CHAPTER TWO: LITERATURE REVIEW
2.1 Development of economic on tourism in Malaysia
Before Malaysia independence in 1957, Malaysia's economy is more focus in tin, rubber, and palm oil and petroleum products. On that period, tourism industry haven't fully affects on Malaysia economy, but after independence, the Malaysia government has attention on develop of tourism industry, therefore on 1972 Malaysia government established Tourist Development Corporation of Malaysia (TDC), to the tourism developing programme. However, Malaysia government focus more on tourism industry on 1980s, because of the decrease in oil and world economic crisis. Tourism industry not only affects positively on economy also affect the increase foreign exchange earnings, taxes revenues and job opportunities on 1980s. Consequently, the government was established one more department called The Ministry of Culture, Arts and Tourism on 1987 and TDC has merged to this department become to the Ministry of Tourism in 2004. In order to encourage and improve private and local investment in tourism industry government was launched two types of funds to help the investors on 2001, which is Tourism Infrastructure Fund with allocation of RM 700 million and Special Fund for Tourism Infrastructure with allocation of RM 400 million. Nevertheless, in 2005 the government increase the Tourism Infrastructure funds to RM 1.2 billion. (Government Malaysia, 2006)
In 1980, international tourist of arrivals in Malaysia only 2.3million and the receipts revenue were RM 7 billion but its increase year by year. In 1999, Malaysia Tourism board has launched one campaign call "Malaysia Truly Asia"; it is a program that promotes Malaysia to worldwide tourist. Due to this campaign, Malaysia receipts 7.9 million of international tourist arrivals in Malaysia and receipts around RM 12.3 billion revenue. Moreover, during year 2001 until 2005 there have many terrorism attacks issue and natural disaster occur, it affect the growth of tourism industry and economy in Malaysia, especially on year 2003 and year 2004 there have terrorism and SARS issue in that two years the economic and tourism industry in Malaysia was decline, therefore Tourism Malaysia was launched "Visit Malaysia Year" on 2007, its success to increase the international tourists arrivals numbers to 20.9 million and receipts around RM 46.1 billion revenue.( Tourism Malaysia Statistics, 2010). Figure 1, it shows that during year 2000 to 2009 international tourists arrivals to Malaysia and receipts, it increase year by year.
In order to develop tourism in Malaysia, Tourism Malaysia was launched one campaign that can stimulate the economic in Malaysia. The campaign is called "Malaysia My Second Home Programme" (MM2H), which is promoted by the government of Malaysia, this programme is encourage and allow the foreigners come to Malaysia to invest and stay in Malaysia for long time. This programme bring a lot of foreign exchange and investors to Malaysia, it can helps the economy and increase the job opportunities in Malaysia. Besides that, Ministry of Tourism Malaysia work with many sectors to launch many programmes to helps the economy and tourism such as student tourism programme which attract more overseas student come to Malaysia having education once they come to Malaysia to study, there can earn more foreign exchange; this programme is collaboration with Minister of Education.
Under the Ninth Malaysia Plan (2006-2010), because of the revenue of foreign exchange are keep growing and for maintain it government Malaysia will develop Malaysia as a main international tourist destination while will enhancing domestic tourism during 2006 to 2010. Besides that, under the Ninth Malaysia Plan one of the main programmes is the government will allocate RM 1 billion of an expenditure of improving access and facilities for tourist arrivals, upgrade and maintaining the public and tourist infrastructure and on some marketing campaigns in major source markets. On the other hand, government Malaysia started to develop Malaysia as a regional centre for health tourism, it can attract more and difference of investment and visitor come and Malaysia for travel and invest.(Government Malaysia, 2006) According to Tourism Minister Datuk Seri Ng Yan Yan saying that Tourism Malaysia is target to attract around 2.4 million of international tourist arrival to Malaysia in year 2010, and more focus in Middle East, China and India because these country they are more sufficient visibility and will promote and encourage them join the MM2H programme and invest in Malaysia.
2.2 Changes of Tourism Demand and Tourism Supply
Nowadays, tourist behaviours are keeping changing therefore the tourism demand and tourism supply also need to change. Changes of the tourism supply may take to two forms; one is a quantity change which is the number of the new facilities, attraction and shopping complex or the expansions and contraction in capacity. Once the tourists increase, the demand also will increase therefore the quantity form must keep changing to satisfy and fulfil tourist's demand like create more new facilities and infrastructure like airports and tourist attractions. Another form is quality changes, which is respect to the environment and the local infrastructure and public services that support to the tourism or the local tourism products and services. The environment and economic are keep changing and getting better, so that tourist's demand and their aspects are getting higher, such as the quality of accommodation, food and beverage of the restaurant and satisfaction of the service. In spite of, fulfil tourist's satisfaction all the infrastructure and services must be more standard.
However, the changes of tourist demand is the tourists arrivals population changes, changes in the competitive position or marketing of the region and the changing of the consumer's tastes and preferences, their shopping activity and the method of spending. The income will effect to the tourist expenditure, during the financial crisis period no matter is international tourist or domestic tourist their income are affected by the financial crisis therefore when they went to travel or shopping they won't spend too much and some of them are less to go travel and shopping. Other than that, the changes of demand also include the competitive, it also will affect the tourists' arrival for Malaysia and it will directly affect the economic. Every year, many countries will launch out their own tourism year to attract international tourist to visit to their country and promote their country. Therefore, it will affect the number of tourists' arrival.
For understand more about the international tourist demand. The volume and the evolution of tourist flows are investigated by using the number of international tourist arrivals for the year of 2005 -2009. Figure 2, it show that the international tourist arrivals to the Malaysia during 2005-2009. In year 2005, there have 16.4 million of tourist arrivals to Malaysia, and year 2009 there have 23.6 million of tourist arrival to Malaysia it increase around 7.2 million. In that period, the number of arrivals are growing slowing due to there have many natural disaster occur and financial crisis.
In year 2009, Malaysia receipts a lot of Asia's tourist, therefore the tourist demand was changing. There are many Europe tourist is flow out to other country, so that in 2009 Europe tourist has decrease. In Table 1, it show that the importance of the Asia markets according to 2009 data on numbers of tourists arrivals. The major tourism market for Malaysia is focus on Asia Pacific; especially Singapore represents more than 50% of tourist arrivals, second is Indonesia represent around 12% of total Asia's tourist arrivals.