Let’s do our part to help build Malaysia

Tourism: A key economic sector

When times are tough, some industries can be more resilient than others. Tourism is one such sector.

Malaysia has plenty to offer tourists – whether it is about exploring the Mulu Caves in Sarawak, diving off Pulau Tioman, shopping at the Pavilion, attending a literary festival in the quaint streets of Georgetown, Penang or just soaking up the sun in Pulau Langkawi.

Boasting a wide-range of attractions, it is easy to surmise that Malaysia’s tourism industry can thrive despite the occasional global socio economic challenges.

As part of Malaysia’s growth plan towards high income status, tourism was selected as one of the National Key Economic Areas (NKEA) under the National Transformation Programme (NTP) in 2010. It was envisaged to be a quick win in terms of drawing in tourist spending. Recognising this potential, we drew up a detailed implementation programme on how ambitious yearly targets running up to 2020 would be met.

The tourism industry is expanding at a tremendous pace. In 2015, tourism was the second highest private investment contributor at RM24.5 billion and the third largest GNI contributor at RM67.1 billion.

This year, we are aiming to attract 30.5 million tourists to our shores from 25.7 million, contributing RM103 billion worth of tourist receipts from RM69.1 billion.

In parts of implementing the programme over the last five years, we had found that the absolute number of tourists arriving could be further maximised, as we saw an evident six percent drop last year in 2015. One of the key factors was the exacerbated haze problem. Something had to be done to sustain this industry or our NTP targets will not be achieved and that would not be a good outcome for our economy come 2020.

The Government made a conscious effort to get to the bottom of the problem, identify issues and figure out solutions to attract tourists back to Malaysia again. As a result the Ministry of Tourism and Culture sponsored a 6 week lab early this year, which included sectoral and industry players. Here, we revisited the plans made in 2010 to determine what worked and what did not.

We found that we have been losing a huge number of Chinese tourists to other countries over the past few years, whilst Thailand was seeing an uptrend of Chinese tourists. This was because we had a complicated visa process for them. Thailand, on the other hand, had eased entry requirements.

We have since eased the entry of Chinese tourists. Chinese tourists visiting the country for under 15 days would not need a visa to enter Malaysia between March 1 and December 31, 2016. We also proposed to fast track the implementation of the e-Visa system, which was deemed more convenient as it allows tourists to apply directly online and this has also been made operational since March 1. All these are done with compliance with our security priorities surrounding our immigration process.

Additionally, lab participants also agreed to focus on new initiatives to attract top carriers in the world to use Malaysia as an ASEAN hub. Focus will also be put to encourage airlines to ply new overseas routes as well as targeted promotions to increase travel inflow.

Overall, the lab proposed 65 initiatives, of which 25 are new. More specifically, lab members explored about 40 opportunities to improve current initiatives, expanding coverage and developing new offerings, facilities and incentives. Led by the private sector, Malaysia is expected to unlock RM2.7 billion worth of further investments in order for us to attain our 2020 target of attracting 36 million tourists and in the process, raking in RM168 billion worth of tourist receipts.

For industry players, there are three important areas that we must focus on to get tourism back on track.

First, we must deliver a hassle-free experience to tourists to begin with. All segments of the industry must think of alleviating stress factors for travellers whether it is the airline, the airport, immigration, transportation or accommodation services providers. People who enjoy a seamless and hassle-free holiday will spread the good word.

Second, the authorities should be more open and tolerant to activities that appeal to tourists such as concerts featuring international artistes, performances and even art shows. We must see tourists for what they are – people who are looking to have an enjoyable holiday. I am not saying there need not be limits, but let us not drive them away from Malaysia because we are too rigid in catering to their interests.

Lastly, products and services must be top-notch. For example, tourist guides must be good story-tellers, having had adequate training to handle tourists with the utmost sense of professionalism. Taxi drivers are possibly first point of contact for many of our tourists, making them as ambassadors of our Malaysian hospitality. Therefore, integrity and the desire to deliver top notch services must be their priority while leveraging on their deep knowledge of the city. Holiday packages though competitive, must not compromise on quality of the experience of the tourist.

I am reminded of this time when I was at Malaysia Airlines, when the team was trying very hard to figure out how our planes as national flag-bearers of the country could symbolise the warmth and generous hospitality often associated with our Malaysian culture. After many discussions, we realised that we had been staring at the answer for the longest time. The code for our flights begins with MH and up till then it was nothing, just part of a code.

And that was how we landed the tagline ‘Malaysian Hospitality’ – a simple expression anchored in gravitas to truly convey the Malaysian way. It brought new meaning to the work we did and everyone in the company – engineers, pilots, stewardesses, management or ground crew – embodied its very spirit in the areas of their work.

If all Malaysians could come together to embrace this spirit of Malaysian hospitality as we receive tourists from all over the world, I am convinced that our tourism industry will realise their aspirational targets. Whether it is simply recognising signs that a tourist is lost and pointing them in the right direction, introducing them to local delicacies or explaining our culture, it is important that we realise it is within us to be able to make it a better experience for them.

