Scholarly article on topic 'The International Tourists’ Perspective on Malaysia's Economic Transformation Programme (ETP)'

The International Tourists’ Perspective on Malaysia's Economic Transformation Programme (ETP) Academic research paper on "Economics and business"

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Abstract of research paper on Economics and business, author of scientific article — Vikneswaran Nair, Lo May Chiun, Sanjit Singh

Abstract The Economic Transformation Programme (ETP) is a strategic plan by the Malaysian Government to transform the tourism sector into a high-yield industry by 2020. It is vital to understand the perception of international tourists on the Government's initiatives in transforming the industry. Hence, this study aims to explore the international tourists’ perception on transformation of the Malaysian tourism industry based on Malaysia's ETP. A practical insight of the characteristics of the Malaysian tourism industry development comparing to the neighbouring countries are provided. Survey data were gathered from a sample of 333 respondents. The findings revealed that affordable luxury, family fun, events, entertainment, spa, and sports, and also business tourism have positive impact on transforming the Malaysian tourism industry into high-yield. Thus, it is concluded that the direction of ETP is in line with the perception of the international tourists. ETP can drive the tourism sector to become a high-yield industry.

Academic research paper on topic "The International Tourists’ Perspective on Malaysia's Economic Transformation Programme (ETP)"

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Procedia - Social and Behavioral Sciences 144 (2014) 433 - 445

5th Asia Euro Conference 2014

The international tourists' perspective on Malaysia's Economic Transformation Programme (ETP)

Vikneswaran Naira*, Lo May Chiunb, Sanjit Singha

a School of Hospitality, Tourism and Culinary Arts, Taylor's University, No.1, Jalan Taylor's, 47500 Subang Jaya, Selangor, Malaysia bFaculty of Economics and Business, Universiti Malaysia Sarawak, 94300, Kota Samarahan, Sarawak, Malaysia


The Economic Transformation Programme (ETP) is a strategic plan by the Malaysian Government to transform the tourism sector into a high-yield industry by 2020. It is vital to understand the perception of international tourists on the Government's initiatives in transforming the industry. Hence, this study aims to explore the international touris ts' perception on transformation of the Malaysian tourism industry based on Malaysia's ETP. A practical insight of the characteristics of the Malaysian touris m industry development comparing to the neighbouring countries are provided. Survey data were gathered from a sample of 333 respondents. The findings revealed that affordable luxury, family fun, events, entertainment, spa, and sports, and also business tourism have positive impact on transforming the Malaysian tourism industry into high-yield. Thus, it is concluded that the direction of ETP is in line with the perception of the international tourists. ETP can drive the tourism sector to become a high-yield industry.

© 2014 Elsevier Ltd.Thisisanopen access article under the CC BY-NC-ND license


Peer-review under responsibility of the Scientific Committee of 5AEC2014.

Keywords: Tourism; Economic Transformation Programme; High-yield; Malaysia

1. Introduction

Tourism is not only becoming an increasingly important sector to the Malaysian economy, but it is also a major contributor to the world economy (Mohd Hanafiah & Mohd Harun, 2010). The total number of international tourist arrivals around the world is expected to reach in the region of 1.6 billion by 2020 (WTO, 2010). These International tourist arrivals around the world have been experiencing continuous growth from 25 million in 1950 to 1.087 million

* Corresponding author. Tel.: +6-035-629-5000; fax: +6-035-629-5522. E-mail address:

1877-0428 © 2014 Elsevier Ltd. This is an open access article under the CC BY-NC-ND license


Peer-review under responsibility of the Scientific Committee of 5AEC2014.

doi: 10.1016/j.sbspro.2014.07.313

in 2013 (UNWTO, 2014). Hence, it is expected that tourism sector would create many job opportunities and enterprises, export revenues earned, and infrastructure development for many nations around the world (WTO, 2010). According to the World Tourism Travel Council's projection, by 2014, it is expected that the global tourism industry will contribute 10.9 percent to the world's GDP (Lee & Chang, 2008).

