Wooing the Arabs

Tourism is leading a surge in business between Malaysia and the Middle East, with some Arab countries recording a 500% increase in the number of tourists that visit Malaysia today

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By  Massoud Derhally Published  March 30, 2003

|~||~||~|Relations between Malaysia, the world's 17th largest exporter and the Middle East are growing stronger by the day, as Arab countries look to forge stronger ties with the East. Though the US is Malaysia’s largest export market, accounting for almost 20% of the country’s exports, trade with the Gulf and Middle East has been growing at a greater speed since September 11.

Exports from Malaysia to the GCC countries came to US $356 million in 1991, a figure that grew to US $1.39 billion in 2001, a nearly fourfold, increase. Imports to Malaysia from the GCC have risen from US $201 million in 1991 to US $1.3 billion in 2001.

Malaysia’s exports to the UAE alone amounted to US $859 million in 2000, and US $833 in 2001. The dip, according to Mohammed Mustafa Abdul Aziz, Malaysia’s Consul General and Trade Commissioner in Dubai, was a result of the global economic slow down.
In 2002, however, business bounced back. “Last year with our aggressive trade promotion programmes, we recovered, with an increase of 2.95% to US $859 million,” says Abdul Aziz. The breakdown of products exported to the Gulf includes manufactured goods (87.6%), mining goods (5.4%) and agricultural goods (3.4%).

But Malaysia is not simply relying on trade with Arab world, as the volume is still relatively small. Trade with the GCC amounts to 1.68% of Malaysia’s overall trade balance with the UAE as the number one trading partner, followed by Saudi Arabia, Oman, Kuwait, Qatar, and Bahrain. It is actively reinventing itself and trying to diversify its revenue base. The country is encouraging foreign direct investment from the Arab and Muslim world in addition to various types of tourism.

Since September 11, Arab investors have been increasingly looking for investment opportunities. “Most of the investments made by Arabs have been in stocks,” says Ahmadur Rahman of the Malaysian External Trade Development Corporation. “Abu Dhabi Investment Authority (ADIA) has made an investment of US $300 million,” added Rahman.

Bahrain recently signed an agreement with Malaysia for encouraging and protecting investments ventures carried out by the two countries’ citizens and companies in the territories of the other through ensuring the basics to promote bilateral investment, trade and commercial activities. The agreement also provides for the free transfer of investments and investment revenues, ensuring fair compensation in case of dividing property, and creating the proper atmosphere for settling any disputes relating to investment. Bahrain has recently awarded oil exploration rights to Malaysia’s Petroliam Nasional Berhad (Petronas.) This is in addition to agreements that have paved the way for the establishment of the International Islamic Financial Market, which is now located in Bahrain.

Next to exports, tourism is now the number two earner of foreign exchange for Malaysia. According to the World Tourism Organisation, a UN-affiliated trade agency, South East Asia accounts for 5.8% of the world’s tourism market share and the number of international tourists that visit the region have incrementally increased in the last ten years. For a country that was affected by two years of recession in East Asia, Malaysia has managed to come out on top. The fact that it is relatively inexpensive when compared to other destinations has helped.

Malaysia’s Kuala Lumpur International Airport saw 16.8 million arrivals in 2001, of which 12.7 million were tourists. In 2002, 13.3 million tourists visited Malaysia, an increase of 4% from 2001. According to the Malaysia Institute of Economic Research, tourism is estimated to have contributed US $11.2 billion to the country’s GDP in 2001, up 8.9% from the year before.

Malaysia has also succeeded in attracting more Arab tourists. This has perhaps increased further as Arabs shy away from Europe and North America because of the difficulty in obtaining visas and avoiding what they see as discriminatory measures such as racial profiling and fingerprinting.

Tourist arrivals in Malaysia from the Middle East in 2001 were 127,000 and the trend has continued. Dato’ Paduka Abdul Kadir Bin Hj. Sheikh Fadzir, Malaysia’s Minister of Culture, Arts and Tourism acknowledges that the September 11 and Bali attacks had an impact on tourism in Malaysia, but points out that the country has recovered and is on its way to attracting more tourists.
“We had a drop in tourist arrivals after 9/11 and have been campaigning in the Middle East for the last two years. Our target was to get 500,000 tourists from the Arab world between the summer months of June to August [2003],” Abdul Kadir told Arabian Business.
“We have spent a lot on advertisements and have been getting a 100% rise every year. We started from a very low base of 22,000 and that went up to 50,000, then 100,000 and now 184,000 tourists from the Arab world out of the total tourist arrivals of 13.3 million. Half of the Arab tourists came from Saudi Arabia. But we will be working hard to reach our half a million figure for the coming year,” Abdul Kadir added.

Bringing in Arab tourists

The increase in Arab tourists is staggering. In 2000, Malaysia received nearly 28,000 tourists from Saudi Arabia, a figure that has risen to 45,000 in 2002. Tourist arrivals from the UAE have increased nearly 500% from 2,000 in 2000 to 14,000 in 2002. This, according to tourism officials, is because of accessibility.

Domestic tourism is equally, if not more, important and the government has an active tourism campaign. “In this country, poverty is very low and we try to enhance the quality of life and we encourage people to go for family holidays and visit parts of the country, especially after the Asian financial crisis,” says Abdul Kadir. “This was part of our recovery strategy. Malaysians travel and take holidays today more than before and this has a tremendous impact,” added Abdul Kadir.

Hotel occupancy rates, according to Abdul Kadir, average 60% because of domestic tourism and the government has scrapped its six day work week and declared two Saturdays of each month as a holiday to encourage domestic travel.

Malaysia is inexpensive when compared to other destinations, and that has been key to its success. This, in addition to the country’s liberal visa policy that allows travelers to secure visas on arrival and a $35 million advertising budget, seem to have worked wonders.
But it has worked had to get where it is. It has been at the forefront when it comes to marketing itself not only as a premier spot, but also as an exotic destination, one that caters to tourists of all income levels.

The country’s tourism authority has done the circuits, be it the local newspaper in the Gulf, the radio station, television channel, CNN or BBC and it is playing host to Formula One.
Intra-Asian tourism has also been very important. Tunku Iskandar, president of the Malaysia Association of Tour and Travel Agents (MATTA), says there is an active campaign to increase tourism in the South East Asian region. “We have created the ASEAN hotel pass and ASEAN Air pass, which have fixed attractive rates for hotels and air fares around the region,” says Iskandar.

MATTA promoted Intra-ASEAN travel with a festival this March 2003, which welcomed 1,000 tours, attracted in excess of 120,000 visitors, and is expected to bring in US $40 million.

Malaysia is aiming high in the next 12 months on both the tourism and trade fronts. Mohammad Mustafa Abdul Aziz, the Consul General and Trade Commissioner, is keen on seeing more Arabs going to his country. “We have to attract Arabs not only to come and spend their vacation holidays but also to use our services such as getting medical treatment, where we are heavily promoting our healthcare services,” says Abdul Aziz.

The government would also like to promote education and lure Arabs to study in Malaysia where costs are cheaper than western universities. “Our presence here is much stronger compared to five years ago and we are trying to position ourselves in this market as a nation that can offer all sorts of facilities and products.” ||**||

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