BMI's Executive Summary

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New Business Environment Rankings

For 2008, BMI has made wholesale changes to the methodology behind its proprietary Business Environment Rankings for the tourism industry across Asia. Our new rating system is divided into distinct areas: limits of potential returns, which evaluates the size and growth potential of every state's tourism industry, and also broader factors that may inhibit its development over the coming years; and risks to potential returns, which evaluates industry risks and threats coming from the state's political and economic backdrop that may impede the realisation of anticipated returns from the sector over our forecast period.

These ratings have been developed to complement BMI's range of country risk ratings and now integrate all of the 16 industries covered by BMI under one methodology. Malaysia is ranked 2nd in our analysis. The country ranks strongly across the board, in terms of having a well-developed tourism infrastructure and strong tourism arrivals figures in recent years. The only slight concern we have is over the country's long-term political risk, specifically whether there is a danger of an increase in Islamic challenges to the secular state, which could deter visitors from visiting the country in the future.

Core Forecasts

The most recent figures (for the January – July period) show visitor arrivals to Malaysia up by 23.9%, to 12,404,377. Singapore again provided the majority of tourists to its northern neighbour, with 6.16mn arrivals over the first seven months of the year. The vast majority of arrivals from Singapore are crossborder day trips. Other key markets included Indonesia, Brunei, China, Japan, India, Australia, the UK and the US.

China continues to be the fastest-growing provider of visitors to Malaysia, with numbers up by 80.4%, to 376,064. The number of Indian visitors to Malaysia was also up, by 62.1%, to 260,271. However, the number of visitors from Thailand dropped sharply, down 22.3%, to 925,958.

These very strong figures have led BMI to revise its targets for 2007 visitor arrivals upwards. We believe that a figure of 20.5mn tourist arrivals for the year is now likely, perhaps with even an upside risk to this new figure. The country's 50th anniversary celebrations have proved very popular, however, it is likely that visitor numbers will start to ease back by year-end.

Malaysia To Review Visa On Arrival Policy

In a move that may do much to damage Malaysia as a tourism destination in the future, Home Affairs Minister Radzi Sheikh Ahmad said in late October 2007 that the country was reconsidering its ‘visa on arrival' policy. Radzi says this decision has been reached due to the number of people who stay on illegally in Malaysia having been granted such a visa, which is only valid for one month. However, the Tourism Ministry has protested against the idea. Deputy Tourism Minister Datuk Donald Lim Siang Chai said that the home affairs ministry would need to find an alternative to visas on arrival, were they to be scrapped. Certainly, the one-month visa, which is granted at Malaysian airports for a cost of MYR100, has proved very popular with tourists coming to celebrate the 50th anniversary of independence during 2007.

The cabinet is due to decide by year end whether or not the policy should be continued.

Opening Up Lucrative Kuala Lumpur–Singapore Route

The long-awaited liberalization of the lucrative Singapore-Kuala Lumpur route looks set to commence in early 2008. In late October 2007, the Malaysian government formally gave Air Asia permission to commence flying the route twice daily. As a reciprocal act, the country will also allow two flights by Singapore-based Tiger Airways into Kuala Lumpur each day. However, the proposal must now be approved by the Singaporean authorities at a meeting of Asean transport ministers scheduled to take place between 29 October and 3 November.

Oil Prices Once More On The Rise

The second half of 2007 has seen oil prices once again making record highs. BMI's economic analysts believe that oil prices will remain in elevated territory well into 2008, which will see fuel costs once more becoming a headache for international airlines. Our average price forecast for Brent crude for 2008 is US$72.00/bbl.

Chapter 1 - New This Quarter

Core Forecasts

New long-haul budget airline unveiled

Racial profiling threat to tourism?

Chapter 2 - Tourism Outlook

Table: Tourism Historical Data And Forecasts

Table: Malaysia - Tourist Arrivals For Jan-Aug 2006 By Source Country

Sabah keen to promote Visit Malaysia 2007

Table: Travel Historical Data And Forecasts

Racial profiling a threat to tourism?

Table: Tourism Sector SWOT

Chapter 3 - Macroeconomic Scenario

Moderate Slowdown Ahead

Table: GDP, Population & Output

Chapter 4 - H5N1 Virus (Update): Still A Key Issue

Chapter 5 - Tourism Business Environment

Tourism Business Environment Ranking

Table: Asia Travel & Tourism - Business Environment Ranking

Politics – Long-Term Risk

Overall Business Environment

International Tourism Receipts

Visitor Arrival Growth

Investment Environment

Shock Factor

Business Environment Outlook

Malaysia Business Environment SWOT

Foreign Direct Investment

Chapter 6 - Travel

Commercial Airlines

Table: Leading Airlines Malaysia

Focus on Malaysia Airlines

Jet Fuel Costs Still High

Table - Oil Price Forecasts

Enhanced Airline Co-operation Ahead?

New long-haul budget airline unveiled

Chapter 7 - Hospitality

Accommodation

Table: Hospitality Market Structure

Infrastructure 30

Regional Case Study: Intercontinental Hotels Group (Asia Pacific)

2004 Results

Strategy

Fresh Projects

Chapter 8 - Company Profiles

AirAsia

Malaysia Airlines

Faber Hotels Holdings

Genting/Resorts World

Chapter 9 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Tourism Industry

Sources

Competitive Landscape for Asia Tourism Reports: Sample of Companies Ranked

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Comparative cross-border analysis assessing business and regulatory factors to rank Asia’s most competitive tourism markets. Indicators used include Political Risk, Business Environment Risk, Forecast International Tourism Receipts, Visitor Arrival Growth, Investment Environment and Shock Factors (taking account of any special factors such as terrorism, natural disasters and disease). Company SWOTs for leading resort, hotel, airline, travel and tourism operators in each market, including competitive intelligence on overall geographic presence, competitive positioning and relationships with international operators; % share of operator markets; % share of international arrivals and departures; % share of busiest domestic routes; main products and services; panregional expansion, merger and acquisition strategies.

Network of Asain Tourism Sources

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BMI's Asian Tourism Reports are based on an extensive network of multilateral organisations, government departments, tourism industry associations, chambers of commerce and company reports. Information sources include: