PETALING JAYA: The recent reopening of Malaysian borders should see tourist arrivals rising. However, a full recovery is only likely in 2024, according to CGS-CIMB Research.
“We expect a pickup in the number of foreign tourist arrivals in the quarters ahead. However, a full recovery of the tourism sector may not be likely this year.
“We estimate foreign tourist arrivals to reach 30% of 2019 levels in 2022, and 80% of 2019 levels in 2023,” the research firm said in a report.
There are a few reasons it was less optimistic about a near-term recovery. It noted that for countries that have kept their borders open since mid-2020, the return of foreign tourists has been gradual.
“Up until the first quarter of 2022, the number of tourists in some of these economies has yet to surpass the pre-pandemic levels, although arrivals are likely to improve as more borders reopen,” it added.
CGS-CIMB Research reckons that growth in the business and conferences segment is also likely to be sub-par due to limited corporate budget allocation for travel, lack of physical conferences for the year, and as new technologies in video conferencing.
Arrivals for business and conferences make up 14% of tourists to Malaysia.
Moreover, it said there was a possibility that no outbound holiday-related travel would be allowed from China for the whole year.
Chinese tourists make up 12% of arrivals into Malaysia.
Another factor that could deter potential travellers was the rising cost in transportation and food stemming from the rise in global commodity prices. This may offset the appeal of the weakened ringgit.
“Fortunately, the government is seeking ways to revive the sector by focusing on domestic tourism while waiting for foreign tourists to return. Our 2022 gross domestic product (GDP) growth is maintained at 5.6% and the monetary policy target is 2.5% by end-2022,” said CGS-CIMB Research.
The tourism sector was one of the hardest following the Covid-19 outbreak. In 2020, tourism revenue fell to RM12.7bil from RM86.1bil in 2019. Subsequently, the share of tourism to the economy fell to 14.1% of GDP in 2020, from 15.9% in 2019, reflecting a RM41.1bil drop in gross value-added, said CGS-CIMB Research.
“To cushion the impact, the sector relied heavily on domestic travellers throughout 2020 and 2021. In addition, the government introduced measures to minimise business closures and cash flow issues. As a result, the sector avoided high bankruptcies and recorded a mild loss of employment,” the research firm said.
Source: https://www.thestar.com.my/business/business-news/2022/06/07/full-recovery-in-tourist-arrivals-likely-in-2024