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Malaysia's tourism industry bitten by
SARS
By Anil Netto
PENANG,
Malaysia - "I have never seen it this bad in the 30-odd
years I have been working here," says a food and
beverage department employee of a five-star hotel along
the palm-fringed Batu Ferringhi northern coastline of
Penang Island. "Occupancy is now just 10 percent. If you
walk into our hotel now to book a room," he said, "you
can ask for a room rate that is about a third off the
published price, and chances are you will get it."
Near the swanky hotel, the night bazaar that
snakes it way along the coastal road looks quiet, the
number of customers barely matching the number of bored,
anxious-looking stall-owners.
It's just after 10
o'clock on a Sunday night - but gone is the bustle of
prospective customers feigning lack of interest while
haggling for a lower price for a "genuine" imitation
designer watch or for pirated video compact discs (VCDs)
stashed away in boxes in a van nearby or for trinkets
from more exotic locales. Already many of the usual
stall-owners have called it a night today; others
haven't even bothered to turn up for business. The
restaurants and drinking holes look three-quarters
empty.
This is Ground Zero for the tourism
industry in Malaysia where the full impact of the SARS
(severe acute respiratory syndrome) scare is being felt.
Elsewhere across Malaysia, business is suffering,
hitting the country's related industries like never
before.
A security guard at another top-notch
hotel next door gloomily relates a similar sad story,
"Occupancy is now 20 percent. It has never been this
bad. Even after September 11, [2001] the occupancy was a
lot higher than now." He stops and sighs, "This is [a
message] from God. We have to go back to His way."
A marketing executive at a third hotel farther
along the road shares a by-now-familiar sorry tale: 20
percent occupancy.
Officially, Malaysia has
recorded only seven probable SARS cases, with two deaths
so far. The government maintains there is no local
transmission. But scores have been quarantined after
having come into contact with the suspected "imported"
cases.
In Malaysia, where annual tourist
arrivals - many of them from Singapore - amount to more
than half the Malaysian population, the services sector
was always going to be vulnerable. Last year, tourist
arrivals in Malaysia reached 13.1 million, bringing in
RM26 billion (US$6.8 billion) in revenue.
The
Malaysian Association of Tour and Travel Agencies
reports that the number of travelers from mainland China
has dropped to near zero, while arrivals from Hong Kong
and Taiwan have slowed to a trickle.
Penang's
Chief Minister Koh Tsu Koon was reported as saying that
hotel occupancy in the state, a major tourist
destination, had dropped to between 30 and 40 percent
compared with 50-70 percent previously. But a
well-placed official told Asia Times Online that hotels
in the state were only averaging around 29-35 percent
occupancy against the usual level of about 60 percent.
That range, low as it is, is an average figure
of both city and beach hotels. On their own, the
international beach hotels of Batu Feringghi are faring
a lot worse, hovering around 10-20 percent occupancy, as
the hotel employees have testified.
Penang had
already suffered a dent to its image as a result of the
growing pollution of its coastal waters - due to
industrial waste, silting and untreated water from large
drains entering the sea - and increasingly congested
roads.
It's not just foreign tourists who are
giving Penang a miss for now. A check with the Penang
Hill Railway - a funicular train hauled up by cable to
Penang's summit - provided another indicator as to how
even domestic tourism is also suffering. The crowds to
this major tourist draw have evaporated. "Our trains
used to be full even on weekdays, carrying 50 passengers
on each trip," said a hill railway staff. "Now we carry
barely 10-12 people per trip."
The railway's
collection has dropped from RM3,000-4,000 on a normal
day to barely RM1,000 daily, he said. "I estimate that
we have suffered a 60 percent drop in passengers." That
60 percent fall ties in with figures reported in the
press for the drop in domestic travel.
If the
current barren spell continues, large sections of the
tourism and travel sectors are likely to face hugely
testing times and things could get worse.
Other
sectors are also feeling the pinch. Export demand is
listless, consumer spending has weakened; fewer people
are eating out, and shopping malls look emptier than
usual. The government had already revised gross domestic
product (GDP) growth forecast for this year from 5-6
percent to 4.5 percent. It is likely to revise the
growth rate further downward now.
Private
forecasts are already putting growth this year at about
3.5-4.0 percent, but even that could prove too high if
the SARS situation doesn't improve.
Industrial
output had declined in February, even before the war
started, noted the Malaysian Institute of Economic
Research. The MIER's Business Conditions Index (BCI)
indicated that the "economy is struggling with
recessionary tendencies. Consumer sentiments have
expectedly fallen during the same period. Exports are
projected to decelerate, while FDI [foreign direct
investment] inflows may also slow somewhat."
The
MIER said the Malaysian economy will largely have to
rely on domestic demand, which will be boosted by
continued monetary and fiscal stimulus policies. There
are also niggling concerns about corporate governance
issues, say other analysts.
The government is
studying a stimulus package to kick-start the economy.
But that was after the Iraq invasion and before the SARS
scare; the plan was then sent back for redrafting to
incorporate measures to deal with the SARS impact.
It looks likely that the fiscal stimulus will be
announced this month. Prime Minister Mahathir Mohamad
has resumed duties after a two-month break. Although
Malaysia is lagging behind Singapore and Hong Kong in
announcing a stimulus package, the delay is seen as
having enabled greater consultation with industry. But
it will take time for these measures to take effect and
for results to be seen.
On the foreign front,
the poor first-quarter growth in the United States of
1.6 percent in the first quarter has done little to
restore confidence and suggests that any US recovery is
likely to remain fragile. About a fifth of Malaysia's
exports goes to the US.
So it looks as though
there is little on the horizon for Malaysians to cheer
about. If Mahathir leaves as planned in October - though
some are still speculating that he could stay on - he
could be spared from having to face the full brunt of
one of the biggest challenges to face the Malaysian
economy.
(©2003 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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