—This paper estimates tourism demand in Malaysia
based on the key economic factors like income, price, exchange
rate, consumer price index, distance, population and economic
crisis using a modified Gravity model. The movement, pattern
and changes of international tourist arrivals are also examined.
A cross-sectional pool time-series of tourist arrivals from
Australia, Hong Kong, Indonesia, United Kingdom, Thailand,
Taiwan and China through using modified Gravity Model was
applied. Log-linear equation indicates that the tourism demand
is highly correlated with Gross National Income (GNI) of the
countries which showing the impact on the standard of living.
On the other hand, tourism demand negatively correlated with
Exchange Rate (ER) as tourist from higher purchasing power
prefers to visit Malaysia. Consumer Price Index (CPI) or
inflation rate reduce number of tourist to travel. The increasing
number of tourist arrivals was influenced by population growth
and distance may reduce tourism demand. Economic crisis
negatively affected the tourism demand from the ASEAN
countries but positively correlated with the western and other
continents. This study clearly indicates that despite of regional
economic crisis Malaysian government can still rely on tourism
industry as a means of sustaining the economy through
—estimating, tourism, demand, Malaysia.
Universiti Teknologi MARA Malaysia.
Cite:Mohd Hafiz Mohd Hanafiah and Mohd Fauzi Mohd Harun, "Tourism Demand in Malaysia: A cross-sectional pool time-series analysis," International Journal of Trade, Economics and Finance vol.1, no.2, pp. 200-203, 2010.