Hopes pinned on tourism economy as demand stays robust

Despite the gloomy economic outlook, Hong Leong Investment Bank foresees that tourism in Malaysia remains intact, underpinned by Chinese arrivals.

The research house said in a report released in late June that Malaysia's first quarter tourism numbers have been strong. Tourist arrivals and receipts grew by 10 percent and 24 percent year-on-year, respectively, to 6.4 million and 27.5 billion ringgit ($6.5 billion). Meanwhile, the average spending per tourist has climbed to 4,300 ringgit.

This can be attributed to the sharp spike in Chinese tourist arrivals during the first three months of 2025, an increase of 27 percent year-on-year, it noted.

Hong Leong highlighted that Chinese tourists tend to stay longer in Malaysia and are higher spenders.

The research house also found that Malaysia was the most visited country in Southeast Asia in the first quarter. It said that the country has benefited from being the ASEAN chairman and tourism campaigns running up to Visit Malaysia Year 2026.

Tourism Malaysia has announced plans to attract 7 million Chinese tourists annually by 2026. To this end, Malaysia will expand direct flights connecting major Chinese cities and launch China road shows for the Visit Malaysia Year 2026 campaign, according to a report by the New Straits Times.

Visa-free

China implemented a unilateral visa-free entry policy for Malaysians on Dec 1, 2023, and Malaysia also announced visa-free entry for Chinese citizens from the same date. Currently, Malaysian people can travel to China visa-free until Dec 31 this year, while Chinese people can travel to Malaysia visa-free until Dec 31, 2026.

The policy attracted approximately 4 million Chinese tourists in its first year, said Malaysian Transport Minister Anthony Loke Siew Fook.

Malaysia has become a gateway for Chinese tourists traveling to Indonesia, Singapore and Thailand. Leveraging the mutual visa exemption policy and diversified tourism products, Malaysia is striving to achieve its overall plan of receiving 35.6 million international tourists annually by 2026, Loke said.

The newspaper report said Malaysian authorities are planning to launch seasonal charter flight routes from second- and third-tier Chinese cities to emerging tourist destinations on the east coast of Malaysia. At the same time, they will conduct targeted marketing campaigns to promote tourism resources in major Chinese cities and partner with mainstream online travel platforms to launch exclusive travel packages.

Furthermore, to enhance the experience for Chinese tourists, Malaysian tourism agencies are improving Chinese signage, expanding coverage of mobile payment options such as Alipay and WeChat Pay, and developing customized products such as luxury shopping, cultural heritage tours and eco-tourism. These measures aim to expand the tourist base and enhance the travel and consumption experience for Chinese tourists in Malaysia.

Key source

China is one of Malaysia's most important source markets, and the growth of Chinese tourist numbers is crucial to achieving Malaysia's tourist growth plan, said Tourism Malaysia Deputy Chairman Yeoh Soon Hin.

In 2024, Malaysia received a total of 3.7 million Chinese tourists. The number of visitors is projected to increase to 5 million in 2025, with the goal of reaching 7 million in 2026.

Malaysia-China Friendship Association President Abdul Majid Ahmad Khan said that Malaysia-China relations have achieved results in areas such as economy, cultural exchange, trade and investment, and cooperation on key projects.

According to a previous report by Singapore's TTG Asia website, since Malaysia and China implemented mutual visa exemptions in December 2023, air travel between the two countries has increased, particularly in the Malaysian state of Penang, where the number of Chinese tourists has risen noticeably. In 2024, Penang International Airport received more than 120,000 Chinese tourists, setting a record. The region's tourism industry is demonstrating strong development momentum and tourist appeal.

Currently, China has become Penang's most important midrange source market. The number of direct flights between some Chinese cities and Penang has exceeded 50 per week. With tourism promotion activities and other initiatives being held in the Chinese market by the Malaysian federal government and state governments, the number of Chinese tourists is expected to continue to climb during 2025-26.

Flight ticket bookings from Chinese mainland cities to destinations like Penang have increased 130 percent in the first quarter of 2025. Simultaneously, business travel demand between China and Malaysia is experiencing rapid growth, according to data from Tongcheng Travel.

Data from Tongcheng Business Travel, an arm of Tongcheng Travel, show that business travel to ASEAN countries such as Malaysia from Chinese mainland enterprises has increased by more than 110 percent year-on-year in the first quarter.

Among them, business travel to Penang has increased by more than 300 percent year-on-year. The growth in business travel is expected to bring new opportunities for tourism in relevant cities.

Diverse resources

President of the Malaysian Inbound Tourism Association Mint Leong Hoon Min said Penang's diverse tourism resources and convenient direct flights to China create a strong attraction. George Town, the capital of Penang, is not only a UNESCO World Heritage Site but boasts a vibrant artistic and cultural atmosphere, stunning beaches and natural landscapes, as well as street food and Michelin-starred restaurants.

Chinese Foreign Ministry Spokesperson Lin Jian said in mid-April that the friendship between China and Malaysia has a long history. The two countries share similar ideals, intertwined interests, and heartfelt understanding. Recently, the two countries officially signed an agreement on mutual visa exemption for holders of diplomatic, official and ordinary passports. Lin said that will further promote bilateral personnel exchanges and cooperation in various fields, and propel the joint construction of a China-Malaysia community with a shared future.

Xinhua contributed to this story.