Abang Et Al 2013 Impact of Tourist Arrival in Economic Growth PDF

014 - Proceeding of the Global Conference on Business, Economics and Social Sciences (GBSR 2013)
IMPACT OF TOURIST ARRIVAL IN ECONOMIC GROWTH: EMPIRICAL EVIDENCE

FROM MALAYSIA
Dayang Hummida Abang Abdul Rahmana, A.M Dayang-Affizzahb, Salbiah Edmanc
Department of Economics, Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS)
aardhummida@feb.unimas.mya, amdaffizah@feb.unimas.myb , esalbiah@feb.unimas.myc
ABSTRACT
This study uses secondary data from 1977 until 2011 to determine the relationship between tourist
arrivals and economic growth in Malaysia. Apart from that, the other objective of this research is to
investigate the contribution impact of tourism to economic growth. There are several methods of
analysis were used to analyse the data which are Unit Root test (ADF & PP), Cointegration test (Johensen
and Jeselius), normality test and Granger Causality test. The result shows that there is a positive
relationship between tourist arrivals and economic growth in Malaysia.
Keyword: Economic growth; causality; Tourist arrivals.
-------------------------------------------------------------------------------------------------------------------------------------1. INTRODUCTION
Tourism industry which already growing in ancient times found successful becomes generating
resources of high foreign exchange revenue. Furthermore, tourism is one of these important generators
of income and employment creation. Tourism can be defined as process, activity, and result which arose
from relationship and interacting among tourists, tourism suppliers, host governments, host
communities, and surrounding environments which involved in attracting and hosting of visitors (World
Tourism Organization [WTO], 2003)1. In addition, tourism is a human activity, which encompasses
human behaviour, resource utilization, and interaction with other people, economy and environments
(Adrian Bull, 1995). Apart from that, people come from this country also could categorise as tourist.
Visitors were divided into two, firstly tourist that means temporary visitors to a country at least 24
hours, for the purposes of leisure or business and; secondly excursionists that means temporary visitors
staying in a country less than 24 hours, for the same purposes, but excluding transit passengers (Adrian
Bull, 1995). At the same time, tourist have are various perspective in different countries. Mohammad,
Elsadig & Abdur (2011) also mentions that Malaysia can become one of the leading tourist destinations
competing with other popular destinations of the global economy. In addition, tourism sector success
many countries worldwide, including Malaysia, is often measured in dollars and cents or specifically by
the number of international tourist arrivals and the income they bring (Baharuddin, Ahmad, Jamil &
Kong, 2000)
The World Tourism Organization is the United Nations agency responsible for the promotion of responsible,
sustainable and universally accessible tourism. This organization also promotes tourism as a driver of economic
growth, inclusive development and environmental sustainability and offers leadership and support to the sector
in advancing knowledge and tourism policies worldwide.
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Proceeding of the Global Conference on Business, Economics and Social Sciences 2013 (e-ISBN 978-96712022-0-3) 25-26 June 2013, Kuala Lumpur. Organized by: WorldResearchConference.com
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According to Khaled (2009), tourism term is a kind of universal remedy for some of the macroeconomic
problems, as an engine for social transformation and to produce a good image on the global platform
driver in an era give incentive that is too generous to industry. As we know, tourism represents one of
the most dynamic economic sectors in the world (Edgardo, 2005; Imran, Muhammad & Fareed, 2010;
Jamieson, 2000). However, tourism also can give the positive and negative impact to our economic
growth. Tourism is also main source and the biggest contribution in economic Malaysia. Nowadays,
tourism industries becoming increasingly vital namely are catalyst in Malaysian economic development
and contribute much to income and countrys growth. Furthermore, it can become aspiring a foreign
centre for tourism. Malaysia is an interesting holiday destination offering something for everyone to
enjoy their holiday. According to WTO (2005), Malaysia was ranked as the thirteen worlds top tourist
destinations while within ASEAN region Malaysia was the leading country in receiving inbound tourists
by controlling about 32.7 percent of total arrivals in 2004 (WTO, 2006). The countrys main gateway is
the Kuala Lumpur International Airport (KLIA). Besides, it also offers low cost flight which is Air Asia in
Low Cost Carrier Terminal (LCCT). Other major international airports are Langkawi, Penang, Johor Bahru,
Kota Kinabalu and Kuching (Malaysia, 2012). According to Syahida (2003), in the tourism industry, the
tourism attractions are key factors in making a destination attractive and exciting. However, they are a
few reasons for tourist to come the country. In generally, factors that attracting the tourists is culture,
demography, political environment, and economic growth. Firstly, endowed with a diversity of culture,
Malaysia offers a truly Asian experience. Malaysia is a melting and amalgamation of people from
various races (Tourism Malaysia; National and Marine Parks, 2010). Moreover, factor that attracting the
economic growth in Malaysia is the size and value of a national economy is normally expressed as the
total value of all goods and services produced by the economy during a specified time period, such as
one year (Adrian Bull, 1995). This industry perceived as contributed on generating foreign exchange
earnings, employment and income. Norsiah Kadir (2008) found that the rising economic importance of
the industry had been fuelled by the large and growing number of international tourists. However, the
tourists that come to our country can give some effect and challenges face the Malaysia tourism
industry.
Table 1: Total Number of Tourist Arrival and GDP in Malaysia (2007-2011)
Year
Tourist Arrival
GDP Constant Price
2007
20.9 million
506,341
2008
22.0 million
530,683
2009
23.6 million
522,001
2010
24.6 million
559,554
2011
24.7 million
590,353
Source: Department of Statistics Malaysia

