- Tourism is one of the hardest-hit sectors following from the Covid-19 pandemic, with disruption likely to continue for months to come.
- Prior to the pandemic, Malaysia’s tourism sector was already struggling with a lack of innovation, fear of competition and inadequate social protection which has been exposed by the pandemic.
- IDEAS calls for a strategy to address long term weaknesses in the tourism sector, alongside short-term stimulus, including increasing connectivity for tourism SMEs, widening the social safety net and reforming outdated regulations which are holding the industry back.
Kuala Lumpur, 28 September 2020 – IDEAS has published Brief IDEAS No. 28, “Tourism Recovery Plan: An Opportunity for Change Post COVID-19”, co-authored by IDEAS senior economist, Adli Amirullah and research assistant, Yohendran Nadar Arulthevan. The tourism sector is currently one of Malaysia’s hardest-hit sectors. The absence of travel and tourists led to a near-collapse of Malaysia’s tourism sector as tourism activities are highly dependent on the movement of people from one destination to another. The Ministry of Tourism, Arts, and Culture (MOTAC) reported estimated losses for the tourism sector in the first half of this year to be around RM45 billion due to the impact of MCO.
IDEAS welcomes the timely rollout of the short-term economic recovery plan, PENJANA by the government which provided the necessary relief to protect workers and businesses but it is also essential that a long-term recovery plan is implemented in the near future. Before the pandemic, tourism was already struggling with a number of structural challenges:
Malaysia’s international tourism numbers have been stagnant compared to regional peers such as Thailand and Singapore and government spending on tourism-related services has been flat;
The industry is suffering from a lack of innovation, with domestic SMEs slow to adapt to new consumer preferences. SMEs in the industry is held back by a lack of internet connectivity, particularly in rural areas and by outdated regulations which do not promote competition;
The tourism industry also demonstrates risk aversion and preference for the status quo, in the face of new disruptive technologies which are transforming the industry.
Finally, the recent pandemic has exposed gaps in the social protection framework with many informal workers not eligible for support.
IDEAS recommends that a long-term strategy be developed alongside the short-term stimulus package. The long-term strategy will need to (i) Promote innovation including by improving connectivity, particularly in rural areas; (ii) Support competition, including by updating outdated legislation and regulation including the Tourism Act; and (iii) Ensure social protection is extended to informal workers to create the space for innovation and mobility.
Commenting on the release of the paper, IDEAS CEO Tricia Yeoh commented that; ”Tourism is one of the sectors which has been the hardest hit by the pandemic and with restrictions on international travel set to continue, the disruption could last for months if not years. This crisis has hit an industry already struggling to adapt to new consumer trends and technologies. A short-term survival plan will not be enough – a long-term strategy is also needed to support the tourism industry – and SMEs in particular – to innovate and compete in this challenging environment.”
The paper, “Tourism Recovery Plan: An Opportunity for Change Post COVID-19” can be downloaded here.
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