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KUALA LUMPUR (June 3): The Malaysian tourism sector is only expected to fully recover in 2024 to pre-Covid 19 pandemic levels seen in 2019, in anticipation that tourist arrivals will be slow and gradual in 2022 and 2023 on high costs and limited corporate budget, while China is likely to keep borders closed to curb the spread of Covid-19, according to CGS-CIMB Securities Sdn Bhd.
In a note on Friday (June 3), CGS-CIMB economists Nazmi Idrus and Lim Yee Ping said CGS-CIMB estimates that Malaysia’s 2022 foreign tourist arrivals will only reach 30% of 2019 levels.
“For 2023, tourist arrivals are still expected to underperform, reaching only 80% of 2019 levels,” Nazmi and Lim said.
For 2022, CGS-CIMB expects Malaysia’s foreign tourist arrival figure to reach 7.8 million people, compared to 26.1 million people in 2019, according to them.
“Fortunately, the government is already seeking ways to revive the sector by focusing on domestic tourism while waiting for foreign tourists to return.
“So far, our (CGS-CIMB) 2022F GDP growth [forecast for Malaysia] is maintained at 5.6% and monetary policy target is 2.50% by end 2022,” they said.
Looking back, the tourism sector, which CGS-CIMB defines as a segment comprising the retail, accommodation, transport besides the food and beverage sectors, was the hardest hit by global movement restrictions due to the Covid-19 outbreak which began in early 2020, according to the economists.
With the lack of tourists, Malaysia’s tourism revenue fell to RM12.7 billion in 2020 from RM86.1 billion in 2019, they said.
“Subsequently, the share of tourism to the economy fell to 14.1% of GDP in 2020, from 15.9% in 2019, reflecting a RM41.1 billion drop in gross value added. To cushion the impact, the sector relied heavily on domestic travellers throughout 2020 and 2021.
“In addition, the government introduced a list of measures in order to minimise business closures and cashflow issues. As a result, the sector avoided high bankruptcies and recorded a mild loss of employment,” they said.
Looking ahead, they said reasons to be less optimistic about a full recovery in the Malaysian tourism sector in 2022 and 2023 include rising costs of transportation and food due to higher global commodity prices.
They said costlier transportation and food could deter potential travellers from venturing forth.
“This may offset the appeal of the weakened ringgit,” Nazmi and Lim said.
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