Table 1 shows GDP and tourist arrival from 2007 to 2011. In year 2007, the number of tourist arrival is
20.9 million and the total GDP in Malaysia is 506, 341. Whereas in year 2010, the number of tourist
arrival slightly increase to 22.0 million and GDP also rapid dramatic sharp to 530,683. After that in year
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2010, the total tourist arrivals only encounter rose dramatic a litter that of 24.6 million and the total
GDP is 559,554. Lastly, in year 2011 the total tourist arrival is 24.7 million and the total GDP is 590,353.
This prove that the higher tourist arrival, that will become dramatic sharp GDP and the largest
contributor to this country.
Tourism sector is the largest generated into economic growth in Malaysia. This is the main reason for
the government support and promotes tourism throughout the world. Furthermore, this sector can give
a positive impact upon economic growth and development in Malaysia. According to Edgardo Sica
(2005), today tourism represents one of the most dynamic economic sectors in the world and the study
aims to verify if tourism represents a determinant of growth in such countries. Different from other
perspective, tourism should generate employment and income, lead to a positive tourism balance of
payments, stimulate the supplying sectors of tourism, and lead to a generally increased level of
economic activity in the country and will give an impact on the frequently used quantitative measure of
the economic development, gross domestic product (GDP) (Edgardo, 2005; Stanislay and Craig, 2006;
Nanthakumar, 2007). In fact, tourism industry is largest contributed to our economic country. Another
key point, Syahida (2003) also agreed that tourism can create needed jobs for residence, generate
needed funds to improve the lives of local people and increase business for local merchants in small
coastal town seeking economic security. In other word, tourism industry not only benefits to economic
growth in our country, but it also benefited to the people of this country. Sara and Elias (2008) also
belief that there a significant relationship between economic growth and tourism. In addition national
economy to benefit from tourism depends on the availability of investment to develop the necessary
infrastructure, and capacity to supply the services that tourists require. Furthermore, when a country
becomes more recognized, thus it facilitates to attract foreign travels (Business travels), which leads to
an increase in the foreign reserve of the country. Therefore, indirectly it will increase our FDI.
On the contrary, Samina (2010) found that tourism led to a growth of household incomes and
government revenue directly and indirectly by means of multiplier effects, improving balance of
payments and provoking tourism-promoted government policies. Indirectly, household will be active
participating contribution to development of the nation. In addition, it can improved policy environment
for sustainable tourism development has major implication for macroeconomic goals and national social
development objectives, especially those related to poverty reduction (United Nations, 2007). They also
mention that at the same time, are new opportunities for increasing the efficiency and effectiveness of
tourisms contribution involving the government, the private sector and other stakeholders.
As noted in the previous section, tourism is one of the largest and fastest growing industries in the
global economy and currently the third most important industry for Malaysia in term of foreign
exchange earnings (MIER, 2008). Balaguer and Jorda (2002) explored the role of tourism for the
economic growth of Spain using cointegration and causality testing. Adamos and Sofronis (2009) have
acknowledged that diminishing returns will eventually set in, putting a limit until level that the tourism
sector can contribute on countries welfare. Tourism is not only one creator of GDP, but has an
important contribution to value added [Minciu, 2000, 25]. This industry can also have an impact
on natural resources in the various tourist destinations, on everyday life of these locations and
also on the individuals from those areas, whether rural or urban. Therefore, this study try to fill
this gap by investigate the between Gross Domestic Product (GDP) and tourist arrivals in
Malaysia. The problem is to understand the difficult of effectiveness of virtual tour technology
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for the market of tourist places in our country in particularly with grows of tourism industry.
Other than that, it is difficult to our country to attract the international tourist especially from
western country. Furthermore, is that our place and product in our country will satisfy the
