malaysia: possible areas of growth in the tourism sector
DESCRIPTION
Measures taken by the Malaysian government to develop the tourism sector and three possible areas the government are focusing to.TRANSCRIPT
TUTORIAL 7
MUHAMAD AMAR BIN MOHD FARID EEE080114NURUL IDAYU BINTI OTHMAN EEE080155AZIEDA BINTI MOHD ADZNI EEE080015NURNADIRAH BINTI MOHD SAUFE EEE080150
Lecturer : Mr.Azmi Shahrin
• A rapid development in the services sector will not only contribute to the overall economic growth of the country, but it will also provide a platform for the economy to move to higher value-added activities and further strengthen its external position by reducing services outflows.
• As the services sector develops, the economy can also retain a higher amount of income generated by the services sector in the country. It will also contribute to the efforts to diversify the base of the economy.
• The development of the services sector will further complement the role of the manufacturing sector in generating growth.
• Since the 1980s, the manufacturing sector has been the mainstay and engine of growth for the Malaysian economy.
• An efficient and strong services sector will further boost the competitiveness of the manufacturing sector because services form a major input to the sector.
•Also, it has been identified as the main target contributor to Malaysia’s GDP, targeted to achieve 59.7% of GDP by year 2020.
Performance in 2008Services Sector Domestic (RM
million)Foreign (RM
million)
Real Estate 25,264.8 656.2
Telecommunication 4,954.0 Nil
Energy 4,407.2 Nil
Financial Services 2,75.6 2,016.5
Hotel and Tourism 1,847.3 82.3
Support Services 1,560.1 684.1
MSC Status Companies
1,418.8 359.6
Distributive Trade 972.9 1,068.0
Transport Services 953.7 469.2
Education Services 184.7 0.2
Health Services 119.1 3.2
Others 85.0 7.3
Regional Establishments
28.4 190.8
Total 44,550.0 5,536.8
Source: MITI Report 2008
• Developments in the services sector in Malaysia in recent years include rising trade in services, deepening of manufacturing related services activity, growing outsourcing activity and increasing trend of liberalization.
• These key trends have not only boosted the development of the services sector in Malaysia, but have also contributed to the efforts to sustain long-term growth of the economy through a manufacturing-services led strategy.
• In order to further boost the development of the services sector, the Government has taken several measures.
• 2 types of measures:•Administrative•Financial Incentives
Administrative MeasuresThe empowerment of the Ministry of
International Trade and Industry (MITI) and MIDA to promote and encourage foreign investment in key manufacturing related and support services.
Malaysia External Trade Development Corporation (MATRADE) has been assigned to promote export of services, such as healthcare; education; construction and related professional services (including engineering and architecture); franchising; ICT; oil and gas related services.
• The Professional Services Development Centre (PSDC) and the National Professional Services Export Council (NAPSEC) have been established to identify potential markets for professional services
•Performance Management and Delivery Unit (PEMANDU) was established to oversee implementation and assess progress of the government transformation programme i.e NKEA, ETP as well as facilitate and support the delivery of NKRAs and MKRAs
Financial IncentivesGovernment provides fiscal and tax
incentives especially for approved services projects, tourism projects, R&D and training activities
There are numerous incentives offered. Among them are investment tax allowance, incentive for energy conservation, incentive for medical devices testing laboratories , incentive for training etc.
Possible Areas of Growth
TourismHealthcareEducation
TourismMalaysia is one of the world’s top 10
destinations, in the top 10 in arrivals as well as receipts.
The fifth largest industry, generating RM37 billion in GNI in 2009 with 24 million arrivals.
Targets by 2020:36 million arrivalsRM106 billion contribution to GNI>490,000 jobs
Under NKEA, the Gov. has identified and developed 12 Economic Partnership Programmes (EPPs) across 6 themes within a 10-year timeframe:
1. Affordable Luxury Develop a vibrant shopping district – KLCC-
Bukit Bintang Position Malaysia as a premier duty-free
shopping destination
2. Nature Adventure Develop a Econature Integrated Resort in
Sabah
3. Family Fun Create a straits Riviera cruise playground
e.g in Melaka, Penang, Kota Kinabalu etc
4. Events, Entertainment, Spa & Sports Target more international events by relaxing
some rules especially pertaining entertainment Establish dedicated entertainment zones Develop the spa industry Expand sports tourism offerings
5. Business Tourism Allocate adequate funding through MyCEB Develop one to two ‘shell’ sites to hold
business tourism events
6. Connectivity & Hotels Improve connectivity to medium-haul markets
e.g Shanghai, Beijing, Sydney, Melbourne, Tokyo, Osaka, Seoul, Delhi, Taipei
Ensure adequate supply with better mix and quality of hotels
Incentives for TourismPioneer Status – hotels granted this status may
enjoy a 5-year partial exemption from paying the income tax
Investment Tax Allowance – 60% allowance (100% for promoted area)
Incentives for the Luxury Yacht IndustryTax Exemption for Tour Operators – at least 500
foreign tourists or 1200 localsTax Exemption for Promoting International
Conference and ExhibitionIncentives for Cultural Performances…etc.
