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‘Malaysian tourism is undergoing a transformation process’

Interview - March 6, 2014
CEO of the Malaysian Association of Hotels, Reginald Pereira, speaks to Worldfolio about the growth of tourism within the ASEAN region and how it will be impacted by the formation of the AESEAN economic community. He also discusses the transformation of the tourism sector within Malaysia, and the necessity of private sector investment in tourism infrastructure in order to continue the growth trajectory.
My first question regards ASEAN, which is proving to be one of the fastest growing regions in the world. Does this new economic strength match the tourism trends?

ASEAN as you say, is the fastest growing region. Looking at the figures provided from the latest available statistical research run in July 2012 there are more or less 80 million tourists - both intra and extra-regional - travelling to or within the ASEAN region. It looks like everybody wants to come to this region for various reasons. It has so much to offer, so much culture and history and believe it or not – even I didn’t realize it until I attended an ASEAN meeting – within ASEAN alone there are 26 low-cost carriers, which have made it possible for a good amount of people to travel. Adding them up to the national carriers, we are talking about 50 carriers that are servicing the ASEAN region. I think that is why maybe we have experienced a sudden increase in the number of tourists coming into ASEAN or even travelling within it. Low-cost carriers do not necessarily represent an opportunity for normal income people only, but also for wealthier people who will prefer these companies over the full service ones in order to be able to spend more money at their destination.

What do you think will be the impact of the establishment of the AEC, the ASEAN single market, on the tourism sector?

I think ASEAN is going to benefit from it because that will allow free movement of labour, higher competition against each other; service skills are going to be alleviated because we are going to have Thais or Indonesians coming into Malaysia and Malaysians going into other countries to work. I know there have been complaints about the level of English in Thailand especially, some say they are still behind compared to other ASEAN countries including Singapore, Indonesia, Malaysia, but I’m a regular visitor to Thailand for business reasons and I believe that they have been addressing this area. Moreover, in many of the hotels that I go to I noticed that they have employed people from the Philippines and I think they do it to provide some sort of a benchmark for the locals, which in my opinion is a very good idea. I think this movement of labour will contribute to tourism because we don’t look at it just as an employment opportunity but also as a touristic movement opportunity

Over the past decades, what do you consider to have been the most relevant milestones of the tourism sector in Malaysia?

Malaysian tourism is undergoing a transformation process. The number of incoming tourists has increased – so much so that Malaysia is now ranked in the top 10 list of destinations to visit in the world. In Asia it is the second most visited country after China and I think this is a result of the promotion initiatives taken by the government thanks to which many tourist offices have been opened all over the world. The country can now count on greater attractions including, not only architecture, but natural resources as well that perhaps had not been properly marketed in a concerted effort before. When the government decided to establish an independent Malaysian tourism culture the results were remarkable, ranking second as the highest income generator of the country. By the year 2020 we’re expecting 36 million tourists who will bring in estimated revenue of 54 billion USD. We have considerably improved our infrastructure and there’s still room for improvement. Previously, most of the infrastructure was concentrated in the triangle of greater Kuala Lumpur but now it is extended to areas like the Eastern and Northern corridors, the Borneo, Sabah and others. However, investments of this nature require a large amount of money, which is why the private sector is now more involved and contributing to this investments in infrastructure projects. This is also why now their development seems to be moving at a faster pace. Both private and public sectors need to participate because our country cannot depend on the public sector only, which is why the Economic Transformation Program has taken off well, being a Private-Public (PP) initiative. I was part of the tourism transformation program and in charge of the strategic tourism development program over the last three years. I would like to see that these improvements are actually taking place; the improvement of the rapid rail transport system – which is manly concentrated in the centre areas – will be expanded to other areas so that traffic will not be an issue anymore; covered walkways from one station to another. These are the projects that need to be carried out and that will contribute to achieving the developed nation status by 2020.

