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Forays into niche tourism subsectors

by Jonathan Wong, Ronnie Teo, Justin Yap bizhive@theborneopost.com. Posted on May 5, 2013, Sunday

As the tourism sector gets more specific in its needs, so too has the industry itself carved out specific niches to fulfill the various wants and needs of tourists on a global scale. Certain sectors have blossomed from these wants, such as medical tourism, halal tourism, agri-tourism as well as MICE tourism.

BizHive Weekly takes an in-depth look at these growing sectors showing promise in taking the country to a whole new level of growth.

Tourism: Branching out from the conventional

Tourism has always been an important economic contributor in the country approximately luring 25 million tourists or RM60.6 billion in 2012 with expectations to further increase in tandem with the country’s ambitions.

Taking into account the lucrative nature of the industry,  the tourism sector is rapidly evolving with niche markets taking the forefront.

The country is now no longer dependant on conventional tourism pulls but rather branching out into specific niches or tourism sub-sectors that target specific audiences to lure in tourist as well as potential investors.

The emerging new economic forces from India and China are expected to push the region’s tourism sector to new heights, as well as east asian countries such as South Korea, Japan and Hong Kong on the back of the rising middle class.

Industry sources opined that the tourism industry’s challenge now would be to add more value to existing and upcoming services and products. Industry upgrades were slated to be of highest priority instead of companies trying to undercut each other on prices.

Among these tourism sub-sectors, the meetings, incentives, conferences and exhibitions (MICE) industry will be a benefactor as all MICE value chain players such as hotels, food and beverage outlets, crafts, gifts and related services will benefit.

On the other hand medical tourism in Malaysia has emerged as one of the fastest growing tourism sub-segments over the last few years despite the global economic downturn with approximately 400,000 health tourist generating over RM380 million in revenue for 2010 alone, according to business intelligence firm Inside Investor.

Over the past few years the government has been supporting the development of the tourism sub-sectors and had been taking a proactive step by placing in the key framework.

The Performance Management and Delivery Unit (Pemandu) stated that, “the Malaysian government is optimistic about the healthcare travel industry in the country, targetting ten per cent per annum revenue growth for the period 2011 to 2015.”

Apart from medical tourism, the lesser known niche in the booming tourism industry – agro-tourism is in the limelight.

“Talking about agro-tourism, it has a great potential to generate lucrative income and continuous efforts are being undertaken by the Ministry of Agriculture and Food Industry to further enhance agro-tourism, which would benefit the tourism sector in general,” said Malaysia Productivity Corporation (MPC) director Burhanuddin Saidin.

He believed the corporation had managed to change the people’s perception that agriculture was no longer a sector for the poor or uneducated, but open to all with the promise of lucrative profits.

With such high expectations from these niche tourism segments, a robust economic foundation laid out by the Economic Transformation Programme (ETP) as well as a booming asian economy, BizHive Weekly takes a look at these tourism sub-sectors that are slated to elevate the nation as a desired tourism destination favoured by global travellers.

Making advancements in Malaysia’s medical tourism

KUCHING: One cannot deny that Malaysia is fast becoming a major medical tourism destination as private healthcare players up the ante on variety, quality and delivery.

It is perhaps a testament to Malaysia’s credibility in this light, being in the top three global choices for medical tourism, coming in third after Panama and Brazil – according to statistics from Nuwire Investors, an online source for real estate investment and other investment opportunities.

These markets were selected based on quality and affordability of medical care as well as receptiveness to foreign investment. Based on these criteria, Malaysia was ranked third.

“Malaysia offers a wide array of medical services and procedures including dental, cosmetic and cardiac surgeries at significantly lower costs compared with the US,” highlighted Nuwire Investors, adding that foreign medical tourists and investors were attracted to Malaysia’s favourable exchange rate, political and economic stability as well as high rate of literacy.

RHB Research Institute Sdn Bhd (RHB Research) analyst Lester Chin added that Malaysia’s medical tourism market remained relatively small in comparison to its neighbours, Thailand and Singapore, despite registering strong growth of 22 per cent per annum over the last five years.

“As such, the Malaysian government had, under the Entry Point Project 4 (EPP 4) of the Healthcare National Key Economic Areas (NKEA), targeted an additional 1,900 beds to achieve its target of attracting two million healthcare travellers by 2020,”Chin said.

“We understand that this initiative also serves to encourage private healthcare players to broaden their patient base beyond the Indonesian market and to position themselves as a provider of higher-end medical treatments.”

More recent statistics from the Ministry of Health Malaysia showed that within the first five months of 2012, some 236,836 foreign patients travelled into the country for medical care, spending RM200.4 million in total.

Based on these preliminary figures, the sector was expected to attract over 600,000 foreign patients and generate more than RM600 million in revenues by the end of 2012, highlighted Oxford Business Group (OBG) in its Malaysia Report 2012.

