Abstract
Tourism industry is one of the important service industries that play a crucial role in the development of Malaysian economy. Thailand has been ranked among the top five tourist generating countries for Malaysia since the last decade. This paper intends to determine factors affecting Thai tourism demand in Malaysia from the macroeconomic perspective by utilizing quarterly data from 2000Q1 to 2013Q4. The Thai tourism demand model is estimated using the error-correction model and a battery of diagnostic tests were carried out to ensure the robustness of the model. The empirical results indicate that there is a long-run equilibrium relationship between Thai tourism demand and the specified explanatory variables, which are Thai real income, real travel cost and exchange rate. Specifically, higher Thai real income will reduce Thai tourist to Malaysia, while higher real travel cost and stronger currency attract more Thai visitor to Malaysia. As a conclusion, this paper has achieved its aim to determine the factors affecting Thai tourism demand in Malaysia. DOI: 10.5901/mjss.2015.v6n3p162
Highlights
Malaysian government has given attention to its tourism industry following the poor performances of Malaysia’s primary commodities and manufacturing industry, which were resulted by the oil price drop and economic recession in the mid1980s
The existence of a positive relationship between exchange rate and tourism demand is expected, which in particular, the appreciation of Thai Baht will encourage more Thai visitors travelling to Malaysia and vice versa, Thai Baht depreciation will decrease the number of Thai tourists visiting Malaysia
The null hypothesis of unit root is not rejected at the level, but it is rejected after first differencing
Summary
Malaysian government has given attention to its tourism industry following the poor performances of Malaysia’s primary commodities and manufacturing industry, which were resulted by the oil price drop and economic recession in the mid1980s. Malaysia has a strong position for its tourism industry as it was ranked in top 10 for both the most visited country and tourist arrival in the world, as well as ranked in top 15 in terms of global receipts (PEMANDU, 2010). It is important to study the factors affecting tourism demand in Malaysia as this particular industry will play an important role in the future development of Malaysian economy. The average annual growth for Thai visitor arriving into Malaysia is 2.43 percent for the period 2000 to 2013. Since 2006, Thai tourist arrival has shown a downward trend until 2013 with the highest negative annual growth of 14.1 percent in 2007. The main objective of this paper is to empirically examine the Thai tourism demand in Malaysia from a macroeconomic perspective
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