UNIVERSITI TEKNOLOGI MARA PUNCAK ALAM

FACULTY BUSINESS AND MANAGEMENT (FBM)

DEGREE IN FINANCE

ECO531 BA2422C

MONETARY THEORY AND POLICY

GROUP ASSIGNMENT

PREPARED FOR:

MADAM FAUZIANA BINTI FAUZI

PREPARED BY:

NAME STUDENT ID

Nur Azeen Nadhirah Bt Mohd Hanafi 2020462054

Muhammad Afiq Bin A Ghafar 2020837504

Muhammad Naim Bin Mohd Nahar 2020608754

Amal Afifah Binti Hatta 2020455682

Irfan Nazmi Bin Zamzuri 2021114225

Nur Adam Mikhail Bin Ismail 2020461842

 ACKNOWLEDGEMENT

First and foremost, praise to our god, Allah the Almighty, the greatest ruler of all, on whom
we all depend for sustenance and guidance.

We would like to thank Almighty Allah for giving us the opportunity, determination and
strength to do this assignment. Without his continuous grace and mercy throughout our life,
we may not have the strength to finish this assignment.

We would like to thank Allah, our parents, friends and group members for their constant
encouragement which make this assignment possible. All group members are very
cooperative and responsible with their own parts of the topic during the discussion and
submission of the assignment. Thank you very much.

Furthermore, with the help of my own lecturer, Madam Fauziana binti Fauzi , we managed
to finish the assignment smoothly. Thus, we would like to express our deep gratitude to our
wise lecturer for her wise guidance, monitoring and constant encouragement throughout the
course of this project.

All those who directly and indirectly guided us to finish my assignment, we would like to
thank you all as well.
CONTENT

Acknowledgement
Content
1.0 Introduction 1
2.0 Disadvantages and advantages of tourism industry in Malaysia 2–3
3.0 Impact of covid 19 on tourism performance in Malaysia 4-5
3.1 The impact on Tourism industry
3.2 The impact on Hotel industry
3.3 The Impact on Amusement Theme Park and Family Attractions
3.4 The impact on Aviation industry
4.0 How to overcome the impact of covid 19 towards tourism industry 6-8
4.1 Tourism Industry as whole
4.2 Government support
4.3 Promoting #TravelLater for aviation industry
4.4 Hotel Industry
5.0 Opinion towards the impact of covid 19 on tourism industry 9
6.0 Conclusion 10
7.0 Reference 11
8.0 Appendices 12
1.0 Introduction
The year 2020 indeed holds a special place in the heart of many Malaysians as
historical Visit Malaysia Year is expected to be a year-long celebration held this year,
[Link] fifth instalment of Visit Malaysia since 1990 will be held with the most joyous
celebration as we celebrate the success and hurdles, we have experienced together as a
nation.

Unfortunately, the Covid-19 outbreak brought the entire world and specifically our own
nation’s tourism industry to close completely as the government took drastic measures to
control the spread of the infectious COVID-19 by closing the borders which leads to high rates
of unemployment due to lose of job and loss of revenue from various sector of economies.

Southern Asian country should expect around 30 million tourists and revenues of $21.5
billion dollar but the COVID-19 pandemic has put a hard way for the economics to growth
particularly and affecting more than 3.5 million people that working in the tourism industry.
During this pandemic, the country’s border has closed so that the spreading of COVID-19 can
be stopped. Lockdown has been introduced by the government and because of that all of the
economic sectors were affected. Ministry of Tourism and Culture said that an expected loss
of RM3.37 billion in the first 2 months of the year during this pandemic outbreak.

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2.0 Advantage and Disadvantage of Tourism Industry in Malaysia

Malaysia is enriched with culture and traditions that can be made for tourist attractions
but there are some advantage and disadvantage of tourism in Malaysia. The advantage of
Tourism is based on a deep interest in tradition as well as heritage by tourist which has led to
growth in the tourism sector over the years with 75% growth. It was revealed since 2009, the
tourism industry has increased by a total of RM53.4 billion, with tourist arrival of 23.65 million,
which indirectly makes this industry the second largest income earner in Malaysia.