Government backing via council

One of the many moves made by the government to boost medical tourism is the establishment of the Malaysia Healthcare Travel Council (MHTC) with the objective of promoting Malaysia as the preferred healthcare travel destination in the Asian region.

As an initiative under the Ministry of Health Malaysia (MOH), its ultimate purpose is to promote and position Malaysia as a unique destination for world-class healthcare services.

“In 2005, the MOH had established a small unit to promote medical tourism. From then onwards, the phenomenon of medical tourism started to catch on,” MHTC revealed.

“To step up the promotional campaign, the MOH then took the initiative to brand Malaysian medical tourism. This led to the launching of the Malaysia Healthcare logo and tagline ‘Quality Care for Your Peace of Mind’ in June 2009.

“Building on this momentum, the government decided to form MHTC, which was established under the MOH on July 3, 2009 upon the approval of the Malaysian Cabinet.”

MHTC noted that it was also responsible for advising on policy issues and setting directions for the healthcare travel industry.

“We are proud to be amongst one of the only countries within the region where medical tourism is promoted by the government. This thus provides medical tourists the assurance on quality care, regulation, safety standards and the governing laws within this industry.”

Cheaper choices, quality undeterred

Malaysia’s healthcare sector offers specialties in various medical disciplines and performs some of the most complicated treatments in the world. Today, the medical practices in Malaysia are on par with the some of the best in the world, incorporating both sophistication as well as international expertise.

In comparison with players, Malaysia’s favourable exchange rate and the costs of healthcare services are at an extensively lower cost than that of other countries within the region.

Some surgeries, in particular, are cheaper by half as compared with Singapore or Indonesia.

“Our team of renowned medical specialists have been trained in some of the most esteemed medical institutions in the world from countries such as Australia, UK, and US.

“Medical treatments are carried out in state-of-the-art facilities that have been furnished to meet international standards. Hence, the high quality in medical treatments is thus maintained at the technology as well as at the professional levels,” MHTC noted.

“A typical current scenario of the international medicine world sees cost of medical treatment skyrocketing in western countries such as the US and Europe. Malaysia’s healthcare service comes as a relief to patients from all over the globe. Malaysia certainly and confidently boasts of a medical care that supercedes in quality and affordability.

“The disparity is proof of the cost-effective nature of Malaysian medical treatment. This leaves scope for combining a holiday along with the medical treatment for many holiday seekers. You still spend only lesser than what you would have, in order to undergo the same medical treatment in some of the western countries.”

Private players ramp up their game

The government is currently working to boost private sector participation in the industry, with the goal of expanding health care options for Malaysians and attracting a large share of the medical tourism market.

“The medical tourism segment is almost entirely served by private sector health care providers,” OBG noted.

“In 2011, facilities in Penang attracted around 49 per cent of total foreign medical revenues, while institutions in KL and the greater Klang Valley attracted 21 per cent of total spending and those in Melaka took in about 10 per cent,” it added.

In recent years, the country has also worked to boost private sector participation in the industry, with the goal of expanding healthcare options for Malaysians and attracting a larger share of the medical tourism market.

“Incentives aimed at encouraging private participation in the sector include tax exemption for firms that build hospitals or expand existing hospitals with the goal of attracting medical tourists, and other tax incentives for companies that obtain accreditations from either Joint Commission International (JCI) or the Malaysian Society for Quality in Health (MSQH), the national medical standards organisation,” OBG noted.

As of mid-2012, OBG said Malaysia was home to eight hospitals with JCI accreditation, including Gleneagles Hospital, the National Heart Institute, the Penang Adventist Hospital and the Sime Darby Medical Centre Subang Jaya.

Additionally, 85 hospitals – 32 of which are private facilities, hold accreditations from the MSQH.

Malaysia: Religious tourism boost

With a global shift in the tourism arena where medical tourism is starting to score big, another type of tourism is fast making a presence.

Having been ranked the friendliest country for Muslim holidaymakers for the third year running, Malaysia has confirmed its position as a premier halal tourism destination.

However, its position – and the revenue that comes with it – could be challenged by regional rivals seeking to cash in on the lucrative market, according to Oxford Business Group (OBG) in its recent report.

The tourism sector was already a major contributor to the Malaysian economy, directly generating US$21.4 billion in 2012, the equivalent of seven per cent of gross domestic product (GDP), OBG cited  the latest report on the global industry’s economic impact, issued by the World Travel & Tourism Council (WTTC).

The council’s report for 2013, released at the end of February, said tourism provided direct employment to more than 800,000 Malaysians, some 6.5 per cent of the active workforce.

However, when indirect factors – such as state spending on tourism-related infrastructure and support, the supply and purchase of goods and services, transport, information technology and utilities – are taken into consideration, tourism’s total contribution to the economy came to US$48 billionn, or 15.6 per cent of GDP, and accounted for 1.7 million jobs, 13.6 per cent of the total.

