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Abstract
The study analyzes the impact of terrorism on Malaysia's tourism demand. A panel FMOLS is employed based on quarterly data from 25 top source countries. The findings indicate that an increase in terrorism events and fatalities in Malaysia negatively impact international arrivals, while an uptick in terrorism activity in Thailand generates a positive spillover for Malaysia. But terrorism activity in Indonesia creates a negative spillover possibly due to closer physical and cultural proximity. It would be beneficial for Malaysia to coordinate terrorism containment measures with Indonesia. Malaysia tourism providers should also focus on differentiating Malaysia tourism market from Indonesian market.
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