Determinants of Tourism Demand in Malaysia: A Study of Chinese and Indian Tourist from Macroeconomics Perspective

Abstract

Tourism is one of Malaysia's key sources of income and has a considerable impact on the nation's gross domestic product (GDP). According to the Global Travel and Tourism Council, tourism and travel generated RM240.2 billion (USD 57.5 billion) in year 2019, accounting for 15.9% of Malaysia's overall GDP. Among the six top tourist arrivals in Malaysia, four are from Malaysia’s neighbor countries, except China and India. As China and India accounted for 2/3 Asian population, this study aims to determine the factors that attract Chinese and Indian tourist inflows into Malaysia from a macroeconomics perspective. Quantitative survey method has been used for this study and secondary data from Tourism Malaysia, International Monetary Fund (IMF) and World Bank has been collected. The determinants include real income of China and India, crude oil price, as well as currency exchange rate. Quarterly observation has been used for this study. The period covered in this study is from 2000 quarter one to 2019 quarter 4. The result shown there is long run relationship between real incomes, crude oil price and currency exchange rate with Chinese tourist arrival in Malaysia whereas the long run relationship does not exists for Indian tourist arrival in Malaysia.