Most Malaysians feel gloomy over the collapse of Malaysia’s national currency the ringgit in the last few weeks. The ringgit is down by 9.7% in just one month (22/08/15 vs 22/07/15); by 18.9% since January 1st, 2015 and by 31.6% since August 2014. In Kuala Lumpur, consumption is down as prices are rising under the combined effect of the ringgit depreciation and the introduction of a 6% VAT rate since April 1st.
However, tourists can only feel happy about the recent ringgit weakness as international travellers can reap now the benefits. Talking to local reporters, Malaysia Tourism and Culture Minister Nazri Aziz explained that “when tourists come to Malaysia they say ‘oh Malaysia is cheap’. They cannot go to a hotel and pay euro. They have to buy ringgit. So there’s demand”.
Malaysia is indeed increasingly competitive. On Agoda website, a room for this Friday at the Mandarin Oriental in Kuala Lumpur costs only US$ 156 in a last minute deal; a room at the colonial style hotel Majestic in Kuala Lumpur is now sold for US$ 108. Last year, Malaysia welcomed 27.44 million of international travellers who generated a foreign exchange income of RM72 billion (US$20.6 billion at exchange rate of 01/01/15).
However, the weakening ringgit is likely to depress outbound travel -Indonesia and Thailand excepted as both countries have also seen their currency losing value since the beginning of the year.
The Malaysian Association of Tour and Travel Agents remains pessimistic as it also believes that Malaysia negative political climate (Prime Minister Najib Razak is currently embattled into a corruption scandal) could also tarnish the country’s image and eventually turn away travellers.
Domestic tourism is likely however to benefit from the current situation as many Malaysians are switching their overseas holiday destination for a domestic one, a cheaper option in times of uncertainties.
MATTA will aise its concerns and suggestions for the tourism industry later this month at a meeting with the Prime Minister.