tourist desire. The visitor can also virtually browse through a souvenir or gift shop thats on
internet before deciding to buy anything they wish (Prasana, 2002). This study gives the
opportunity for country to identify the real source for economic growth in this country.
Different from other research, this study merely using two variables only; the fist was total
tourist arrival and secondly is GDP in Malaysia. In other words, this study would like to
investigates the contribution of tourism in related to the Malaysian economic growth whereby
provide the relevant recommendation of government policy to strengthen the economic
performance in Malaysia.
2. LITERATURE REVIEW
A development in tourism industry is really emphasized therefore the interesting places in Malaysia can
attract more tourists arrival to come to Malaysia. Alfartas (2009) investigated that to have a
development increasing in this sector a demand from the people must be created and that cannot be
happen if they only have a tourists attractive place. Apart of that, government and private sector must
participation through a long term plan. In contrast, Sica (2005) said that they are other factors
contributed to the rapid development of tourism in the South-East regions, for example are
technological improvements, new marketing promotional strategies and elimination of political barriers.
Moreover, in order to, tourism sector become an alternative driving force to achieve economic
development, the part of gains from tourism should be allocated for improving the living conditions of
weak population.
According to the Salleh (n.d), explored the tourism development can be attracting foreign direct
investment (FDI) inflow that having significant impact in generating economy. In addition, according to
Kweka et al. (2003) also have the same opinion. They mention that in Tanzania, the contribution of
tourism sector has attracted investment and policy initiatives to supports its development. The certain
investment can give benefit both communities and reserves. Apart of that, they also mention that
tourism sector can generate indirect tax revenue. Tourism sector will also give in directly or indirectly
contribution to one country. Households indirectly will be earning income more by working in tourism
sector or supporting industries. Indirectly, tourism industry will increase economic growth and further
increase this countrys name. In addition, according to Brida et al. (2008), investigated the tourism
sector have relationship among elasticity of tourism expenditure (TourExp), real exchange rate (RER) and
in long-run economic growth (GDP). Policy implications will be accessible this by enhance performance
of the economic growth and increase their administrative management performance. In contrast, Malik
et al. (2010) examined that there is long-run relationship between the number of tourists, GDP growth
rate and current account deficit. It will increase Pakistan balance of payments accounts by cutting down
current account deficit and the GDP will be improves.
According to the Zortuk (2009), identify that tourism industry in Turkey have emerged as a great empire
with annual foreign exchange that high and job opportunities directly and indirect. In fact to, it is not
only increase foreign exchange income, yet it had spurred growth of the tourism industry and additional
it also triggered overall economic growth. As a matter of fact, Tohamy and Swinscoe (2000) having the
same opinion on the matter above. Moreover based on export revenue, tourism has become the
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worlds largest source of income and item that is important in balance of payment to most of the
country. The direct effects of tourist expenditure on business are tax potential contribution that
estimates high from total of tax revenue. That research also indicated that direct impact foreign tourist
expenditure about four times the one percent contribution from hotel and restaurant to GDP in national
account.
Furthermore, Mazumder et al. (2011), think that tourism industry not only creates considerable high
multiplier effects but also stepped up the inter-sectoral linkages in the economy. Therefore, multiplier
effect that is direct, indirect, and induced is reason which helps in expand tourism contribution to
economic. In additional, the capacity to generate ripple effect by tourism makes one important medium
of foreign currency injection which had been significant attention for developing countries economic
development. The developing country has been gradually depending on income streams from tourism
while traditional economic sector has been less potential in contributing to GDP country. In contrast,
Evan et. al. (2008) has different perspective. They found that tourism industry is as one of the income