Malaysia is ranked as a top tourist destination in Asia (Nanthakumar et al., 2012) and is one of the world's top ten countries in terms of tourist arrival (WTO, 2010). Malaysia also has seen a jump in tourist arrivals from 12.7 million in 2006 to 25.72 million in 2013 (Tourism Malaysia, 2014). According to the report further from Tourism Malaysia (Malaysian tourism promotion arm), tourist arrivals into Malaysian shores in 2013, mainly comprised of visitors from Singapore (13,178,774), Indonesia (2,548,021), Thailand (1,156,452), China (1,791,423), and Brunei (1,238,871). The high number of tourist arrivals has contributed to the total income receipts of RM65.44 billion (~US$20 billion). These figures, according to the former Malaysian Minister of Tourism, Dato' Sri Dr Ng Yen Yen (currently Chairman of Tourism Malaysia), are in parallel with Malaysia's aspiration of achieving 36 million tourists arrivals with RM168 billion (~US$50 billion) in tourists receipts by the year 2020 (Borneo Post Online, 2012).

Tourist expenditure on accommodation, food and beverages, entertainment, shopping, local transportation, and others, translated into tourism receipts, is an important aspect of the economy of the host nation. It generates higher employment rate and development opportunities (WTO, 2010) and increases the foreign exchange income levels. Due to the benefit gained by tourism industry, the Government has structured the Economic Transformation Programme (ETP) to develop and transform the tourism sector into a high-yield industry by 2020 (PEMANDU, 2010a).

ETP is a strategic plan for developing the nation's economy based on the selected National Key Economic Areas (NKEAs). A total of 11 industry sectors which are able to support Malaysia in achieving a high-income nation were prioritised under the ETP, namely: (1) financial services; (2) oil, gas and energy; (3) education; (4) tourism; (5) wholesale and retail; (6) electronics and electrical; (7) healthcare; (8) palm oil; (9) communications content and infrastructure; (10) agriculture; and (11) business services. In addition to the industry sectors, the Greater Kuala Lumpur/Klang Valley region was included as part of the NKEA.

Therefore, the objective of this paper is to explore and identify the perception of international tourists on the transformation of the Malaysian tourism industry based on ETP. This study will also investigate the characteristics of the Malaysian tourism industry's development comparing it to the neighbouring countries.

2. Theoretical Foundations and Development of Hypotheses

2.1. Malaysia's Economic Transformation Programme (ETP)

As outlined in PEMANDU (2010a), ETP is a private-sector led transformation with 92 percent of the over RM1.4 trillion (~US$0.4 trillion) of investment is by private sectors. Importantly, ETP raises the income levels across Malaysia by creating an additional 3.3 million jobs opportunities in which over 60 percent are in the medium-income or high-income salary bracket. In other words, ETP significantly focuses on the key growth engines, known as National Key Economic Areas (NKEAs) and it is selected based on expected contribution to Gross National Income (GNI) by 2020. Statistically, through ETP, Malaysia can becomes a high-income nation with GNI per capita of RM48,000 (~US$15,000) by 2020. With that, twelve entry point projects (EPPs) have been identified across five themes to enhance the Malaysian tourism yields. These themes are as follows:

2.1.1. Theme 1: Affordable Luxury (LUX)

In Malaysia, shopping accounts for 28 percent of the total tourist receipts compared to 35 percent in Singapore and 57 percent in Hong Kong (Pemandu, 2010b). High price and limited selection of products are the main reasons for tourists unwilling to spend in Malaysia compared to Singapore and Hong Kong. Hence, there is a potential for Malaysia to be well positioned as a shopping destination with the targeted aim of growing shopping receipts from 28 percent to 35 percent by 2020 (Pemandu, 2010b). There are three EPPs proposed for this theme, generating RM 9.9 billion (~US$3 billion) in GNI and creating about 80,340 jobs opportunities. EPP 1 is to position Malaysia as a

duty-free shopping destination for tourist goods; EPP 2 is to designate Kuala Lumpur City Centre-Bukit Bintang as a vibrant shopping precinct; and EPP 3 is to establish three new premium shopping outlets in Malaysia.

2.1.2. Theme 2: Nature Adventure (NAT)

Malaysia is a highly bio-diversified country that offers "green tourism" destination of wonderful natural environment as well as a "blue tourism" destination that provides endless beautiful beaches and picturesque islands (Nanthakumar et al., 2012). Approximately, 10 percent of the total tourist arrivals to Malaysia are nature tourism related. Tremendous potential is available if nature tourism and eco-tourism packages are sustained, well-managed and sold to tourist at a reasonable price. This will reflect the value of Malaysia's precious natural resources. According to Herbig and O'Hara (1997), ecotourism is likely to succeed if implemented in a responsible manner. This includes preserving certain aspects of the environment and generating sufficient revenue for the sustainable management of the site. Therefore, by increasing the yield per tourist, it ensures the development of eco-tourism sites in Malaysia will take carrying capacity into consideration. Hence, Malaysia targets to build a recognized network of different biodiversity sites of international calibre (EPP4). This EPP will be undertaken by the Government to generate RM1.5 billion (~US$0.5 billion) in GNI and create 2,900 jobs by 2020.

