This article first appeared in The Edge Malaysia Weekly on February 24, 2025 - March 2, 2025

THE race is on for Malaysia’s tourism industry to shore up its inbound tourist count and receipts amid a global travel rebound as key markets in the region intensify their tourism agenda.

“With external headwinds such as potential US tariff threats, Malaysia can capitalise on its tourism recovery to mitigate tensions in the export market,” says Lee Heng Guie, executive director of the Associated Chinese Chambers of Commerce and Industry of Malaysia’s think tank, Socio-Economic Research Centre.

“Tourism initiatives related to Malaysia’s Asean chairmanship this year, followed by Visit Malaysia 2026, are a good start. Over 300 ministerial and working committee meetings will be held across the country, showcasing Malaysia’s compelling services sector across the supply chain, from logistics and hospitality to food and beverage, accommodation, and entertainment,” he says.

“Foreigners often comment on a perceived lack of awareness in their home countries of Malaysia’s tourism offerings. Malaysia’s strengths lie in its cultural and culinary diversity as well as abundant ecotourism opportunities. These comments should prompt a concerted effort by the government, authorities, industry players and all stakeholders to promote Malaysia as an international tourist destination.”

Tourism veterans The Edge spoke to are watching for key agenda items: the Ministry of Finance’s budget and allocations for the sector in preparation for the Asean summit, an overhaul of the tourism framework and policies, and development of tourism infrastructure, route development and transport services.

“Marketing and promotions must meet changing customer expectations and provide seamless travel experiences for arriving and departing tourists,” says Datuk Tan Kok Liang, president of the Malaysian Tourism Federation (MTF) and Federation of Asean Travel Associations. Tan was also formerly head of the Malaysian Association of Tour and Travel Agents or Matta.

According to Tourism Malaysia, the nation recorded 25 million inbound tourists in 2024, a 24% increase from 20.14 million in 2023. While Thailand led Asean with the highest number of inbound tourists — 35.53 million — in 2024, regional comparisons show that Vietnam led growth in Asean with an increase of nearly 40% in foreign arrivals in 2024, followed by Thailand (26%), Malaysia (24%), and Singapore (21.32%).

With 17.5 million inbound arrivals in 2024, Vietnam also led in recovering to near pre-pandemic levels (18 million in 2019), thanks to favourable visa policies, enhanced tourism infrastructure, and targeted marketing efforts by local authorities and businesses. Vietnam’s performance precedes that of Malaysia, Thailand, and Singapore (see tables).

“Except for 2021, Thailand and Malaysia have consistently ranked first and second in Asean for international tourist arrivals. In 2023, Thailand recorded 28.2 million arrivals while Malaysia received 20.1 million, as compiled by the Asean Secretariat,” says Dr Yeah Kim Leng, professor of economics at Sunway University Business School.

Yeah believes Malaysia will remain the second-highest international tourist destination in the region, given the trend and sizeable gap with other Asean countries, even if arrival numbers are likely to remain below pre-Covid-19 levels, suggesting that regional tourism has yet to reach full recovery.

“Despite this sustained position, Malaysia cannot rest on its laurels, given the rapid improvements in tourist arrivals seen in Indonesia and Vietnam. [Malaysia] needs to increase investments in tourism infrastructure and facilities, enhance its global branding and marketing, and improve service quality and efficiency across the tourism ecosystem,” says Yeah.

Vietnam, a rising star, aims for 22 million to 23 million international visitors this year, after recording 17.5 million in 2024, despite natural disasters like widespread flooding.

Thailand launched its “Amazing Thailand Grand Tourism and Sports Year 2025” in early February, featuring events like the 33rd SEA Games from Dec 9 to 20. The country aims to attract 40 million foreign visitors and generate THB3 trillion in tourism revenue this year. Other major sporting events in Thailand this year include the Honda LPGA Thailand 2025, the MotoGP PT Grand Prix of Thailand 2025 — its sixth year as a MotoGP host — and the Jet Ski World Series 2025.

