THE ECONOMIC IMPACTOF TOURISM INMALAYSIA:AN INPUT OUTPUTANALYSISRashidah bt Abdullah810163
INTRODUCTION• In Malaysia, tourism industry is currently thesecond largest foreign exchange earner, aftermanufacturing.• Malaysian Tourism Minister said that in line theMalaysia Tourism Transformation Plan 2020,which aims to receive 36 million tourist arrivalsand RM168 billion in receipt by 2020.
PROBLEM STATEMENT• Tourism has a variety of economic impacts. Touristcontributed to sales, profit, jobs, tax revenue andincome in Malaysia.• From the report, the basic pattern of tourist arrivalsover the years has remained the same. Highest touristarrivals in Malaysia are tourist from ASEAN countrieslike Singapore and Thailand.• Malaysian tourism sector face a difficulties inattracting a tourist from high income countries. Wecan say that Malaysia is still not competitive inattracting tourist compared by the EuropeanCountries.
Cont- PROBLEM STATEMENT• From the table of contribution to employmentshows that the increased amount of labour andemployment in Malaysian tourism sectors.• But the ratio of total employment to thenumber of tourist arrivals is 22 to one, while inThailand the ratio is one employee to every 3 to5 tourist.• This show that the Malaysia tourism sector stilllack efficient in human resources to providebetter service to visitors.
Cont- PROBLEM STATEMENT• Given its is importance to the growth in GDPand household income, the government hasplaced strong emphasis on the development oftourism industry.• Even though, it has been demonstrated thattourism is a vital piece of the economy in termsof importance of GDP, intersectoral andemployment, these figures do not capture theentire impact of on the wider economy.
RESEARCH QUESTIONi. What economic impact does tourism have tothe Malaysian economy?ii. How tourism sector contributed to output,income and employment in Malaysia?iii. What are inter sectoral backward andforward linkages of the tourism sector withthe other economic sector?
OBJECTIVE OF THE STUDY• General Objective:The general objective of this study is empirically examinesthe economic impact of tourism sector on the Malaysianeconomy.• Specific Objective:i. To examine the impacts of tourism sector on domesticoutput, household income and employment in Malaysia.ii. To examines the strengths of the inter sectoral forward andbackward linkages between the tourism sector and the nontourism sector in the rest of Malaysia economy.
LITERATURE REVIEW(1)• Archer and Fletcher (1996)• Analyzed the impact of tourists’ expenditure’s contribution on thegeneration of income, government revenue, and supportingemployment and the balance of payment using input output modelto the Seychelles island economy• The input-output transaction table was disaggregated into 18sectors• The study shows that input-output analysis can do more thanmerely quantify impact.• It can produce data which is of importance to policymakers andprovide guidance to marketing experts. It also provides a strongindication to government which sector of the economy should bepromoted and encouraged to meet particular policy objective.
LITERATURE REVIEW (2)• Albqami (2004)• estimated output, employment, and income multipliers ofthe Saudi Arabian economy from the economic impactanalysis of tourists’ expenditure using input output model.• The input output transaction table of 1997 wasdisaggregated into nine sectors where tourism sector wasincluded as one of the sectors• The impacts of tourist expenditure on output, income, andemployment were measured at direct and indirect level• The study concludes that service sector received highestincome and employment impact although output impactwas relatively lower compared to transportation sector.
LITERATURE REVIEW (3)• Tianhu Fan and jan Oosterhaven (2005)• investigate the impact of international tourism on theChinese economy for 1997• They employ an input-output impact model extendedwith SAM-based endogenous consumption demand toestimate the direct, indirect and induced dependenceof the Chinese economy on international tourism• They conclude that the impact of international tourismin China is still small, its high value added-intensityindicates its future potential for the Chinese economy.
LITERATURE REVIEW (4)• Mazumder (2009)• examine the contribution made by tourism sectorthrough deriving multipliers in terms of output,income, employment, value added and import for theMalaysian economy using input-output techniques.• Normal and ratio multipliers were measured todemonstrate the contribution made by tourismindustry and its linkages with the other sectors of theeconomy• This study show that multiplier analysis of tourismindustry in Malaysia possesses that this industrycontributing significantly to economic growth.
LITERATURE REVIEW (5)• Krista Daniella Yu (2011)• study on the economic impact of tourism to the Philippine economythrough the use of input-output analysis• The input output model is used to examine the interdependencebetween industries in an economy• From the inverse matrix, she derive the multiplier that will estimatethe economic impact of an exogenous change in the hotel andrestaurant sector to output, GDP and income• From this study, she conclude that the Philippine tourism industrydoes have an impact in the economy. Although its impact is not assignificant as expected, it does contributed to the welfare of thecitizens through increasing their income and at the same timereduce balance of payment deficit.
METHODOLOGY• DATA SOURCE: Secondary data are gathered from input-outputtables. Data on input-output coefficient wereobtained from Malaysia’s input-output tablepublished by Department of Statistics Malaysia(2005). The tourism activities considered in this study areaccommodation, food and beverage, wholesale andretail trade, transportation, business services,communication and recreation
SIGNIFICANT OF STUDY• This study will provide a quantifiable estimation of theeconomic contribution of the tourism sector to the Malaysianeconomy• The outcomes will provide the information needed in keymarketing decisions and formulating the next five year plan ofthe tourism sectors which will significantly impact all tourismstakeholders• The finding will be useful to the Malaysian economy to adjustthe production structure of the tourism related businesses tomeet future tourism demand in the country
LIMITATION OF STUDY• This study is limited to the contributions of tourism sector tothe output, income and employment in Malaysian economy.• This study did not include social and environmental analysesof tourism because of the possibility of becoming a large scaleof study, lack of data and limited time to address theseconstraints• The input output model has considerable usefulness for shortand medium term planning but the application to long termplanning may be limited if the structure of an economychanges quickly over time