2.1.3. Theme 3: Family Fun (FAM)

With reference to other countries, Singapore is positioned as a business and higher-end tourism destination and has recently started penetrating into the family destination market with the development of Resort World Sentosa. On the other hand, Thailand has a clear position of offering beaches, entertainment, and value for money. Malaysia too is moving to capture a bigger share of the family market segment especially by increasing the availability of world-class family activities and tourism products. There are two high potential projects that have been earmarked to cater for the families segment which is expected to generate RM2.5 billion (~US$0.8 billion) in GNI and create 17,400 jobs by 2020. This EPP 5 is undertaken to develop an eco-nature integrated resort in Sabah; and EPP 6 is to create Straits Riveira that will further encourage the development of cruise tourism in Malaysia.

2.1.4. Theme 4: Events, Entertainment, Spa and Sports (ENT)

It should be noted that besides promoting Malaysia as the top destination for tourists to visit, the tourism industry is also aims to move the industry towards higher yield. Some of the major activities being actively promoted include are diving, spa, golfing, sail and cruise, food, shopping, national parks, theme parks, cave exploration, Islam in Malaysia, health tourism, education tourism, real-estate tourism, Malaysia My Second Home, and homestay tourism (Salamiah et al., 2008). By focusing a significant importance on this market segment to attract more tourists that will boost Malaysia's tourism industry, a total of four major projects will be undertaken by the government to generate a combined RM1.8 billion (~US$0.6 billion) in GNI and create 19,214 jobs. EPP 7 is generally targeting more international events; EPP 8 is establishing the dedicated entertainment zones. Additionally, EPP 9(a) is developing local expertise and better regulating the spa industry, and EPP 9(b) is expanding sports tourism offerings in Malaysia beyond hosting events.

2.1.5. Theme 5: Business Tourism (BUS)

Business tourism segment represents only a small portion of the Malaysian tourism industry, approximately five percent in total arrivals and 19 percent in tourism receipts in 2009. In comparison, Singapore's business tourism segment accounts for 30 percent of tourist arrivals with 40 percent in tourism receipts. This is predominantly intended to be developed, as participants of business events spend up to three times more compared to non-business tourists. In addition, up to 60 percent of the visitors on business eventually return as leisure tourists and this market segment yields high return on the Government's investment (111 times return per Ringgit of government's investment) (Pemandu, 2010b). Therefore, the Government has embarked on three projects, with two of them being

cross-theme projects and is projected to generate about RM3.9 billion (~US$1.3 billion) in GNI and offer 94,100 jobs by 2020. These projects are EPP 10 on establishing Malaysia as a leading business tourism destination; and EPP 11, to enhance the connectivity to priority medium-haul markets. Additionally, EPP 12 is planned to improve rates, mix, and quality of hotels.

Despite the 5 themes, three business opportunities have been identified by the Malaysian Government that will support the growth of tourism industry which includes the food and beverages outlets, local transportation, and tour operators.

3. Concept of High-Yield in Tourism

In the economic perspective, yield is associated with the economic contribution to Gross Domestic Product (GDP), Gross Value Added (GVA), and the employment generated (Dwyer et al., 2006). Tourism yield is defined as the net benefit accruing to a host country from international visitors that is benefits minus the cost of economic activity (Dwyer & Forsyth, 1997). By focusing on the concept of yield, it allows Government to develop effective and efficient strategies for enhancing Malaysia's tourism competitiveness.

The economic yield concerns other aspects as well in addition to the financial variables. Yield concept contributes to positive economic impacts. Some examples include the increase in the government tax base, expansion of economy's export base, and using tourism by means of a catalyst for economic development. Furthermore, yield concept can assist tourism in the development of remote areas, diversification and stabilizing of the economic activities. Additionally, yield concept can provide a self-financing mechanism for natural and heritage attractions to serve as a tool for environmental preservation (Dwyer et al., 2006). Dwyer and Forsyth (1997) provided several possible importance to government in formulating policies and strategies in regards to tourism and economy such as foreign exchange earnings, net national economic benefits from foreign tourists as measured by changes in economic surpluses, employment generation, cultural and sociology impact on the host society, environmental impact, promotion of international understanding and cooperation; and also income distribution consequences.

