Move to allow interstate travel augurs well for tourism, other sectors - Economists

KUALA LUMPUR: The country's tourism industry is set to rake in major benefits following the government's move to allow interstate travel for fully vaccinated Malaysians from today, said Bank Islam chief economist Mohd Afzanizam Abdul Rashid.

He said growth in domestic tourism expenditure would be better next year compared to 2021, as the people had been constrained by the nationwide Movement Control Order (MCO) since the middle of this year.

According to him, tourism is one industry that is poised to benefit quickly from the government's move.

"Domestic tourism spending fell to RM40.4 billion last year from RM103.2 billion in 2019. Hence the situation is set to turn more positive with interstate travel now being permitted.

"For this year, perhaps in the fourth quarter the country would record a much stronger growth compared to the third quarter with the lifting of the interstate travel restrictions," he told Bernama.

Mohd Afzanizam said the government's move was important in terms of sustaining livelihoods and the economy as well as public health.

He said when the country's economy was shuttered, many businesses experienced financial problems and some had to close down permanently. Similarly, individuals saw their income fall, with some who were in the T20 (top 20 per cent) group being reclassified into the M40 group.

"Hence the move (to allow interstate travel) seems apt by factoring in the adult population's vaccination rate of 90 per cent.

"This means there's a lower risk of infection as well improved immunity against the coronavirus. It also means the decision was made after taking into account the health aspect, not just based on emotions," he said, adding that the public must nonetheless practise self-discipline in order to prevent the formation of new clusters and to keep the COVID-19 transmission rate low.

Meanwhile, University of Malaya Faculty of Economics and Administration senior lecturer Dr Mohammad Tawfik Yaakub said interstate movements would help to re-strengthen economic sectors via the cash flow from buying and selling -- for example, in the retail, hospitality and food service businesses.

"This is the right move for reviving the domestic economy that was bleak previously due to the prolonged MCO period.

"I foresee the reemergence of the food service, retail and hospitality sectors. The rise of these three sectors will subsequently trigger the chain for comprehensive economic empowerment," he said.

Hence, he forecast a stronger revenue growth for all sectors in the next one to two weeks.

Mohammad Tawfik noted that some constraints remained. For instance, the airline sector is being opened in phases both domestically and internationally, some shops would have to rethink their business strategies, and industries would remain cautious in expanding their workforce.

"The government does not limit the reopening to clusters or certain sectors. The announcement yesterday (Sunday) is on a full reopening, including for tourism -- no more 'bubble tourism'. This is seen as an economic boost," he added.

Sunway University professor of economics Dr Yeah Kim Leng said the lifting of interstate travel restrictions was an eagerly awaited move towards a return to normalcy in the country's social, business and economic activities.

He said it also signalled confidence that with most of the adult population fully vaccinated, the possibility of another virus resurgence would be less threatening in terms of causing the economy to be shut down.

"While many consumers and frontliners remain wary of vaccine breakthroughs and risk of being afflicted by the virus, the fuller reopening of the economy augurs well for a more sustained economic recovery and transition to the so-called 'living with the virus' phase," he said.

Yeah said the small, but no less important, boost to domestic spending would strengthen the recovery that had been sustained thus far with strong production activities for exports.

"The domestic sectors that have languished due to the restrictions on travel, social and business activities such as retail, food and beverage, transport, travel, hospitality and tourism-related industries will see some relief in the coming months.

"The consumption boost will likely be gradual as consumers will likely adopt a cautious 'wait-and-see' attitude due to the still-high but falling infection cases," he added.

-- BERNAMA