earners that are attracts great interest from policy aspect for economic growth that continued in this
country.
3. METHODOLOGY
This section explains more about the method to be used in this research. The Methods and techniques
of this study will involve several aspects such as the conceptual framework, research design and
hypotheses of the study. Furthermore, this study was focuses on the period of the studies data, the
variables that used, and how data is analyzed and what the data analysis carried out from these studies.
In this section, the time series data always includes four standard procedures which are Unit root test
(ADF, PP), Normality test, Co-integration test (Johansen and Jesulius, JJ 1990) and Granger Causality.
4. DATA
This study use the time series annual data from year 1977 until year 2011 which is was used the yearly
data. The data that used are GDP and total number of tourist arrival to Malaysia. The data had been
found from Department of Statistic Malaysia.
5. UNIT ROOT TEST
Unit root test is test to defined stationary or non-stationary in the result. The unit roots test is a more
formal test, which is required to check the stationary properties of the variables. Stationary is refers to
the state where the underlying stochastic process that generates a data series is invariant with respect
to time. It is important for estimation because with apply least squares regression on non-stationary
variables can give misleading parameter estimates of the relationship between variables. Meanwhile,
with checking for stationary, it will be explain what kind of processes we need to estimate for our
models. If the characteristics of the stochastic process change over the time, we can say that the process
is the non-stationary. Non-stationary time series data is necessarily contain the permanent components.
The mean and variance of a non-stationary time series depend on time, which can cause a series has no
long- run mean. The ADF test is one-sided because the alternative hypothesis is that < 0 (or p).
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Phillip and Perron (1988) propose an alternative (nonparametric) method of controlling for serial
correlation when testing for a unit root. The PP method estimates the non-Augmented DF test equation,
and modifies the t-ratio of coefficient so that serial correlation does not affect the asymptotic
distribution of the test statistic. The PP test is differing for the ADF in the treatment of serial correlation.
The information based method does not apply to the PP test. The lag selection is not that important in
PP test if compare with ADF test.
6. COINTEGRATION TEST
Cointegration test is the test to find this result is long run relationship or short run relationship among
the endogenous and exogenous variable. Advantages of Johansen and Jeselius, JJ is the Johansen
multivariate procedure poses several advantages over the residual-based Engle-Granger two-step
approach in testing for a long-run relationship among economic variable. Phillips (1991) has
documented the desiberility of this technique in term of symmetry, un-biasedness and efficiency.
Furthermore, it is well known that the Johansen procedure does not suffer from normalization problem
and is robust to departures from normality Cheung and Lai, (1993), Gonzalo (1994). To reject the null
hypothesis, the trace statistic and maximum eigenvalue statistic must greater than critical value. When
the two or more variables in a system are found to be co-integrated, it said to have a long run
relationship. But if does not co-integrated they are short run relationships.
7. NORMALITY TEST
Normality tests are used to determine whether a data set is well-modeled by a normal distribution or
not, to compute likely an underlying random variable is to be normally distributed. The distribution of
sum of a large number of independent and identically distributed random variables tends to a normal
distribution as the number of such variables increases indefinitely. If the number of variables is not very
large or they are not strictly independent, their sum may still be normally distributed. The normal
distribution is a comparatively simple distribution involving only two parameters (mean and variance).
8. Granger Causality Test
Granger Causality Tests based on Vector Error Correction Model (VECM) is deployed when cointegration
is detected. The purpose is to avoid problem of misspecification (Granger, 1988). The existence of a
cointegrated relationship in the long run indicates that the residuals from the cointegration equation
can be used as ECT as below.
LnGDPt=0 i +
3,i LnTA t-i + 1ECT t-1 + 1t
(1)
LnTAt = 0 +
2,iLnGDP t-i + 2ECT t-1 + 2t
(2)
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9. EMPIRICAL RESULT AND DISCUSSION