3.1. Visitor Yield and Expenditure

Tourists' expenditure is a standard shorthand measure of tourism yield (Dwyer & Forsyth, 1997). Tourists spent on accommodation, food and beverages, entertainment, shopping, local transportation, and other important aspect of the local economy of the host nation. Accordingly, food and beverage expenditures amount to one third of overall tourist expenditures of the global tourism turnover (Meler & Cerovic, 2003). Furthermore, Enright and Newton (2005) highlighted that for Hong Kong, food was the second attraction that pull visitors, while food was ranked the fourth and the first most important factor for Bangkok and Singapore respectively (Hassan, 2008).

3.2. Yield as Economic impact

Tourism is a significant industry that could enhance the Malaysian economy in terms of foreign exchange (Mohd Hanafiah & Mohd Harun, 2010). As for tourists' expenditure, it creates business turnover, household income, and government revenue for the particular host country. It leads to production and consumption induced impacts on economy. As a result, the income earned will be circulated, and eventually leaks out of the system through retained earnings, taxes, and imports. Additional types of economic impacts as a whole are GDP, GVA, employment, and 'net benefit' (Dwyer et al., 2006).

3.3. Yield as Contribution to GDP

Gross Domestic Product (GDP) is the total market value of goods and services produced in a country over a period of time after deducting the cost of goods and services used in the process of production (Dwyer et al., 2006). GDP measures the economic contribution of a particular niche market and tourism industry. With the economic contribution calculated, it allows the government to select and identify target market segments more effectively since

the returns to be gained from the initial investment required to attract one unit of visitor (trip) or one visitor night are more clearly visible (Dwyer et al., 2006).

3.4. Yield as Contribution to GVA

Tourism Gross Value Added (GVA) measures the value of tourism gross output at basic price by industries which supplies tourism products less the value of inputs used in producing the products and exclusive of taxes (Dwyer et al., 2006). It preferred national accounts measure of the production of industries because it is free from distortions in prices caused by changes in tax rates or the introduction of new taxes over the time. It is a comprehensive description of industry's total output over a period of time and as an excellent indicator of industry's contribution to the economy (Dwyer et al., 2006).

3.5. Yield as Contribution to Employment

In government's economic policies, employment is often regarded as an important objective. Yield can be estimated in terms of the change in the tourism industry employment generated per visitor day or more frequently, by employment per US$ millions of tourists consumption (Dwyer et al., 2006). The measure of yield as employment is informative of industry performance and, just like the value added measure; it provides important information to the economic policy makers. As such, tourism players may use such information as a measure in allocating resources to generate employment in the economy. Kumar et al., (2012) highlighted that poverty faced by the society could be tackled through effective tourism strategy.

3.6. Economic Wide Yield Measures

Measuring yield on a wider concept as 'net economic benefit' is more valuable comparing to measuring yield as 'profitability', GDP, GVA or other economic impacts (Dwyer et al., 2006). The measure of net economic benefit is generated by subtracting the costs of additional factors domestically supplied from the measures of the change in gross value of additional output less income payable abroad (Dwyer et al., 2006). The net economic benefit is only comprehensive on a macro-economic level. According to Pemandu (2010b), GNI contribution by the tourism sector was at RM36.9 billion (~US$12 billion) and is expected to contribute RM103.6 billion (~US$34 billion) by 2020.

4. Tourism Plan of Neighbouring Countries

Malaysia's close neighbours, Singapore and Thailand have embarked and approved their respective tourism development plans to improve the competitiveness and attractiveness of their tourism industry. Singapore is expecting to contribute S$30 billion in tourism receipts and receiving 17 million tourists by 2015. The Singapore Tourism Board (STB) aims to achieve leadership positions in leading key customer segments, mainly BTMICE (Business Travel, Meetings, Incentives, Conventions, and Exhibitions); and also Leisure and Services (Healthcare and Education). Approximately S$2 billion tourism development fund has been set aside by the Singaporean Government to achieve the goals (Singapore Tourism Board, STB, 2010).