With a multi-cultural country, we can attract numerous tourists to travel in Malaysia.

Moreover, Malaysia is a relatively a cheap destination for tourists that coming from America
and Europe which resulting more tourist arrivals in Malaysia. They have been a huge revenue
contributor for this industry. Other than that, Borneo is a rugged island in Southeast Asia’s
Malay that has been shared by the Malaysian, Indonesian and Brunei. This place attracts a
huge number of tourists with their beaches, mountains and rainforest. In 2018, tourists have
increased by more than 10%, to approximately 6 million.

Furthermore, tourism industry is good to promotes local business which increase the
business opportunities. With international connections, local business can introduce their
product to the foreign travelers and expand their business around the world. This also will
raise the company and country profile to the world. However, the tourist receipts are increased
until 2014 only and remain until 2019. By 2020, the tourism industry has declined sharply to
reach a receipt of only RM 12.7 billion.

Graph 1 Tourist Receipts

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 Graph 2 Tourist Arrivals

This will lead to disadvantage of Tourism in Malaysia. Before we discussing the

disadvantage of tourism with a large impact, we should first discuss the factors on the shortage
with a small impact in Tourism. First disadvantage is terrorism. There are several reports in
east Malaysia, near the Thailand border, there are occurrence of violence and crime that is
mainly aimed at foreigners. Therefore, The Foreign Office advises foreigners to not travel in
the area. This makes tourists feel threatened to do their tourism activities.

Next, there are also some reports of travel agents for not being very friendly to tourists.
This makes it difficult for them to communicate especially with different languages. For tourists
who are not with a travel agent, they have problems traveling when the transport information
is not good enough. But, since 2018, Waze app are launched in Malaysia for the convenience
of people to travel from one road to another road which making it a little bit easy for tourists to
travel. However, the attitude of some tourism agencies is one of the reasons for the
weaknesses in tourism.

Currently, the tourism industry is one of the most industry that affected as a result of
covid-19 symptoms. This is due to the cancellation of tourism from abroad to protect the health
of the citizen. Sometimes, the government is so focused on the tourism industry that income
generation for other industries is neglected. This will lead to an economic recession if the
tourism sector is ruin in the long run.

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3.0 The Impact of COVID19 on tourism performance in Malaysia

3.1 The Impact on Tourism Industry

The Covid-19 outbreak has resulted in a significant risk to Visit Malaysia Year 2020
(VM2020) campaign as half of the predicted tourist came from Singapore and China. The ever-
increasing cases of COVID-19 in both of the largest contributors in our tourism industries has
led to the cancellation of many planned tours to our country which in turn led to a large drop
of the total number of tourists in Malaysia. In the first nine months of 2020, the total number of
tourist arrivals to Malaysia decreases as much as 78.6% which is from over 20.1 million
tourists to only 4.9 million tourists. Most of the tourist arrived in Malaysia right before the
borders were decided to be shut by the government on March 18. As a result, the tourism
industry which is Malaysia’s third largest revenue contributor suffers a negative growth of
80.9% from RM66.1 billion to RM12.6 billion. Similarly, the per capita expenditure showed a
decline of 10.7% from RM3,289.30 in prior year to RM2,398.40 in 2020 according to
Department of Statistics Malaysia (DOSM).

3.2 The Impact on Hotel Industry

The complete halt in tourism activities was an unforeseen and unexpected to hoteliers
in Malaysia. As the government begins to impose nationwide travel restriction, a total of
170,084 hotel room bookings had been cancelled which in turn caused a loss of revenue
amounting to RM75.69 million in the first quarter of 2020. The industry begins to lose as much
as RM6.54 billion in revenue for the year 2020. Apart from lose of revenue, the CEO of
Malaysian Association of Hotels, Yap Lip Seng estimated that around 10% to 20% of the
industry’s workforce would been retrenched whilst most of the remaining employees are on
unpaid leaves or had their salary cut. From a sample size of 54,299 workers in the hotel
industry, 2041 (3.7%) workers have been laid off, 5054 (9.3%) are facing pay cut and 9773
(18%) are facing unpaid leave.