As mentioned in the previous chapter, the data that have been used in this study was gained from year
2001 until 2010 for both dependent and independent variable. This chapter will be presented the
empirical result using the statistical analysis of Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP)
Unit Root Test, Co-integration Test, Normality Test and Granger Causality Test. The result will be
presented in the table form followed by the explanation for each tests. The empirical result will be
presented in table from and followed by the analysis of the empirical result.
Table 2: Result for Unit Root test
ADF test
Variable
1st difference
Level
intercept
Trend &
intercept
intercept
Trend &
intercept
LGDP
2.372(1)
-0.923(0)
-6.834(0)***
-8.083(0)***
LTOURIST
-3.446(14)
2.629(0)
-2.261(0)
-3.244(0)*
Notes: Asterisks (*), (**), (***) indicate the rejection of the null hypothesis of non-stationary at 10%, 5% and 1%
and ( ) denote the lag length.
Table 2 represents the result of ADF unit root test in probability value (p-value). Null hypothesis can only
be rejected if p-value is smaller than 0.1. In the levels intercept, ADF test results provide evidence that
only Tourist arrival and GDP not significant in that case the first different are proceed. At the first
differences, GDP are stationary at 1 percent significant and Tourist arrival only have one significant at
first differences, trend and intercept at the level of 10 percent during the period of the annually from
1977 2011. Furthermore, the null hypothesis is rejected at the first difference because the variable of
GDP and Tourist arrival was found to be stationary at the first different and statistical significant.
Table 3: Result for Unit Root test
PP test
Variable
1st difference
Level
Intercept
Trend & intercept
Intercept
Trend & intercept
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LGDP
2.824(5)
-0.421(3)**
-6.781(3)***
-8.787(3)**
LTOURIST
5.489(3)***
2.629(0)
-2.161(3)
-3.087(3)**
Notes: Asterisks (*), (**), (***) indicate the rejection of the null hypothesis of non-stationary at 10% 5% and 1%
and ( ) denote the lag length.
Table 3 represents the result of PP unit root test in probability value (p-value). At the level intercept GDP
significance. In other words, all the probability is less than 0.01. In contrast, in first differences, only GDP
are stationary at 1 percent significance. Tourist arrival only significant at level intercept, at 1 percent
significance. Moreover, the null hypothesis is rejected at the first difference because the variable of GDP
was found to be stationary at the first different and statistical significant. The ADF and PP test shows
that, most the variables are stationary and the test can be proceed to cointegration test
10. COINTEGRATION TEST
The purpose of cointegration test is to test the existence of long run relationship among the endogenous
and exogenous variable, namely the GDP of Malaysia and Tourist who come to Malaysia. It is also known
as multivariate analysis. To reject the null hypothesis, the trace statistic and maximum eigenvalue
statistic must greater than critical value.
Table 4: Co-Integration Test
Null
Alternative
k=2 r=5
Trace
Test statistic
-Max
95% (C.V)
Test statistic
95% (C.V)
r=0
r=1
14.76445**
14.07
19.72945**
15.41
r<= 1
r=2
4.965006**
3.76
4.965006**
3.76
Notes: Asterisks (**) denote statistically significant at 5 percent level. The k is the lag length and r is the cointegrating vector(s).
Table 4 indicate that the trace test and maximum eigenvalue exist at single and double cointegration
vector and the variables are moving towards equilibrium. The table shows that both Max and Trace
tests suggest that there is a cointegrating relationship because they are significant. The trace test shows
that the rejecting of the null hypothesis of r=0 which is 14.76445 is greater than critical value. The null
hypothesis of r 1 is also rejected due to the greater than critical value. The maximum eigenvalue test
indicates that the rejection of the null hypothesis is only occurs at r=0 of maximum eigenvalue test of
19.72945 and r 1, maximum eigenvalue test of 4.965006 is greater than critical value. Based on the
result, it can be interpreted that cointegrating test has are relationship between the GDP and tourist
arrival.
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11. NORMALITY TEST