So the next time you come into contact with a tourist, I hope you’ll remember that you’re another flag-bearer representing Malaysian hospitality.

Building resilience for the long haul

Writing has been on the wall for a while now that from an economic standpoint, we’re experiencing crunch time. Low oil prices and shrinking global demand are some of the factors forcing a ‘new normal’ of slower economic growth the world over.

In addition to being an oil producing country, Malaysia as a nation that trades heavily with the rest of the world – with total trade at 151.9% of our GDP (2015), will inevitably be affected by the drop in global consumption.

Progressing into 2016, we are aware that some industries, especially those involved in commodities and financial services are already tightening belts for the rougher ride ahead.

Against such a backdrop, I understand that it can be tempting to cave in to prophecies of gloom and doom and believe that our economy is in trouble. Except, it isn’t.

Malaysia’s economic performance in 2015, despite the challenging scenario, demonstrates resilience. GDP growth clocked in at 5 percent, our budget deficit target was met at 3.2 percent of the GDP, national debt remains at 54 percent below the ceiling of 55 percent of GDP and private investment continues to outdo public investment at a ratio of 65:35.

Despite lower private sector investment compared to 2014, public sector investment numbers remain below that – proof that the Government has decided not to step in and borrow just for the sake of growth because this would increase debt and affect our fiscal position.

In January, ratings agency Standard & Poor’s when commenting on the budget review announced by the PM, highlighted that Malaysia’s fiscal initiatives, such as the implementation of Goods and Services Tax and removal of petroleum subsidies have helped reduce some of the stress that previously slowed down fiscal consolidation.

As a matter of fact, all three ratings agencies – S&P, Moody’s and Fitch – have given Malaysia’s sovereign ratings a stable outlook in 2016 due to the Government’s discipline in pushing ahead with fiscal consolidation measures.

Beyond fiscal consolidation, a question we now need to ask is whether or not we have been building enough resilience in our key sectors?

Low oil prices may be good input for production but it certainly is bad for oil-producing countries.

Last month, at the invitation of their government, I was in Oman to share our national transformation initiatives. As a country that heavily relies on oil and gas, they are highly-exposed to the fluctuations in oil pricing. They liked the work we have done in Malaysia, and were keen on replicating the process.

I was also recently invited by the Saudi government to address their ministers and top civil servants and share our transformation experience as they are now embarking on their own national transformation. They are running more than 20 labs to figure out in Riyadh, how to move the economy forward in these current circumstances.

Malaysia has evolved past the stage of labs. In ensuring prudent fiscal management, the government recognised the need to mitigate risks from volatilities and scenario planned in 2010.

In implementing the Economic Transformation Programme, we set out to restructure the economy by moving away from being overly dependent on oil and gas revenue to build resilience in the top 12 sectors of the economy in which we enjoy comparative advantage. Through strategic reforms, we have been working to build a competitive business environment for the best run businesses to thrive.

Within the NKEAs, we looked at ways to expand from commodity extraction activities into high-value, downstream segments. Allow me to share some examples.

The Oil, Gas and Energy NKEA included an entry point project to increase petrochemical outputs through the development of the Pengerang Integrated Petroleum Complex. This provides a natural hedge against volatilities – when oil price comes down, raw oil and gas (O&G) input is much lower so when you sell it, you make a good profit. Deepwater terminal operator Dialog Group Berhad was able to ride the coat-tails of a contango in this industry to cater to increased demand for storage to the point that they reached maximum capacity. So getting serious about the downstream business was a spot on, absolutely good strategy.

During the Palm Oil and Rubber lab in 2010, we anticipated that crude palm oil prices would decrease at some point, and we were not far off the mark as prices have come down in the past year. Under the Palm Oil and Rubber NKEA, the Government works with the private sector to encourage businesses in high-value oleo-derivatives and bio-based chemicals.

Many of these initiatives may take a while to manifest benefits, but the point is these measures are in place and our economy is not crumbling beneath the weight of external pressures.

Today, instead of experiencing a contraction, we have modest growth. We did the hard work and made the tough decisions, and are now staying the course for a sustainable future.

Historically, when you look at the world economy, say every 40 years, 50 years or even a 100, you will find the global economy or even the economy within a country goes through ups and downs in cyclical fashion. There are those who just struggle and simply fizzle out. And then there are winners – people who can pick out opportunities during the down-cycles, who are then able to ride the wave during the upswing.

The last thing anyone should do in this current situation is to panic. In a recession, when governments panic, they end up borrowing money to stimulate the economy. Public sector investment is boosted at the expense of the fiscal position. It becomes the case of ‘kicking the can up the road’ because despite the ‘kicking’, problems of debt and deficit still remain. We do not want that here in Malaysia. Instead we should accept the reality that the world economy is in the doldrums, and stick to the plan.

The trick to survival in the long term across various business cycles lies in being resilient. And resilience is not something you build only when you have your back against the wall, you keep doing it – in good times and bad, so you are always ready for when the tide turns.  In these current times, staying the course we have charted will ensure we get to our target of becoming a high income country by 2020.

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