three times the 2009 figure, Najib said at the launch of the terminal. "With globalisation, providing the best air travel services and facilities without a doubt is an important catalyst to promote trade and investments into the country," Najib said.

Though the new terminal will greatly improve accessibility and speed for low-cost airlines and their passengers, it will be completed behind schedule, having initially been due to start receiving flights in late 2011. As a result of delays in building the associated runways and changes to the original plan of the terminal, it is not expected to be operational until the second half of 2012.

This highlights a potential problem for Malaysia and its booming tourism industry. With visitor numbers climbing steadily, the country's tourism infrastructure must keep pace with or better yet get ahead of this growth. Poor services, such as lengthy delays at airports, can tarnish a country's reputation with visitors looking for relaxation rather than frustration.

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