Meanwhile, Thailand has implemented their National Tourism Development Plan 2012 to 2016 with the vision to become a quality tourism destination that is competitive at the international level. A total of five different strategies have been highlighted for the implementation. They include: (1) developing infrastructure and logistics linking with domestic and international tourism; (2) development and rehabilitation of tourism sites; (3) development of creative economy; (4) first-class image marketing to tourists; and 5) participation of the public sector in tourism management. Thailand is also aiming to be among the top five tourism destinations in Asia and to increase the tourism income by at least five percent (Public Relations Department, PRD, 2011).

5. Development of Hypotheses

In line with the objectives of the study, six hypotheses are tested. All these hypotheses will test the five major themes outlined in the ETP. They include luxury (LUX), nature adventure (NAT), family fun (FAM), events, entertainment, spa and sports (ENT), business tourism (BUS) and other market segments (OTH). Each of these themes, consist of between two to three items or projects (EPP) that will also be tested on their significance. The five hypotheses include:

H1: Affordable Luxury's EPPs creates a positive impact on transforming the tourism industry into a high-yield industry

Shopping is a number one activity while travelling and a trip is not considered completed without having time spent for shopping. Hence, shopping activity is considered an integral part of tourism (LeHew & Wesley, 2007). According to Liu et al., (2008), the retail sector contributes a significant proportion to the tourism industry and plays an important role in maintaining a destination's attractiveness.

H2: Nature Adventure's EPP creates a positive impact on transforming tourism industry into a high-yield industry.

The results of the study by Yang and Chen (2008) on nature-based tourism concluded that nature-based tourism produces an increment in financial revenues in terms of total sales revenue, increment in percentage of sales and increment in percentage of customers in a particular location. It further concluded that nature-based tourism is a vital tool in tourism development for generating financial revenues and tourism sustainability.

H3: Family Fun's EPPs creates a positive impact on transforming tourism industry into a high-yield industry.

Given the diversity of the tourism market, a destination is able to create and maintain a steady growth of international tourists in improving the local economy. Families travel together in large groups opting for family oriented leisure activities. Similar trends are found in Dubai, whereby a large proportion of its tourism activities are family oriented leisure activities (Hazbun, 2006).

H4: Events, Entertainment, Spa and Sports EPPs create a positive impact on transforming tourism industry into a high-yield industry.

Other sectors that are fast growing within the tourism sector is the meetings, incentives, conventions and exhibitions (MICE) sector which may also be part of conducting events and entertainment sector. A number of destinations such as Australia, Hong Kong and Singapore have been successful enjoying growth in their economy and market demand for this sub-sector by focusing on infrastructure and market development, and striving to improve professionalism, quality standards and marketing efforts (Hing & McCabe, 1998).

H5: Business Tourism's EPPs creates a positive impact on transforming tourism industry into a high-yield industry.

Due to globalisation, countries are competing to stimulate exports, attract foreign direct investments (FDI) and attract tourism. Governments are turning to branding techniques in order to gain competitive edge over their rivals, including in tourism (Fetscherin, 2010). According to Byrne and Skinner (2007), business tourism has emerged as a significant sub-section of the tourism industry both in terms of volume of travel and expenditure generated. By focusing and branding destinations as business tourism related, many cities in Europe and countries like USA has managed to regenerate their economies successfully (Hankinson, 2005). In recent times, such market segmentation and branding technique has been applied by Hong Kong and Singapore.

H6: Other market segments that creates a positive impact on transforming tourism industry into a high-yield industry.

Given the technological change and context of globalisation within tourism, new market segments within tourism are being developed and growing steadily. As businesses continue vying for consumers in crowded global marketplaces, market differentiation and specialisation based on the preference of tourists are increasingly catering to the demands of certain tourists. Such tourism market segment is also known as "Niche Market Tourism" (Lew,

2008). This niche market tourism mainly consists of medical tourism, education tourism, heritage tourism and others.

Hence, the following items will be tested for each of the independent (FAM, BUS, LUX, ENT and NAT) and dependent variables (YIE) (see Table 1).

6. Methodology

A survey method was used in this study. A total set of 350 questionnaires were distributed to the international tourists at the Kuala Lumpur International Airport, Malaysia from January to March 2010. Tourist between the age of 18 and 65 years old were selected. Out of the 350 questionnaires, 333 questionnaires were valid and used for analysis, representing a response rate of 95.1 percent. In determining the sample, the researcher used non-probability sampling method and convenient sampling. A total of 26 closed-ended and open-ended questions on a five-point Likert Scale, ranging from 1 (strongly disagree) to 5 (strongly agree) were used to probe responses.

