Service Sectors In The Malaysian Economy

Service sector plays an of import function in the growing and development Malayan economic system. The enhanced growing of services sector in Malayan economic system is so in line with the growing transmutation that has taken topographic point in many of the developed economic systems such as in United States of America and European Union. In these states, the services sector forms a major structural constituent of the economic system compared to fabrication or other primary sectors ( Public Bank Review, 2008 ) . As per World Trade Organization, eight developing states are in the list of the universe ‘s 30 largest exporters of services and Malaysia was ranked 30th in 2008 ( ) . It implies the significance of service sectors ( in footings of exports ) to Malayan economic system.

Table 1.1 shows Malayan Gross Domestic Product ( GDP ) by sort of economic system sector for twelvemonth 2008 and 2009. In twelvemonth 2008, the GDP of service sector was invariably higher than Malayan overall GDP every bit good as GDP of other economic sector viz. agribusiness, excavation, fabrication and building. Though, GDP of service sector remained higher than Malayan overall GDP in twelvemonth 2009, its growing has declined compared to the building sector throughout twelvemonth 2009 and fabricating sector in 4th One-fourth of twelvemonth 2009 ( Department of Statistics, 2010 ) . However, it besides shows that GDP of services sector begun to retrieve from 3rd to 4th One-fourth in 2009 with the growing rate of 3.4 % to 5.1 % .

Table 1.2 shows the GDP of services sub-sectors from twelvemonth 2005 until 2009 ( Bank Negara Malaysia, 2009 ) . By and large, Table 1.2 indicates all sub-sectors experienced steady growing from 7.2 % in 2005 to 9.7 % in 2007. However, later there was a diminution in the growing of these sub-sectors with 7.3 % in 2008 and 4.5 % in 2009. The sub-sector of sweeping, retail trade, hotels and eating houses had experienced a finer growing compared to the other sectors. Both Table 1.1 and Table 1.2 show at that place was diminution in the growing of service and its sub-sectors. It can be justified with terrible global economic crisis every bit good as due to outbreak of H1N1 A grippe virus disease. As the cordial reception and touristry one of the of import sub-sectors of service sector, the eruption of diseases had significantly influenced the growing of services sector ( ; WTO, 2010 ) .

However, under the Third Industrial Master Plan ( IMP3 ) , 2006-2020, the services sector is expected to lend significantly to state ‘s economic growing with the purpose to place Malaysia to go a regional Centre for selected services ( Malayan Industrial Development Authority – MIDA, 2010 ; Public Bank Economic Review, 2008 ) . Consequently, the IMP3 has targeted the service sector to enter an one-year growing rate of 7.5 % per annum and to lend 59.7 % to GDP by 2020. Eight services sub-sectors have been identified for farther development sing their potency for greater planetary integrating and exports viz. existent estate, conveyance, energy, telecommunications, distributive trade, hotel and touristry, fiscal services and wellness services ( MIDA, 2010 ) .

In order to heighten the growing of this service sector and its part to the economic system, the Government had begun intensification attempts in 2008. One of the important attempts is pulling foreign investings through major policy enterprises whereby Government has targeted about RM688 billion ( RM45.9 billion per twelvemonth ) investings for the services sector under IMP3 ( MIDA, 2010 ) . Table 1.3 illustrates the entire sanctioned investing in the services sector for twelvemonth 2008. For twelvemonth 2008, the entire investing was RM50.1 billion, exceling the investing mark under the IMP3 which is RM45.9 billion per twelvemonth. Apart from existent estate, telecommunication and fiscal services, hotel and touristry sector has been allocated important sum of domestic investing due to its significance importance towards Malayan economic system, in general and services sector, in peculiar.

The growing and development of touristry sector in Malaysia has a long history. Initially, Malayan economic system was to a great extent dependent on primary trade goods chiefly rubber, palm oil and crude oil merchandises before and a few decennaries after its independency in 1957. In order to diversify the state ‘s economic system, Government had earnestly begun to excite the development of the fabrication industry in the seventiess. However, these two sectors i.e. primary trade goods and fabricating were extremely export-oriented and their public presentation was straight influenced by alterations of the universe economic clime ( Norlida Hanim et Al. 2008 ) . The terrible economic recession that hit most of the Asiatic part in the mid 1980s had severely hurt the Malaysia economic system and the authorities started to seek for a more robust industry to broaden the state the state ‘s economic base. Tourism was identified as a possible industry that could promote and excite the socio-economic development of the state particularly as a provider of foreign exchange net incomes and employment chances ( Norlida Hanim et Al. 2008 ) .

Serious attempts in developing and advancing touristry began merely with the constitution of the Tourist Development Corporation Malaysia ( TDCM ) in 1972 and it took another 15 old ages before a specific ministry, the Ministry of Arts, Culture and Tourism ( MOCAT ) was set up in 1987 ( Amran, 2004 ) . In 2004, this ministry was restructured into three ministries and one of them is the Ministry of Tourism which was assigned to take attention of, organizing and implementing authorities policies and schemes refering to touristry development. Ministry of Tourism had ensured the constitution of assorted tourism-related bureaus at the province degree, uninterrupted promotional activities and active engagement of the private bureaus. Consequently, the touristry industry has experienced a rapid growing and gained an importance in the Malayan economic system ( Amran, 2004 ; Norlida Hanim et Al. 2008 ; Public Bank Economic Review, 2008 ) .

