Foreign tourists are expected to spend a whopping RM58.89 billion shopping in the country in 2020, accounting for 35 per cent of the total foreign exchange receipts of RM168 billion then.
But local malls expect to ring up a little more than that. Malaysian Association of Shopping and Highrise Complex Management (PPK) president H.C. Chan expects foreign tourists to spend RM63 billion on shopping in 2020.
This is four times more than what was achieved in 2009 from shopping at RM14.94 billion, from a total foreign exchange earnings of RM53.37 billion. Last year, for every RM100 spent by a visitor, 28 per cent went into shopping or a total of RM631 per person.
This compares with the top two shopping destinations in the region - Singapore and Hong Kong. The 2020 target set by the Malaysian government is similar to Singapore's where each visitor spent 35 per cent or RM988 on shopping, while in Hong Kong they spent 57 per cent or RM1,311.
"We are confident that today's 28 per cent tourist spending in shopping can be increased to 40 per cent level by 2020, as there is a tremendous potential and strong upside to move up tourist spending in malls," Chan told Business Times in an interview.
The mall beneficiaries of the tourist dollar now include Suria KLCC and Sunway Pyramid, where tourist spending can be between a fifth and a third of total sales derived by the mall. Tourists spend two to three times more than locals and in terms of absolute numbers, the amount is substantial.
One way of getting tourists to buy more in Malaysia is by making Malaysia more competitive. Duties on imported branded items are now as high as 30 per cent.
Chan feels that even if duties were not removed completely but reduced, it will create an incentive for people to spend more as what they will be buying is cheaper.
Operating costs are already competitive as mall rental rates in Malaysia are 25 per cent lower than in Singapore. As such, a product can be priced much lower if duties are reduced.
"Tourists need to feel that they are saving 10 per cent to 30 per cent if they shop in Malaysia," he said. "We hope something substantial or a breakthrough will result from the ongoing National Key Economic Areas (NKEA) Tourist Lab where key industry players and stakeholders are represented including PPK," he added.
The Performance Management and Delivery Unit (Pemandu) under the Prime Minister's Department, is facilitating the NKEA Labs.
Source : Business Times
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