The WTTC had also forecast Malaysia would continue to build on its achievements, with total tourism revenues expected to reach US$81.5 billion by 2023 on the back of a sharp increase in arrival numbers over the coming decade, as the number of visitors was projected to rise from 27 million in 2013 to 45 million in 10 years.

According to Datuk Seri Jamil Bidin, chief executive officer (CEO) of local firm Halal Industry Development Corporation (HDC), Malaysia had made itself into a leading destination for visitors from the Middle East by making its halal brand what he called, ‘a seal of guarantee for consumers’.

“If you want to encourage Muslim tourists to come to your country, halal-certified products and services are required,” Bidin told reporters at a halal trade fair in Kuala Lumpur in early April.

The international halal tourism trade was estimated to be worth more than US$125 billion per year, some 12.3 per cent of the global outbound tourism market. This figure was set to rise by an estimated 4.8 per cent annually through to 2020 – well above the forecast 3.8 per cent global average – as disposable incomes in many Asian and Middle Eastern countries increase, OBG stated.

Malaysia has already positioned itself to take a significant slice of the existing and future trade, being ranked first for the past three years in an international survey for being halal tourism friendly.

The annual market assessment, based on a number of factors, including the availability of halal food, prayer facilities, and halal-friendly accommodation, was carried out by Singapore-based consultancy and research firm Crescentrating.

According to Fazal Bahardeen, CEO of the firm, the survey was conducted from the point of view of the traveller, meaning that it measured the ease of access by Muslim tourists rather than locals to halal food and services, with Malaysia scoring well across the board.

Malaysia’s continued strong showing was largely due to the fact that authorities had been focusing on the market for a number of years, he said. “Malaysia remains the top destination for Muslim holidaymakers,” said Fazal.

“It is still the best place to enjoy your holiday and at the same time be completely worry-free when it comes to finding halal food and prayer places almost everywhere.”

Malaysia also benefits from being within a single flight of much of the world’s 1.7 billion Muslims, as it has direct links to the Middle East, the Indian subcontinent and Asia. While Malaysia may head the Crescentrating rankings, it is likely to face increasing competition from regional rivals in the years to come.

The survey found that Indonesia was lagging when it came to catering for halal tourism, though Jakarta had announced it would launch a multi-faceted programme in June that aimed to better Indonesia’s tourism sector to perform in the syariah-compliant segment of the global market. Singapore and Thailand also had strong market potential and hoped to begin competing with Malaysia, OGB noted.

Under the government’s Tourism Transformation Plan 2020, launched in 2010, Malaysia is aiming to attract 36 million overseas visitors by the end of the decade, a target it seems to be well on track to achieving, having seen arrivals hit a record 25 million in 2012, some 40 per cent up on the 2005 total.

Similar progress over the next seven years will put Kuala Lumpur’s goal well within reach and on the road to the 45 million the WTTC had forecast for 2023.

The Ministry of Tourism estimated that almost one-quarter of inbound visitors come from Muslim countries, which makes the need to maintain the flow of new services and facilities for this market essential to further growth and development of the sector, as well as to ensure it stays ahead of regional and international rivals.

Agro-tourism: Taking environment into consideration

Diana Jitam, horticulturist

The surrounding environment has become one of the most important criteria for today’s travellers.

“Whereas comforts and luxuries once played the major role in a traveller’s decision-making process in choosing a destination, things have very much evolved since then,” Diana Jitam, a horticulturist told BizHive Weekly in an interview recently.

“Today’s tourists are willing to pay for the preservation of the natural and social environments they seek to explore and I believe Sarawak has some of the world’s agro-tourism wonders that are certain to facinate everyone,” she added.

These include the largest amount of rainforest that any state in Malaysia has with a large variety of plants that can only be found in Sarawak such as Dabai (local olive) and Isau as well as flowers – the state is home to the largest flower in the world, the Rafflesia.

“Agro-tourism is more than just another tourist product. It goes well beyond a mere offer of services in a rural setting,” Diana pointed out. “Rather, it implies a novel way of understanding the importance of agriculture, important for the younger generation to know how their food is being produced, a new awareness, a positive attitude towards the environment and towards local people as well as their culture.”

The possibility of enjoying the rural environment and culture at an attractive price appeals to a large market, including families, couples and seniors.

On top of that, she further stressed that agro-tourism had also proved itself as a powerful tool in the reactivation of depressed areas in Sarawak.

“Besides the turnover derived from accommodation, catering and leisure activities as well as from the direct selling of local produce and crafts, agro-tourism will also bring about other beneficial effects, such as the restoration of the architectural and cultural heritage,” she highlighted.