Normality tests are used to determine whether a data set is well-modeled by a normal distribution or
not, to compute likely an underlying random variable is to be normally distributed.
Figure 1: Normality Test
9
Series Residuals
Sample 1977 2011
Observations 35
8
7
6
Mean
Median
Maximum
Minimum
Std. Dev.
Skewness
Kurtosis
5
4
3
2
Jarque-Bera
Probability
1
0
-15000
-10000
-5000
5000
1.35E-12
-476.0103
9592.812
-13874.48
4978.152
-0.379907
3.171002
0.884566
0.642568
10000
The figure 1 indicates that most observations are highly concentrated on the left side of the distribution.
Furthermore, based on figure above, the distribution found more to negative side. This proved to its
skewness and kurtosis is -0.379907 and 3.171002. To summarize, the Jarque-Bera test return 0.884566,
which reject the null hypothesis of normality because p-value is less than 0.0001.
12. GRANGER CAUSALTY TEST
Table 5: Result for Granger Causality Test
Dependent variable
GDP
TOURIST
ECT1__________
ECT
t-ratio
GDP
0.355
-0.383*
-2.537
TOURIST
0.124
-325.715 -1.685
Notes: is the first difference operator. Asterisk (*) indicates statically significant at 5% level
Table 5 indicates the causality relationship between Tourist arrival and economic growth in Malaysia
based on VECM. The t-ratio on the coefficient of the lagged error-correction term (ECT) represents the
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statistical significance on the long run causal effect, while VECM was constructed to obtain the short run
elasticity. The coefficient of ECTs in GDP equation is 0.383, indicating that about 38 percent of the
adjustment is completed in an annually. This means that Malaysia needs approximately 2 and year to
reach long run equilibrium from the estimed result. In other words, only the Tourist arriva VECM has
long run causality. In addition, the result also shows that the direction of granger causality is shown a
one-way causality. For short run causality, based on the results obtained that both GDP and Tourist
arrival statistically insignificant at the 5 per cent level.
Figure 2: Long Run Causality Direction
Tourist
GDP
Notes: GDP Tourist implies one-way causality or unidirectional