7. Results and Discussions

7.1. Profile of the Respondents

From the total 333 respondents, males represented 52 percent and females 48 percent, while 48.3 percent were singles and 49.8 percent were married. In terms of age, a large number of respondents were under the category of below 38 years old (77.1 percent). A small number (15.9 percent) of the respondents have travelled to Malaysia by themselves and 4.1 percent respondents have travelled to Malaysia either with their family, spouse/partner, friends or their colleagues. Majority of the respondents have high monthly income ranging from US$ 4000 a month (71.7 percent). These findings clearly demonstrated that Malaysian tourism industry is capable of attracting tourists from the upper income bracket. In terms of travelling pattern, 26 percent of the respondents preferred to travel to Malaysia at least once a year and the balance of the tourists have travelled to Malaysia more often.

Approximately 55.6 percent of the respondents were from the Asian continent. Tourists from Europe are ranked the second highest. The Australian tourists made up of 10.8 percent of the respondent. This is closely followed by the tourists from Malaysia's neighbouring country, Singapore, with a total of 10.2 percent of the respondent.

Interestingly, the "Shopping" segment tops the total travelling reasons to Malaysia with 24.3 percent, followed by the "Business" segment (24 percent). The "Family Oriented Leisure" segment has performed consistently in the overall travelling reasons and main travelling reason to Malaysia, with 15.9 percent. The "Events, Sports, Spa and Entertainment" segment contributed 13.2 percent of travelling reason.

The Malaysian tourism industry clearly needs to develop their events, sports, spa and entertainment segment to attract more tourists for this segment. Additionally, a total of 60 percent of the respondents travelled to Malaysia for its historical heritage, local culture and local cuisine. The results are in line with Malaysia's tourism promotional tag-line, "Malaysia Truly Asia".

Thus, destination's management strategy played a key role in the success of the tourism industry. The results also indicated that 24 percent of the respondents travelled to Malaysia to visit their family members that are based locally, and, 16 percent of respondents travelled to Malaysia for the home-stay programme.

Table 1. Items tested for each dimensions

Code Items

LUX1 The shopping market segment in Malaysia is well developed.

LUX2 There are sufficient numbers of shopping destinations with superior luxury brands available in Malaysia.

LUX3 The shopping market segment is a key tourism driver for Malaysian economy in terms of yield.

NAT2 The nature's offering in Malaysia are unique and diverse compare to other nature related destinations.

NAT3 The nature market segment is a key tourism driver for Malaysian economy in terms of yield.

FAM1 The family oriented leisure market in Malaysia is well developed.

FAM2 The family oriented leisure offerings in Malaysia are unique and diverse compare to other family oriented leisure related


FAM3 The family oriented leisure market segment is a key tourism driver for Malaysian economy in terms of yield.

ENT1 The events, entertainment, spa and sports market segment in Malaysia is well developed.

ENT2 There are sufficient numbers of world-class events, entertainment, spa and sports events/facilities held/ available in

Malaysia on a yearly basis.

ENT3 The events, entertainment, spa and sports market segment is a key tourism driver for Malaysian economy in terms of


BUS1 The business tourism market segment in Malaysia is well developed.

BUS2 There are sufficient numbers of business tourism related facilities available in Malaysia in order to attract business


BUS3 The business tourism market segment is a key tourism driver for Malaysian economy in terms of yield.

YIE3 The tourism industry is a vital contributor in improving Malaysian economy in terms of yield.

YIE4 The tourism sector is a key economic driver in terms of yield.

7.2. Exploratory Factor Analysis (EFA) 7.2.1. Convergent Validity

Exploratory Factor Analysis (EFA) is a test used to identify the underlying variables, in which the pattern of correlation between a given set of observed variables are described. The Kaiser-Meyer-Olkin (KMO) test, with values is between 0 to 1 (Haque et al., 2009) is applied in factor analysis, to measure the sampling's adequacy (Hair et al., 2006); to test the variables and predictors' relationship strength; and also to examine if the data is suitable for factor analysis (Haque et al., 2009). In this study, the KMO test conducted on the samples indicated a result of 0.681, which is clearly acceptable with the given cut-off value of 0.5.

