Recovery difficult without international tourists

Govt urged to facilitate opening of the country’s border to supplement domestic travels and ensure a stronger revival

by ANIS HAZIM / pic by MUHD AMIN NAHARUL

SOME sectors are in “quite uneven” positions to recover due to the absence of international tourists, said the Socio-Economic Research Centre (SERC).

Its ED Lee Heng Guie said among the sectors are the tourism, retail and aviation industries.

“Interstate travel might help, but we still need international tourists to come in. On average, we have 60 million tourists and that generates close to 6% of GDP,” Lee told a media conference at the Rehda Institute CEO Series 2022 conference yesterday.

Lee hopes that the government would facilitate opening of the country’s border for international tourists.

“This would supplement the country’s domestic travels and will ensure a stronger revival, especially in tourism.”

He also opined that the government is moving slowly in facilitating international tourism, which needs to be balanced out with the right pandemic precautions.

Lee projected that Malaysia’s GDP will grow at 5.2% in 2022 compared to his estimation of 3.4% last year.

“What I expect to drive the economy this year is power consumption, which will slightly increase to close to 5.9% for this year.

“However, it is still low as the average power consumption goes about 7.3% per annum for the last five years.”

Lee also noted that the labour market condition continued to improve with the unemployment rate improving to 4.3% in November 2021.

“This will help to support consumer spending. People are returning to the malls, restaurants and grocery shops, although some retailers may still experience low sales compared to the pre-pandemic level.”

Moreover, Lee viewed that another catalyst for Malaysia’s recovery will be the government’s Budget 2022.

“The government’s budget is a record high this year of RM332.1 billion, while the development expenditure is at RM75.6 billion, which is another record high.”

However, Lee stressed that there is no point in having a big budget if the implementation capacity is weak, as it will not help to boost the country’s economic recovery.

Meanwhile, Real Estate and Housing Developers’ Association Malaysia (Rehda) Institute chairman Datuk Jeffrey Ng Tiong Lip said the high-cost pressure on the industry in terms of increases in building materials and labour costs has affected project cash-flow planning.

“Increase in material costs directly impacts the cost of doing business, which has resulted in a 13% to 20% hike in construction costs.

“All these factors cumulatively distort costs of construction,” Ng said in his speech at the conference.

Therefore, he said government intervention may be necessary to ease the cost pressure on developments and real estate to ensure prices remain stable.