During the pandemic, most of the manpower in hotel industry are lost, many hotels decide to
close their rooms, some departments in the hotel were completely shut down in order to make
ends meet. With the closure of departments and travelling companies, the industry may be
unable to cater for an increased demand in the future.

3.3 The Impact on Amusement Theme Park and Family Attractions

After the Movement Control Order (MCO) period was lifted, the amusement theme
park and family attractions industry were one of the last business segments that are allowed
to be reopen. And just thing started to normalise, the industry took an unexpected turn when
the government begins to reimpose the second round of Conditional Movement Control Order

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(CMCO) in most of the states which force the operators to once again, temporarily shut down
their theme parks. 10 of the members of Malaysian Association of Amusement Theme Park
and Family Attractions (MAATFA) to close permanently in the fourth quarter of 2020. One of
the prominent members of MAATFA, Genting Berhad experience it quarterly losses dip further
from RM132.32 million in the first quarter of 2020 to RM331.76 million in the first quarter of
2021 and Genting Berhad’s revenue dropped almost half from RM4.11 billion to RM2.25 billion
for the year 2020. Due to the massive lost, Genting Berhad is asking some of their employees
to agree to a temporary pay cut of 15% to 20% according to their ranks and some staff are
being asked to take one day per week of no-pay leave.

3.4 The Impact on Aviation Industry

2020 is dubbed the worst year for aviation industry with the travelling ban imposed all
around the world and plummeting demand of air travel have put the aviation companies at the
risk of bankruptcy. Malaysia’s three major airlines, Malaysia Airlines, AirAsia and Malindo Air
suffers greatly in the pandemic. The airline companies have been forced to halt their
operations and also ground large parts of their fleets. They even scaled down their operation
and initiated salary cut from 10% to 100% and unpaid leave to over 13,000 employees
depending on the salary range and position. Malaysia’s aviation industry suffers RM10.9 billion
loss during the MCO. Malaysia’s Air Asia suffered a record-breaking net loss of RM992.89
million in the second quarter of 2020 and its revenue dropped by 96% quarter-on-quarter to
RM118.96 million from RM2.92 billion. It is indeed a tremendous loss for Air Asia. Meanwhile,
it’s affiliate, AirAsia X Bhd, recently announced that it has run out of money and needs to raise
up to RM500 million to restart the airline. Both companies have also confirmed
the retrenchment of 10 per cent of their 24,000 employees.

The drastic loss of both revenue and profit for all three major Malaysian based airlines which
has resulted in a high risk of bankruptcy has caused the airlines to ask the government of
Malaysia to step in to provide support to the airline industry.

5
4.0 How To Overcome the Impact of Covid-19 Towards the Tourism Industry

4.1 Tourism Industry as a Whole

Supporting policy transparency and making actions to reduce uncertainty will be vital to boost
the recovery of tourism industry. The point of view for the tourism financial system continues
to be extremely unclear, as business and tourism self-confidence has drained to the bone.
Clear communication, properly constructed information strategy and precision on the
systematic standards will be very crucial as they need to adjust the travel constraints and
procedures in response to the virus outbursts and the unstable hygienic condition.
Furthermore, developing the database and policy for businesses to make decisions will be the
key, via data collecting, research and statistics evaluation. From this crisis, we are able to
underline the weaknesses in the accessibility of time, comparable, every detail data to speedily
creating solutions. Therefore, reliable and dependable statistics or data are necessary to
calculate the efficiency of programmes and plans, and observe the growth on tourism recovery
and flexibility. Other than that, risk-based solutions to carefully boost travel limitations and get
the international tourism system revived and running will need to be created according to
sound scientific proof. These solutions also must be realistic to execute, with adequate
capacity available to make sure that these approaches are able to operate reliably.