“It has great potential to generate lucrative income to Sarawak, and this will also change people’s perception that agriculture is no longer a sector for the poor or uneducated, but open to all with the promise of lucrative profits,” she added.

In line with the changing expectations for Malaysia to be more innovative as well as creative, Malaysia Productivity Corporation (MPC) has aligned itself to meet the challenging demands outlined in the New Economic Model, which is to accelerate the nation’s transformation in areas of productivity and innovation.

Last year, Parliament Agriculture Development Council identified four areas in the Santubong constituency with the potential for agro-tourism – Kampung Sungai Batu, Kampung Sungai Lumut, Kampung Sungai Bedaun and Kampung Buntal.

According to Pantai Damai assemblyman Dr Abdul Rahman, the four identified areas had been singled out as they were located along the central road heading towards the resorts, adding the villages also had the potential for large-scale agriculture.

“Therefore, we must work smart to carry out these agricultural projects to increase productivity,” he added, while calling for cooperation between residents and relevant agencies to identify the various types of agriculture that were suitable for operation.

Jitam further added that agro-tourism in the highlighted areas had huge potential to improve the community income as well as economic potential of small farms, rural communities and agro-based ventures throughout the country.

“It is a new tourism concept that has received a positive acceptance among the local and international tourists. There are approximately more than hungred tourists destinations in Malaysia that offer agro-tourism activities,” she said.

With that a number of countries in the world have transformed their economies through agro-tourism activities. In Thailand, it has been used as one of the main mediums to attract tourists from all over the world.

Since the advent of agro-tourism in the country in 2002, there have been constantly increasing numbers of private agricultural entrepreneurs participating in the ventures, thus opening a new destination for the tourism industry.

In the same year, a total of 98 farming communities joined the Thailand national scheme. The impact of this scheme is significant since half a million tourists have visited the farm areas.

MICE tourism: A preferred destination

Meetings, Incentives, Coventions, Exhibitions (MICE) – For the uninitiated, the word evokes images of a nocturnal, four-legged pest. But for most corporate travellers and those in the tourism business, the term conjures visions of business opportunities and events.

“Whether it is termed MICE, business tourism, meeting and incentives travel (M&IT), business events or any other of the myraid names that serve to further confuse the identity of the industry, the meeting industry is a distinct area of enterprise with its own unique markets,” said Rod Cameron, International Development director for International Association of Congress Centres.

“When you look at every single business that is scheduled, they choose the place for completely different reasons but at the same time, when they come, what’s the draw card? It is the destination…,” he added.

Over the years, Malaysia has emerged as one of the most preferred MICE destinations in Southeast Asia. With a host of significant conferences and conventions held here annually, there is no doubt about Malaysia’s supremacy in this area.

According to National Business Events Study, for every RM192,450 in economic value generated by business events, there was one full time equivalent job created.

An estimated 46 per cent of international delegates would extend their stay for pre and post travel, providing benefits to regional communities and an estimated 25 per cent had an accompanying partner with them whenever they attended conferences.

Industry statistics further pointed out that Malaysia had climbed three places to 28th place in the International Congress and Convention Association world rankings, while retaining its seventh placing among the top 10 meeting destinations in Asia Pacific.

In 2011, Malaysia Convention & Exhibition Bureau (MyCEB) had supported 29 convention bids and 20 corporate incentive groups representing 35,750 delegates at an economic value of RM382 million (US$123 million).

It also assisted 130 meetings and conventions, six exhibitions and 62 corporate incentive groups, which contributed an estimated economic impact of RM1 billion to Malaysia.

It aimed to continuously lead the way in championing the country’s business tourism sector through its Networking Sessions and other innovative programmes.

This is in line with its mission under the Economic Transformation Programme which is to grow business tourism arrivals from five per cent to eight per cent of the overall tourist arrivals – which translates to an increase from 1.2 million (2009) to 2.9 million by year 2020, and positions the country as one of the top five destinations in Asia Pacific for international meetings.

“From an economic perspective, meetings as well as conventions will attract people who are much more likely to be decision makers and this can promote not only local business prospects but trade and investment potentials too,” said Cameron.

“Meanwhile, from a professional development perspective, events in any area of discipline particularly major national or international events, often attract literally the very best expertise in the world.

“For the community, this basically means access to this level of ‘knowledge and experience’ right at their doorsteps,” he added.

On the other hand, Cameron said a lot of things could also impact the MICE industry, “many of which are outside our control. Global economics, political turmoil, pandemics and security issues can all bring things to a grinding halt on an international scale. Other include tax policies, transportation issues or sudden changes in visa requirements which can also have the same effect on an individual country.

“We’ve seen both at work earlier this decade, where international events precipited many different impacts, creating both winners and losers as events sought a ‘safe haven’ and, in some cases, changed the way the entire industry works,” he concluded.

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