HealthcareMalaysia’s spending on healthcare at 5%
of GDP is regional peers with public spending is the major disproportionate contributor to healthcare costs.
In 2009 – contributed RM15 billion in GNIMalaysia aims to further develop 3 sub-
sectors: PharmaceuticalsHealth TourismMedical Technology Products
Targets by 2020:To generate RM35 billion incremental GNI
contribution to reach RM50 billionAttract >1 million health travelersConduct >1000 clinical trialsCreate >180,000 new jobs
6 EPPs have been categorized into 3 themes:1.Quick Wins
To mandate compulsory health insurance for foreign workers
Create an eco-system to support clinical trials
2. Strategic OpportunitiesMove from a net importer to a significant
player in the RM422bil prescription and pharmaceutical drug industry
Promote Malaysia aggressively in the world health travel map
3. Longer Term Bets Tackle difficult issues such to gain a
strong position in new high technologies i.e telemedicine
Establish Malaysia as a source of significant medical innovation
Offer more grants and incentives for R&D in health science and biomedical research
Build more partnerships with world’s leading healthcare institutions
Incentives for HealthcareInvestment Tax Allowance – up to 100% for
10 yearsIncentives for Medical Devices Testing
Laboratories Incentive for R&D in medical and health
scienceIndustrial Building AllowancePartial Income Tax ExemptionIncentives for the Usage of IT Equipments…
etc
EducationEducation is one of the most pivotal
catalysts that drives the transformation of Malaysia from a middle-to-high income nation due to its impact on productivity and human capital development
In 2009 – contributed RM27 billion or 4% of GNI
Targets under NKEA:To strengthen the private education services
sector by increasing private consumption & investments
Expand education importsMake Malaysia as an education hub in the
regionRaise the standard of education in Malaysia
and improve the access to itBy 2020, education is a big business that
delivers huge and significant impacts on GNI, >500,000 jobs are created (professional & technical) & foreign students enrolment is tripled to 200,000
13 EPPs have been developed and categorized into 3 themes under NKEA:
1. Rapid Scale-up Initiatives Scaling up early childcare and education centres Improve early childcare and early training
centres Boost international schools Expand private teacher training Increase skill training provision
2. Concentration and Specialization Initiatives Build Islamic finance and business education
cluster Build a health science education discipline cluster Build an advanced engineering, science and
innovation cluster Build a hospitality and tourism discipline cluster
3. Demand Generation Initiatives Develop Malaysia as a regional education
hub instead of just a stop-over Champion Malaysia’s international
education brand aggressively Launch EduCity at Iskandar Malaysia and
KL EduCity Introduce public-private partnership in
basic educations
Incentives for EducationExemption from income tax – up to 10 years
for private higher education institutionsMake and receive payments in foreign
currencyBorrow any amount of foreign currency from
licensed onshore banks and non-residentsUnrestricted amount of foreign-knowledge
workersInvest any amount in foreign currency,
onshore and offshore…etc.
Over the last few years, the services sector has not only continued to expand but recorded major key trends as well. Trade in services has been rising at a significant pace and growth in the MRS and outsourcing industry continued to expand. Liberalization in the services sector has continued to take place in line with Malaysia's commitment to the WTO and the AFAS.
Government remains committed to further boost the services sector and make it a new engine of growth. However, government has not only set up organizations to promote the industry but also maintain attractive investment incentives to encourage new investments. The Government also maintains a liberal equity policy in selected services industries.
ReferencesEconomic Review. (2006). Services Sector in Malaysia: Part II. Retrieved
September 29, 2010from http://ww2.publicbank.com.my/cnt_review78.html
MIDA. (2010). Invest in Malaysia: Liberalisation of the Services Sector. Retrieved September 29, 2010 from http://www.mida.gov.my/en_v2/index.php?page=liberalisation-of-the-services-sector
MIDA. (2010). Invest in Malaysia: Performance of the Services Sector. Retrieved September 29, 2010 from http://www.mida.gov.my/en_v2/index.php?page=policies-guidelines-and-incentives
Ministry of Higher Education Malaysia. (2010). Malaysia’s Incentives and Support Packages for for Higher Education. Retrieved September 29, 2010 from jpt.mohe.gov.my/.../Maklumat%20Insentif%20Untuk%20IPTS%20&%20Borang%20Yang%20Digunakan_120309.pdf
PEMANDU. (2010). National Key Economic Areas: The Economic Transformation Programme. Retrieved September 29, 2010 fromhttp://www.pemandu.gov.my/index.php?option=com_content&view=article&id=600&Itemid=83&lang=en