Furthermore, the result indicates that economic growth does not Granger cause tourist arrivals, but
tourist arrivals Granger causes economic growth. Based on the figure 2, this suggests unidirectional
causality running from economic growth to tourist arrivals.
13. CONCLUSION
As a conclusion, this research is carried out to investigate the impact of tourism will effect economic
growth in Malaysia. Apart from that, this study also has others objectives which aim to identify the
contribution impact of tourism in related to economic growth and to provide recommendation and
policy for government in related to tourism growth. Besides, the results for ADF test suggest that GDP
are stationary at the first difference with one percent of significant level while tourist arrival are
stationary at the first difference with ten percent of significant level. Corollary, null hypothesis rejected
at the first different because the variable was found to be stationary. Moreover, PP test suggest that
only GDP are stationary at the first difference with one percent of significant level. In addition, the
cointegration test has been run by using Johansen and Juselius test (1990) and it shows that both trace
and maximum eigenvalue test statistics rejected the null hypothesis at five percent significant level
which implies that there is cointegration between GDP and tourist arrival.
In the vector error correction model, the result suggest the there is no causality between the GDP and
tourist arrival in the short run because the result shows that bigger than 5 percent level of significant.
This mean the tourist arrival cannot be explained properly by the economic condition. However, the
granger causality test has explained there is long run relationship between the two variables. These
results show that there is unidirectional between economic growth and tourist arrival in the long run.
The result of analysis which made in chapter four found tourists arrival have a positive relationship with
GDP Malaysia. This can be proved when all tests have been made to show that the existence of positive
relationship between dependent variable namely economic growth and independent variables are
tourists arrival. In other words, an increase in tourist arrivals also led to increase in GDP Malaysia.
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From the results that are obtained, it was found that the objective have been achieve where found that
tourism has a positive impact on economic growth in Malaysia. In other words, the increase in tourist
arrivals will cause an increase in economic growth in Malaysia generally. Diversity of tourism products
that introduced like ecotourism, health tourism, film tourism, tourism homestay, edutourism and
tourism aqua is also one of the increase of tourists factor to Malaysia. Apart from that, a high gross
national income, lower inflation, population rates that high and short haul destinations influencing
tourists to visit Malaysia.
In addition, the tourism industry is very sensitive to international recession crisis non- economic like
war, natural disasters such as haze and plague. The global economic recession has greatly slowed also
related to tourist development in this region. Besides that, the World Tourism Organization estimates
has estimated that tourism accounts will reach up to 10% of global gross domestic product, making it
the worlds largest industry. Besides that, tourism also contributes to the reduction of poverty and that
for many of the least developed countries, and in many rural areas, tourism is one of the viable
strategies that also contributed to the development of the country. In 2020, Malaysia targets 36 billion
tourist will arrive, and bringing up to RM168 billion in the revenue for the country. As a conclusion, the
analysis shows, then, that a long-run stable relationship between economic growth and tourism
expansion exists. The strong impact of tourist activity, according to the magnitude of the estimated
parameter would reveal the existence of important long-run multiplier effects.
In developing a master plan countries may wish to consider incorporating the recommendations
presented below as well as those contained in Commission resolution on Implementation of the Plan of
Action for Sustainable Tourism Development in Asia and the Pacific. Malaysia as a truly Asia, is a country
that has an attractiveness of its own. Moreover, by looking at the rise in the tourism sector, it is
opportunity to further boost the tourism industry in Malaysia by diversifying tourism activity that more
innovative. Government should consider increasing their efforts to assess the economic impact of
tourism from boiling. The formulation of national tourism development policy must be done will as not
hindered by lack of data on the scope and extent of the economic contribution of tourism and its
impact. Promotional activities should be directed towards to raise awareness and encourage visitors to
visit tourist attractions in Malaysia. Concentration should be given to improvements to attractions and
present markets and developing tourist infrastructure. Government also should consider establishing in
order to create inter-ministerial committees that include representatives from the tourism industry in
order to coordinate and monitor that implementation of the plan. In addition, the government must
make improvements in procedures for the issuance of visas, border formalities and customs regulation
to ease international travel.
In other words, to attract tourists arrival, a strategy involves consumer marketing and commercial need
to be developed to promote the tourists on tourism product offering unique and different than other
countries. Although, has a strong tourism product, it is possible can be the main motivate a tourist to
travel our country. Thus, to attract the international market to come to Malaysia, tour package can be
proposed together with other tourism package. For example, the welfare tour package and tourism
homestay were consolidated, that can attract more tourists attention. It is likely to be a added value
for product tourist from other countries and with the image enhancement it will contribute to extension
of tourist visit to one country. In order to increase the demand on the international market, the unique
destinations may need to be explored with include and introduce natural products that are invaluable
national treasures such as rafflesia flower that can only found in Sarawak. Environmental and sociocultural should be considered and integrated into national policies and plans for tourism development.
Collaborative approach between the public sector, private sector and stakeholders can internalize some
26
of the external travel cost thereby preserving the cultural heritage and protect our environment.
Government and private sector must work together to ensure efficiency in realizing Vision 2020 to
achieve developed nation and thus introduced the name at the international level. Besides that,
countries should consider a undertaking surveys to assess the needs and demands of the workforce to
the level skills and training of current and future training requirements in the tourism sector, and
develop a national tourism training plan. Bilateral, multi-lateral and sub-regional cooperation in tourism
development should be further strengthened. All the above recommendations are intended to improve
and add value to the existence to being tourist attractions. However, it may be increased in accordance
with the needs and demands of tourists which is in line with current trends, tastes and quality of life
improvement.
14. Acknowledgements
Financial support from Universiti Malaysia Sarawak through SGS-03(S100)/868/2012(13) is gratefully
acknowledged. All remaining flaws are the responsibilities of the authors.
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014 - Proceeding of the Global Conference on Business, Economics and Social Sciences (GBSR 2013)

IMPACT OF TOURIST ARRIVAL IN ECONOMIC GROWTH: EMPIRICAL EVIDENCE

GDP Constant Price

Source: Department of Statistics Malaysia

3,i LnTA t-i + 1ECT t-1 + 1t

2,iLnGDP t-i + 2ECT t-1 + 2t

9. EMPIRICAL RESULT AND DISCUSSION

Trend & intercept

Trend & intercept

11. NORMALITY TEST

Notes: GDP Tourist implies one-way causality or unidirectional

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