4.2 The Government Support

Since the effect of COVID-19 is projected to be unstable in both time and area, things are not
moving to be back to usual as it was before the pandemic, instead we should change ourselves
to the new standard. Therefore, tourism purposes, firms, and sub-segments would have to
embrace themselves to the new procedures. It is advisable that government must take into
consideration to propose a recovery plan foreseeing the following 1 to 2 years of emergency
plan aiming on primarily two parts which are capacity building and computerise of the tourism
industry. The goal is to prioritise on retraining the tourism human investment funds correlated
to hygiene, protection, and service value. In the future, the government need to focus on
transforming the unified spectrum of the entire tourism industry by leveraging information
technology for supporting 'Smart Tourism". Other than that, the government are planning to
move forward with a collaboration of the international airline, domestic airlines, and the budget
Asia Airlines to save all airlines during the pandemic. Finally, the government has organized
a subsidy program amounting to RM 3 billion. This is planned to specifically support small and
medium-sized businesses in the sector effected by covid. Hence, it allows employers to
maintain their labour force during the pandemic and keep the industry running. The subsidy is
said to be given until the end of year 2021.

6
4.3 Promoting #TravelLater for the Aviation Industry

Local tourism and airline will be playing a vital part in the industry's recovery. Therefore, the
Malaysian Tourist Higher-Ups promotes the citizens using the hashtag #TravelLater in its
social media posts, to travel around the local tourist sights after the pandemic to Malaysia
economy. The major test will be to rebuild the faith of local and foreign tourists. However, a
campaign called the "Clean and Safe Malaysia" is in a plan to be. The objective is to grant
certification to airlines and hotels that meet the conditions of the relevant agencies. Hence,
certification and authorization of a hotel or airline will help to encourage local and foreign
tourists to start travel again around Malaysia. Besides that, airlines, hotels, transport firms and
other operators related to tourism are to collaborate and propose a mutual travel bundles. This
will lessen the costs for companies and tourists and make Malaysia’s tourist sector more
economical. The tourism industry in Malaysia is estimated to gradually recover at early of year
2022 and stabilize during mid of 2022.

4.5 Hotel Industry

Social media platforms certainly indicated to be a crucial instrument to fight and restore the
industry from the outcome of the present pandemic. Primarily social media engagement will
be able to play an essential role in expanding positivity news to start up again the pandemic-
caused prejudice and negative view for the affected tourists’ places and tourism companies.
Concentrate on social media and other digital platforms such as blogs as a supplier of
motivation could accelerate the recovery progression of the tourism industry after the
pandemic period in a successful way. For example, a public-based tourism operator in
Malaysia recognized as “Miso Walai Homestay" is working out for a much foresee recovery
period for the future by creating a video regarding their current development such as showing
building renovation and renewing activities, reskilling the workers on hygiene and protection
aspects, as well as refining their business website. Such videos can be used by the local
agencies and government organizations to demonstrate how local programs and efforts may
be a cause of inspiration for other businesses to be prepared for the difficult time ahead in the
post-pandemic tourism sector. Another method to boost the industry is some hotels are being
utilized as quarantine centres for the local people who came back from overseas. The
government agreed with an average of RM 30 per night for a room. Over 23,000 rooms
seemed to be on the list. Although it seems low to businesses, but during this tough times it is
something that could help businesses to boost their motivation and earn some money to
recover their losses.

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4.6 Amusement Park

During the pandemic, the toughest challenge for the amusement park industry is executing
new sales and marketing plans to raise income, control cost, manage effectively and multi-
tasking. The industry is likely to take a “lean and mean administration strategy” with the
purpose of enhancing performance. Moreover, the president of Malaysian Association of
Amusement Theme Park and Family Attractions (Maatfa), Tan Sri Richard Koh, recommends
that, in the near future, the government should execute MCOs on red zone or clusters areas.
This would allow people to visit amusement parks in order for the industry to improve and
recover.

After the pandemic, the industry will work in a different way. Other than the mandatory SOPs,
safety and hygiene procedures, technology is estimated to play an important part in
amusement park. The technology will be used to purchase tickets, lining up for rides as well
as ordering foods and snacks. Hence, people will use cashless payment methods as well as
distribution of tickets and ride bookings will be made online. Manual counting of visitors staying
in lines will be substituted with automatic counters and less people will be in contact with
cashiers for food services as people will start ordering meals and making payments through
their smartphones. As of the long run, amusement parks will renovate rides in a different way
to prevent having crowded waiting spots. Therefore, amusement parks management needs to
be creative in order to secure and increase the number of visits and improve customers’
experience towards the services given.