Apart from the KMO, the validity of the sample can also be measured with Bartlett's test of Sphericity (Haque et al., 2009), whereby a significance of correlations would result in significant value, P<0.05 (Hair et al., 2006). A p = .00 in Bartlett test of Sphericity suggests that there is a statistical probability that the correlation matrix among the variables has significant correlation (Luarn & Lin, 2003). A total of 5 statements (items) from the questionnaire were eliminated for this study. The data collected were further tested based on Keiser's normalisation criterion whereby only measures having eigenvalue greater than one were grouped into each factor group. The findings in factor loading revealed that the loading value of each variable is higher than 0.7, which implies that the factor loading for the variables has exceeded the perfect level of 0.7 and are deemed as the best explanation for the factors (Hair et al., 2006).

7.2.2. Reliability

To evaluate and gauge the degree of which the measures are error free, reliability tests are conducted (Cavana et al., 2001). According to Sekaran (1992), a Cronbach alpha value of 0.7 is considered ideal, a higher value of 0.7 is judged to be better whereas a value of less than 0.7 is considered poor. The findings in this study suggest that all the variables obtained the ideal value with the exception of nature adventure's variable (see Table 2).

Table 2. Exploratory Factor Analysis (EFA) results

Variables and Eigenvalue Factor % Variance Cum. Cronbach

Items loadings % alpha

Family Oriented Leisure (FAM) FAM1 FAM2 FAM3

0.853 0.820 0.802

21.686 21.686

Business Tourism (BUS) BUS2 BUS1 BUS3

0.823 0.810 0.731

15.477 37.163

Luxury Shopping (LUX) LUX2 LUX1 LUX3

0.837 0.798 0.700

9.788 46.951

Events, Sports, Spa & Entertainment (ENT) ENT1 ENT2 ENT3

0.799 0.788 0.744

9.540 56.492

Nature Adventure (NAT) NAT3 NAT2

0.806 0.668

.275 62.767

High-Yield (YIE) YIE3 YIE4

0.859 0.845

7.442 70.210


KMO (Kaiser-Meyer-Olkin Test of Sampling Adequacy) ^ 0.681 Bartlett's Test of Sphericity ^ 1608.776, p<0.0001 Overall alpha coefficient = 0.727

In this study, the value of R2 is 0.77, which indicates a strong relationship between the independent variables and dependent variable. The findings indicated that Business Tourism (BUS) and Luxury Shopping (LUX) have a positive significant effect on High-Yield (YIE) given the T-value for these two independent variables are as indicated in Table 3. This means that BUS and LUX are significantly associated with YIE whereby any positive changes within the BUS and LUX variables will lead to a positive effect on the YIE variable.

Table 3. Multiple Regression Analysis (MRA) results

Multiple R= 0.278 F= 5.474 R2= 0.77 Adjusted R2= 0.63 p<0.01 Standard Error= 0.56239

Dependent Variable: High-Yield (YIE)

Independent Variables: Family Oriented Leisure (FAM) Business Tourism (BUS) Luxury Shopping (LUX) Events, Sports, Spa & Entertainment (ENT) Nature Adventure (NAT)

Independent Variables



FAM -0.030a -0.533 0.595 b

BUS 0.202 3.405 0.001

LUX 0.116 2.063 0.040

ENT 0.008 0.125 0.901

NAT 0.078 1.452 0.147

Notes: a Standardized Coefficient b p<0.05

Multicollinearity Statistics:

Dimensions Condition Variance


Index Constant FAM BUS LUX ENT NAT

1 1.000 0.00 0.00 0.00 0.00 0.00 0.00

2 10.919 0.00 0.68 0.12 0.01 0.00 0.02

3 12.876 0.00 0.02 0.05 0.03 0.14 0.65

4 15.561 0.00 0.02 0.15 0.80 0.11 0.02

5 17.872 0.01 0.15 0.49 0.00 0.74 0.08

6 25.791 0.98 0.15 0.19 0.16 0.00 0.23

Note: There is no evidence of Multicollinearity problem, since each condition is below 30 and at least two variance proportions are less than 0.50, except for a variable

8. Conclusion

In promoting tourism, tourists' perception is critical as tourists are more demanding and adventurous in locating new destinations that will give them unique experiences (Hassan, 2008). More and more tourists are also becoming environmentally friendly and are willing to be part of the local culture at tourism destinations. Tourists also engage themselves in various types of activities other than recreational activities while vacationing. These activities can generate income for the local community and the host destination (Mason, 2008). The local economy of the destination can be improved and positive impacts can be created on the socio-culture and environment.

This further reiterated that efficient tourism management plays an integral part in creating a successful tourism industry in Malaysia. The focus of tourism management must be on understanding the tourism impacts on the destinations and the management of people that are involved in the tourism businesses.

