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Malaysia will see full recovery in Chinese tourist arrivals — HSBC

19 Jun 2024, 18:47 PM SGT

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KUALA LUMPUR (June 19): Malaysia will see a full recovery in the return of Chinese tourists this year on top of booming foreign direct investments and exports to China, according to HSBC.

Malaysia is one of the main beneficiaries of an accelerated arrival of Chinese tourists thanks to the visa-free scheme, HSBC said in a note assessing the linkages between the two countries. Malaysia has yet to release the latest tourism figures, though high frequency indicators suggest bullish prospects this year, it said.

“Using the number of direct flights as a proxy indicator of travellers, the recovery pace between Malaysia and China is just 7% shy of a full recovery, thanks to Malaysia’s proactive efforts to launch new routes connecting with more Chinese Tier-2 and Tier-3 cities,” HSBC said.

Malaysia has removed visa requirements for Chinese from Dec 1, 2023 in a bid to boost its tourism industry. The visa exemption was originally set to end on Nov 30, 2024 before the scheme was extended to end-2025.

For 2024, Malaysia has set an ambitious target of attracting 27.3 million tourists and generating RM102.7 billion in receipts. To achieve this goal, Malaysia is looking to draw in more than five million tourists from mainland China this year, more than the 3.1 million Chinese tourists recorded in 2019.  

“We believe this goal is achievable,” HSBC said. Higher tourist receipts will provide foreign exchange inflows and reduce Malaysia’s services deficit in the balance of payments, while creating a broader array of job opportunities and help “diversify Malaysia’s growth story”, it said.

The research house also sees a large proportion of Chinese investment in Malaysia concentrated in green sectors, such as solar module manufacturing and electric vehicles, critical for its economic transformation.

Among others, Chinese solar firm’s Risen Energy is investing US$10 billion (RM47.12 billion) in its production facility in Malaysia while Geely, who owns 49.9% stake in Proton Holdings Bhd, plans to pour in US$10 billion to manufacture electric vehicle brand e.MAS by the end of 2025. 

“These investments highlight that there is room for further cooperation in Malaysia’s emerging sectors” under its New Industrial Masterplan 2030 and the National Energy Transition Roadmap, it said.

HSBC also highlighted Malaysia’s solid trade relationship with its largest trading partner, and shined the spotlight on the multi-billion-dollar durian market on top of exports of electronics and commodities.

“A new deal offers opportunities for Malaysian durian exporters, as Malaysia is poised to conclude negotiations with China by the end of 2024 to be able to export fresh durians,” HSBC said. Durians from Thailand dominate 70% of the Chinese market while Vietnam has the remaining 30% share.

“It will only be a matter of time before Chinese consumers can enjoy Malaysia’s famous Musang King and even the more exotic Black Thorn varieties,” HSBC added.

More than 40% of Malaysia’s exports to China is concentrated in the electronics space and Malaysia also sells petroleum, palm oil, aluminium, and rubber to China. Most of the commodity exports to China are liquefied natural gas that accounts for close to 10% of Malaysia’s exports to China.

Edited ByJason Ng

Source: https://theedgemalaysia.com