Tourism is identified as a crucial growth engine by developing countries around the world including Malaysia in its effort to transform itself into a high-income country by the year 2020. Malaysia’s tourism industry serves as a vital foreign exchange generator, magnet for investments and a major contributor to the nation’s employment rates. Tourism makes up 5% (RM124.7 billion) of Malaysia’s GDP in 2011 and 13.8% of total employment (World Travel & Tourism Council 2011). According to Dato’ Sri Dr. Ng Yen Yen, the country’s pleasant weather and eco-diversity attract over 25 million tourists a year, earning over RM60 billion in tourist receipts. These figures refer to international inbound tourists, meaning the number of tourists from overseas who travel to Malaysia without exceeding 12 months of stay. This essay aims to study the international tourism sector in Malaysia by first analyzing the demand trends of Malaysia’s international inbound tourism and thereafter presenting the long-run effects of demand determinants as a justification of tourist arrival patterns. The tourism supply perspective focuses on the two major components, namely the supply of hotels and airlines. Together with complementary data from the supply and demand of international tourism, the affect on prices is surveyed. Lastly, distinct government policies aimed at tackling shortcomings in the development of the industry will be addressed.
In the efforts of broadening Malaysia’s economic base, the government realized the potential of the tourism industry to drive up the country’s economic growth. This lead to an increase in tourism activities development since the late 1980’s such as providing incentives to enhance tourism related private sectors. Due to the assistance, the number of international tourist arrivals to Malaysia presented an upward trend annually.
Year 1990 marks the