In some ways or the other, the introduction of tourism has been one of the major factors in raising the local communities' standard of living. As tourists are spending willingly on local services and buying local products, the local economy will improve. This will indirectly contribute to the new variety of local establishments (Deery et al., 2012). As a result of tourists spending at the tourism destinations, this indirectly adds to the balance of payment and proceeds generated, thereby contributing to the national economy as advocated by Seetanah (2011). Nonetheless,

tourists spending may however, change the patterns of domestic consumption that could lead to inflation, through demonstration-effect (Lee & Chang, 2008).

The tourism industry in Malaysia has helped the country's economy and it is imperative for the government to focus in promoting and implementing strategies that would support other alternative types of tourism. Some of these critical policies include Malaysian Environmental Policy, Local Agenda 21, Sustainable Tourism, and Responsible Tourism Policies (Siti Nabiha et al., 2012). Awang and Abd Aziz (2011), opined that the Government's plan in promoting alternative types of tourism will diversify the country's market segments as well as markets that are attractive to tourism. Hence, this would result in the emergence of new forms of tourism such as rural tourism that encapsulate ecotourism, agro-tourism, adventure tourism; shopping, MICE and others.

This research has a number of practical implications for practitioners, especially the tourism industry and the Government of Malaysia. Malaysia is reckoned as an attractive destination with high tourists' arrival in spite of the uncertainties in the global economic situation and the susceptibility of the industry in facing crises after crises. Nonetheless, Malaysia has an advantage as Mother Nature is a major tourism asset for the country. Thus, if these assets are not well managed, and controlled in terms of capacity, the destination will suffer in the long term. One such approach can be by introducing a certain amount of conservation taxes or levy charged to the tourists, tour operators, hotels and other establishment within these destinations for tourism to remain sustainable and responsible. The concept of Limit of Acceptable Change (LAC) (McCool, 1994; Ahna et al., 2002), the extension of the carrying capacity concept (Prato, 2001) can also be introduced to further sustain the destination.

ETP is a fundamentally a partnership programme between the Malaysian Government and the private sector. In this regard, the Government has to be more pro-active in setting sustainable public policy, create transparent business environment, orchestrate the public-private dialogue, provide public investment and facilitate private investment. The public and private sector also needs to collaborate in finding better ways of involving the local communities in the development process, improving economy activity and engaging in crucial areas for sustainability.

Other than the Government, the findings of this study can also benefit the tourism industry in providing good quality tourist-friendly infrastructure such as information booths, security personnel dedicated to cater the tourist's needs, the cleanliness of the destination, professional tourists guides and tourism agencies and others to fulfill the demand of tourists in future.

Based on the findings, the affordable Luxury Shopping and Business Tourism market segment are able to attract tourists. Therefore, the Malaysian tourism industry should implement new methods such as the EPP's proposed under the ETP, higher service quality levels and fair policies to enhance firm-level competitiveness for the continuous growth of these two market segments. Additionally, the results also revealed that the events, sports, spa and entertainment, and also the nature adventure market segments play a key role within the tourism industry. In this regards, the industry needs to provide a higher number of professionals specialising and regulating this particular market segment accordingly, which Thailand has been successful in achieving over the years.

As with other research studies, this study has several limitations. Firstly, the sample size of this study is small (333 respondents) comparing to the actual tourist arrival figures annually to Malaysia. The sampling mechanism can also be enhanced by using clustered sampling based on certain criteria that can generalise the responses. Generally, the future researches should highlight the expenditure level per trip to Malaysia for each respondent and the total amount of expenditure in a specific market segment. As such, it will provide a concrete direction of where and on what the tourists' money is being spent on. With that, it will enable the policy makers to further improve on their strategies in transforming the tourism industry into a high-yield industry.

The tourism sector is becoming one of the important contributors to the economy of Malaysia. A vital strategic destination management is needed for the growth of tourism. With the recent launch of ETP, the Malaysian Government has highlighted the objectives and development projects for its tourism industry in their quest to transform the sector into a high-yielding industry. This study attempts to explore the perception level of the international tourists on the ETP. Furthermore, the concept of destination management, high-yield and other related literature with significance to tourism development and destination management were highlighted in this study.


This project is made possible through research grants obtained from the Ministry of Education, Malaysia [LRGS grant no: JPT. S(BPKI)2000/09/01/015Jld. 4(67)].


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