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M'sia visitor arrivals down 9% in Q1 despite weak ringgit

Penang's Bayview Beach Resort.

Kuala Lumpur

MALAYSIA'S tourism sector appears headed for a contraction this year, with arrivals from its top three source markets significantly lower in the first quarter - even with a weaker ringgit in play.

Except for a few markets, tourist arrivals were down in all segments, perhaps a corollary of the three aviation tragedies involving carriers Malaysia Airlines and AirAsia.

Going by the latest figures from Tourism Malaysia and Immigration, total arrivals slipped nearly 9 per cent to 6.48 million in the first quarter of 2015, with those from China down by 27 per cent and from Australia, down 23 per cent.

The number of arrivals from Singapore, another top market, was 3.241 million - nearly 9 per cent lower than the corresponding quarter last year.

Bucking the trend was South Korea, with an 11 per cent rise or 121,178 arrivals.

With the ringgit falling even further against most major currencies this year - by another 8 per cent against the greenback and 6 per cent against the Singapore dollar after a more muted 2 per cent drop last year - Malaysia is seen as a cheaper destination.

The ringgit is the region's worst performing currency, currently trading at 2.794 to the Sing dollar and 3.807 to the US dollar.

But the shrinking ringgit has also made imported goods expensive, even everyday goods such as cheese and milk - and this is being felt by visitors as well. "Things are very expensive here," said M. Poignant from France during a recent visit.

Over the years, Malaysia has promoted itself as a shopping haven, but most goods and services now cost more, with a 6 per cent consumption tax having been introduced in April.

Malaysia has set a target of 29.4 million arrivals this year, after registering 27.44 million last year for a 6.7 per cent increase.

Whether total arrivals pick up in the second half - especially during the peak June-to-August summer season - remains to be seen. The national carrier Malaysia Airlines has cut a few routes and reduced frequency on others.

The Chinese, still smarting from the disappearance of their nationals who formed the majority of passengers on MH370 - which mysteriously vanished from radar on March 8 last year and is still missing - have been slow to return, despite Malaysian overtures including visa-free entry for tour groups.

A slowing Chinese economy is another consideration.

Individual investors from China - particularly property investors - had shied away after MH370, but some realtors say that there are signs of renewed interest. One Chinese yuan now buys RM0.614, compared to RM0.519 a year ago - 18 per cent more.

Last weekend's riot in a popular IT mall in Kuala Lumpur's main tourist belt may not help the situation. A large group of Malays brawled with Chinese retailers and bystanders and vandalised shops following what police said was a simple theft of a smartphone that was played up by right-wing elements into a racial issue. Video clips of the fracas have since gone viral on social media and tarnished the country and its law enforcement units, given that the police appeared passive while bystanders were being assaulted.