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5.0 Opinion Towards the Impact of Covid-19 On Tourism Industry

In order to restrict the spread of COVID-19 in Malaysia, for instance, most economic
activities were put on halt including tourism industry. It is widely recognized that Malaysia's
tourism industry contributes significantly to economic growth by encouraging foreign
expenditure on goods and services in the country. If the number of tourists continues to
decline, some tourism businesses will be compelled to close due to unsustainable losses and
inability to pay employees' salaries.

Following the Covid-19 epidemic, a series of hotels shuttered their doors, laying off
hundreds of hotel employees. Between March and May, the Malaysian Trades Union
Congress MTUC's Covid-19 Helpdesk received 678 complaints from the hotel industry.
According to the union head, these included salary cuts, firing, forced leave, and unpaid leave.
The Covid-19 pandemic is doing misery on hotel employees. Because of the pandemic, over
10,000 people have been forced to take unpaid leave, while over 6,000 others have had their
salary reduced. Over 30,000 people in the country's hotel industry have lost their jobs.

Other than that, according to airline industry stakeholders, current travel restrictions
and declining demand throughout the world have put the loss-making company at risk of
collapse. Depending on the pay range and job, AirAsia, Malindo Air, and Malaysia Airlines
have imposed compensation cuts as well as unpaid leave on their staffs.

Therefore, due to the outbreak of Covid-19, most workers have lost their jobs and
sources of income. This has caused the unemployment rate soaring. These employees have
been struggled for their lives. That is why the government's financial assistance to the afflicted
sectors is crucial.

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6.0 Conclusion
In conclusion, the impact of covid 19 can be seen on the tourism industry as a whole,
the shutdown of economic because of the pandemic make the industry tourism in Malaysia
struggling to sustain the business since the nature of the business itself is highly depend on
the movement of people, the impact of covid 19 is very significant on the tourism industry that
contribute billion of dollar in the economic Malaysia, nevertheless the covid 19 pandemic has
also give advantages to the tourism industry to diversify their business in order to sustain the
business, for example the hotel industry has been known to be a service based business that
giving the service for the tourist and traveller to provide for their accommodation in Malaysia,
since the covid 19 pandemic and lockdown is been impose by the government, every hotel
industry in Malaysia has diversify their business by selling hotel based food and doing other
business service that are not mainly being done by the hotel before the pandemic hit the
nation, this is been done by every tourism industry to sustain their business.

The shutdown of the economic has been a tough challenge for the industry, a lot of
tourism based business eventually has take a very hard decision by closing their business
because of losing in profit and struggle of sustaining the business, in the time of the pandemic
they has been several idea and help being impose by government and non government
agencies to help the tourism industry to sustain the business, the support of government is
very crucial for the industry to keep going and not closing down, government has been
imposed several plan such as giving subsidy to the tourism industry based business in order
to help the business, all of this implementation of support can support the tourism industry
from becoming more worse, this necessary action also need to be taken by non government
and the people to help the industry of tourism to maintain their business and helping them to
raise back up after the covid pandemic problem has been solved.

The pandemic has taught the tourism industry to be more matured in this kind of
problem, there is many downside of the pandemic that effected the industry itself but the
positive side also can be seen in the industry, the pandemic has teach the industry on how to
recover and sustain the business in a time of unexpected, lastly the impact of covid 19 on the
tourism industry is a huge thing, its not only affected the industry but also effected the nation
as a whole. Government, non government and people of Malaysia should play a vital role in
order to sustain the industry, the tourism industry is important for the nation itself, the collapse
of the tourism industry isn’t something that can been taken easily, It’s the nation duty and
responsibilities to keep the industry of tourism to be recover and becoming to normal after the
post covid 19 pandemic.

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7.0 Reference

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15. Lee-Peng Foo, Mui-Yin Chin, Kim-Leng Tan & Kit-Teng Phuah (2020) The impact of COVID-19
on tourism industry in Malaysia, Current Issues in
Tourism, DOI: 10.1080/13683500.2020.1777951
16. [Link]
mtuc/
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18. [Link]
of-hotel-workers-who-lost-jobs/1871004
19. [Link]

11
8.0 Appendices

12