As you said the Malaysian government has had a key role in promoting the tourism sector in Malaysia and the government has always had this pro-business approach that has indeed created a well-established business environment. What do you think are the best political initiatives in the tourism sector? And how is the Special Tourism Fund going to be allocated for this year?

Everything cannot come in the form of grants and that is something that the private sector has to understand. We do not ask for money from the government. What we ask for is tax allowances and incentives. The government has set up a Special Tourism Fund whose criteria is still not quite clear yet; I tried to get some information about it but I believe it will be used to improve infrastructure and not to build hotels. With the amount of money allocated it will be possible to build only two hotels so I think the intention is to improve the services around to complement what already exists. I’m pleased to say that the government agreed to our request to extend these tax allowances until 2016. We needed to make this special request because we realized that there’s a lack of 4 and 5-star hotel facilities in Malaysia, indeed there are a lot of good 3-star hotels which and more for the normal spend tourists. To attract the high-end tourists, we would have to have more luxury hotels. If, we would like to focus our target on the MICE market (meeting incentives convention exhibition) because it involves individuals that have a higher expense budget and who would want to stay in at least a 4-star hotel. So, considering the lack of this kind of accommodation, the government has agreed to extend the incentives. Moreover, we want to also ensure there are sufficient and large exhibition halls. In addition I would like to highlight that these projects are not being confined within the area of Kuala Lumpur because we don’t want everything to be congested here.

So this poses a major opportunity for international investments, doesn’t it?

Yes, there is going to be a higher demand for hotel rooms. There are investments coming into Langkawi, Kedah through the Langkawi Development Authority, (LADA) and there’s a whole new transformation program taking place. Langkawi its own charm, it is an eco-tourism spot, it is something unique. It already is a fine destination but I think a lot more of privately driven projects can be implemented. We’re getting a considerable amount of private investments coming in from both local and foreign partners. I would not hesitate to recommend it to anyone myself. I’ve been in Malaysia my whole life – apart from the period spent studying abroad – and I’ve had the opportunity, thanks to the position I’m currently occupying, to travel the region and beyond and see in person what is happening all around. I’ve spoken during conferences and summits encouraging investors to consider Malaysia as a tourism investment opportunity.

What is your personal insight on the role of MAH in the transformation of the tourism sector since its inception?

As the umbrella body of hotels we try to be the mediator between the hotels and the government. Of course, the role of the MAH has grown to a higher level over the last couple of years; we felt like we should be championing more causes and we should be speaking up without fear because as far as we are concerned, we are not obliged to the government as much as we are to our members.

One aspect that put the private and public sector together here in Malaysia is that both sides have understood the importance of human resources and that knowledge is power. I know that the Malaysian Association of Hotels also recognizes the crucial role of human resources. What are the main activities that you are currently undertaking in terms of training and human resources development?

The Malaysia Association of Hotels also sits on the Malaysia Tourism Promotion board performing a cooperation under the Ministry of Tourism but, at the same time, under the Ministry of Human Resources we participate in the Human Resource Development Corporation, which is also known as PSNB. Tourism is a key industry where manpower is crucial. On top of that we’ve got also a training centre which was established 17 years ago and is owned by MAH and the goal now is to upgrade the working skills so that students would join our community straight out of school and be provided with a formal certificate on hospitality. However, a couple of years ago we were approached by the Ministry of Human Resources which, under the manpower department, recognized that shortage of manpower in the hotel industry needed to be addressed, and we were employing foreigners to come and cover some of the positions. Consequently we did a study of the manpower requirements and that’s when the Ministry of Human Resources knew about the training centre and started working with us. Now, under the ETP engaged by each Ministry, the Ministry of Human Resources, having worked with us since 2009, established some key industries to which manpower was an issue. One of them turned out to be tourism so the Industry Lead Body was established. This identifies the weaknesses and shortages of the manpower requirements and then develops the necessary training to ensure that the issue in question is properly addressed. A special fund is allocated to the Association with the purpose of moving forward and coming up with policies and strategies on the development of human resources and addressing our goal towards achieving the developed nation status by 2020.