Singapore remains bullish for 2025, having seen a surge in visitor arrivals in 2024, thanks to a 30-day mutual visa exemption with China, strong air connectivity and world-class concerts by mega pop stars such as Cold Play, Ed Sheeran and Taylor Swift. The year saw spending growth across all categories, and tourism receipts reached S$22.4 billion between January and September 2024, up 10% from the same period in 2023. Full-year receipts, to be released in the second quarter of 2025, are expected to reach between S$27.5 billion and S$29 billion, according to the Singapore Tourism Board.

Economists note that Malaysia’s Asean chairmanship provides the country with a solid opportunity to leverage international media attention to promote the country as a regional hub for businesses, investors, entrepreneurs and tourists.

“Given that merchandise trade may be negatively affected by Trump’s unilateral tariff hikes and ‘America First’ policies, promoting service exports, including tourism, education, healthcare, logistics and professional services such as legal, engineering, accounting and information technology, will help to offset potential declines in merchandise trade. This will also help reduce the country’s services deficit and improve the current account surplus,” says Yeah.

Industry experts point out that the official inbound totals between countries do not make for a fair comparison, given the vast differences in each country’s makeup and offerings.

“The traditional approach of comparing arrivals with neighbouring countries like Thailand to benchmark performance is inaccurate. Thailand’s tourism industry started much earlier and it has geographical advantages, a different population size, different appeal and branding, different government policies and different infrastructure development. We can learn from their strategies, but not compare their performance with ours. They are way ahead because of excellent public-private sector collaboration and they stand united in tourism, a key economic driver in Thailand,” says MTF’s Tan.

“It’s unfair to compare Malaysia to Thailand, whose geographical spread and offerings are huge. Tourism success depends on funding, and the private sector should lead,” Tan adds.

He believes Malaysia’s tourism performance is better measured by growth rate, length of stay and tourism revenue rather than absolute tourist arrivals.

“It should be based on contextualised progress, policy and strategy effectiveness, and segmented growth analysis. We should consider our resources, potential, constraints, external factors and challenges,” says Tan.

“Given that tourist arrivals have remained fairly stagnant over the last 10 years, a fresh approach is needed. We should set aside religious and political differences when it comes to tourism and stand united. Fresh ideas and a transformed leadership are essential to provide a sound tourism roadmap for Malaysia to remain a preferred destination,” he adds.

Travel operators have been calling for protectionist policies for local players.

“Some travel-related platforms have been disruptive to local businesses as these players are listing local vendors at prices that erode our margins. The authorities are led to believe that these platforms are doing us a service by locking in visitors to local attractions but the mechanics are such that the low ticket prices come at our expense. We should be sharing the margins, not giving them up entirely,” says a major travel and tour operator who wished to remain anonymous.

Hence, MTF has urged the government to review and update the Tourism Industry Act 1992, citing outdated and inconsistent policies.

Tan cites the requirement for tour buses to be accompanied by a licensed tour guide whereas hire-and-drive vans or e-hailing multipurpose vehicles whose drivers often act as tour guides are exempted as a glaring example of inconsistency.

MTF’s Tan has also called for stricter requirements for foreign participation in the sector to protect local businesses and to ensure they also benefit from the surge in tourist arrivals. He cites a provision allowing 100% foreign ownership of inbound travel agencies with a mere RM1.5 million paid-up capital, which he says is detrimental to local companies.

“This policy creates an uneven playing field, allowing foreign players easy entry into a low-capital business environment, sidelining Malaysian entrepreneurs,” Tan adds.

“We have been waiting for years for a reform in the Tourism Act. Each day the reform is delayed, we fall further behind in an intensely competitive global market.”

Tan asserts that official data show room for growth in inbound arrivals from Vietnam, Cambodia and the Philippines.

“Some 70% of Malaysia’s arrivals are from Asean. As Asean chair this year, with more MICE (meetings, incentives, conferences and events) and two-way traffic from visiting nations, all airlines should be encouraged to increase connectivity, especially to second-tier cities in the country. Currently, connectivity is strong only for major cities like Kuala Lumpur, Penang and Kota Kinabalu,” he says.

Tourism veterans are also calling for infrastructure upgrades to facilitate promotional activities in smaller cities.

“Many second-tier states have hidden gems but a holistic approach is needed so that no one is left out,” Tan adds.

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