Besides being one of the key players in the tourism sector, MAH is also a very responsible player towards the community and it is, indeed, very active in CSR activities. The Annual Charity Jam session is an example. Can you give us some more details about this initiative?

It is the longest music jam session held in the region with a charity purpose. It normally takes place on the first Saturday of July. We just concluded our 14th charity jam. Almost RM600,000 has been collected since its inception. I believe these are the kind of efforts that an association has to make because what the members are giving back is something unique, a 12-hour music fest where people enjoy themselves drinking and eating and everything is sponsored by our vendors and hotels. This initiative has been widely appreciated by the charities that have received the proceeds over the last 14 years and I want you to know that next time we want to make this event even bigger because I think that when it comes to music, people would travel heaps and bounds. In Sarawak, for instance, they have the Rainforest Jazz Festival that attracts international participations. Compared to that a charity jam is a one-day event but if it does grow it might spill over to tourism and get the same kind of recognition. Over the years that I’ve been here I’ve seen the visitors that come to the charity jam, normally composed by locals but now the trend has changed and we see also many tourists participating at the event..

Moving on to the UK-Malaysia relations I know that this is the Visit Malaysia 2014 and another major event will take place this year in Malaysia: the ASEAN Tourism Forum. As much as 28 million tourists are expected, which will result in a contribution of 76 million ringgits in revenues. Apart from eco-tourism and the growing trend of MICE - which we previously mentioned - what do you think are the new business opportunities that may arise especially in relation with the UK?

More than 200 events have been organised in conjunction with VMY 2014 and it’s listed on the VMY website. Besides the MICE and eco-tourism, I think one area, which to some extent needs to be taken into serious consideration is medical tourism that attracts visitors with large expense budgets. We’re talking about people coming here to receive medical treatments - that is why there is a growing number of private hospitals being constructed. People from the US come to Penang to receive medical treatment because they say it is cheaper for them to fly here, seek medical treatment and then spend some R&R time than it is to do the same in the US. And they still manage to have an enjoyable time, especially those who come here for recuperation. The Healthcare Travel Council - MAH is part of that as well – organizes conferences every year, both locally and overseas, with the purpose of promoting Malaysia as a destination to seek medical and SPA treatment. Besides this, another area that we should consider as a touristic opportunity is the barrier-free tourism, which some people think it is exclusively indicated for handicapped people. What they don’t realise is that also aged people or parents with young kids require some additional accessibility. We need to see this as capital opportunity for barrier-free tourism because when they travel they need certain additional services that normal tourists do not need. It will be difficult to ensure that all the required facilitations across Malaysia but they can be implemented in certain locations. Of course wheelchairs accessibility services are more challenging but this issue can be addressed in certain defined areas, which is what is happening in Penang right now where certain buses plying certain routes are able to handle individuals on wheelchairs. The figures of people with disabilities - including aged people as well as parents with infants - are mind-boggling. The population of the world now is estimated at 8 billion people, 700 million of whom require some sort of aid to travel. When these people travel they will not be alone so the growth perspective is exponential.

300,000 British nationals travel to Malaysia every year and 16,500 of them reside in the country thereby forming the biggest Western community in the Nation. How do you feel the UK-MALAYSIA relationship has evolved in the recent years and how about the future prospects?

Due to historical background – Malaysia has been ruled by Britain – our country is full of British culture and organizations and I think that’s one of the main reasons why we have such a strong connection with the UK. All my siblings went to UK to study and this is why a lot of English universities have set up their campuses here and British colleges are the number one choice when it comes to setting up of collaborative partnership. So yes, basically it has to do with history. We have this program called Malaysia My Second Home (MM2H), which attracted quite a few British people as well, who went to live in Penang - a very peaceful place that has a nice colonial influence. A lot of people who were in Malaysia during the colonial period are coming back and I can only see positive signs in this coalition between Britain and Malaysia developing even further, creating more opportunities and making Malaysia even better known to the younger generations in the UK.

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