The Prime Minister Datuk Seri Najib Tun Razak revealed that touristry sector has earned about RM 51 billion ( a‚¬ 10.6 billion ) in twelvemonth 2009 ( ) . This was contributed by the unexpected figure of tourers arrival about 23.5 million which has surpassed the initial mark of 19 million tourers. In order to take advantage over this positive record every bit good as to farther better the criterion of service, harmonizing to the Prime Minister Datuk Seri Najib ( ) , the Government has prepared a grant worth RM 899 million ( a‚¬187 million ) to the touristry sector with the purpose of upgrading its substructure, put in preparation of forepart line drives and extend the scope of appealing touristry merchandises and events over the following twelvemonth.

In order to excite the farther enlargement of touristry sector, Government has given legion inducements for the companies that are interested in puting in touristry sector. Generally, a company granted Pioneer Status enjoys a 5-year partial freedom from the payment of income revenue enhancement and it will merely hold to pay revenue enhancement on 30 % of its statutory income ( MIDA, 2010 ) . Alternatively, a company granted Investment Tax Allowance ( ITA ) will acquire an allowance of 60 % on the measure uping capital outgo incurred within five old ages ( MIDA, 2010 ) . However, in order to further develop eco and agro-tourism in East Malaysia, companies set abouting new investings in 4 and 5 star hotels in Sabah and Sarawak are considered for Pioneer Status, with income revenue enhancement freedom of 100 % or ITA of 100 % ( MIDA, 2010 ) . On the other manus, companies that reinvest in the enlargement, modernisation and redevelopment of hotels and touristry undertakings are eligible for another unit of ammunition of Pioneer Status ( with income revenue enhancement freedom of 70 % ) or Investment Tax Allowance of 60 % ( MIDA, 2010 ) . Besides these investing inducements, companies besides qualify for a dual tax write-off on the outgo incurred for promotional activities at abroad and engagement in an sanctioned international trade carnival in Malaysia ( MIDA, 2010 ) . Further, companies that bring in at least 500 foreign tourers or form domestic circuit bundles for at least 1200 local tourers in a twelvemonth are eligible for revenue enhancement freedom on the income earned ( MIDA, 2010 ) .

The most distinguishable facet of Malayan touristry is the state ‘s cultural and natural heritage. Malacca and Penang are known as celebrated tourer finishs for their multicultural and historical attractive forces meanwhile east cost of Peninsular Malaysia and East Malaysia ( i.e. Sabah and Sarawak ) are known finishs for eco and agro touristry activities as these topographic points are gifted with natural wealth ( ) . Besides rubber-necking, other activities that are pulling tourers to Malaysia include shopping, leisure and business-related events. Global featuring events like Sepang F1 Grand Prix and Le Tour de Langkawi are besides pulling a important figure of foreign tourers into the state ( ) .

With an eternal assortment of goods and competitory monetary values, Malaysia is a fantastic finish for shoppers. Malaysia has a broad of shopping topographic points such as immense shopping promenades, hypermarkets, sole dress shops, responsibility free stores and others. The shopping activities have been farther stimulated by the Malayan Mega Gross saless Carnival which held twice a twelvemonth ( MRA – Malaysia Retailers Association, 2010 ) . This event is jointly organized by Ministry of Tourism, Tourism Malaysia and Shopping Malaysia Secretariat.

The state-of-the-art Kuala Lumpur International Airport ( KLIA ) is a major gateway into South East Asia and it presently handles flights for over 40 international bearers. Despite lifting planetary fuel monetary values, air menus remain comparatively stable in Malaysia therefore the growing of tourers has been facilitated. This is due to the intense yet healthy competition between national bearer i.e. Malaysia Airlines ( MAS ) and Asia ‘s largest budget air hoses i.e. Air Asia ( EUROMONITOR, 2010 ) . In the adjustment sector, some of the universe ‘s prima hotel trade names are already runing in Malaysia such as Hilton, Marriott, Shangri-La and Sheraton ( MAH -Malaysian Association of Hotel, 2010 ) . The tenancy rate of hotel is systematically high for popular tourer attractive forces e.g. Kuala Lumpur and Genting Highland.

Tourist reachings in Malaysia increased to 7.34 million between January and April, 2009 as compared to 7.10 million for the same period last twelvemonth. Tourist reachings to Malaysia are predicted to make 24.6 million by 2010, with the majority of travellers consisting intra-regional tourers ( BERNAMA, 2009 ) . This figure is admirable given the drawn-out planetary economic crisis and the outgrowth of Influenza A ( H1N1 ) worldwide. Harmonizing to the Ninth Malaysian Plan ( 9MP ) , there will be 791 million or 80 % intra-regional travellers, while the remainder being long draw travellers. South East Asian ( SEA ) states particularly Singapore and Thailand will stay the largest beginning of tourer reachings to Malaysia. Apart from that, it is said more attempts would be made to bring forth greater involvement among possible tourers from traditional markets like Europe, Britain, Australia, New Zealand and United States to see Malaysia ( BERNAMA, 2009 ) . For illustration, late Ministry of Tourism has introduced six attractive bundles to hike farther the touristry sector every bit good as to pull the tourers to remain relevant and competitory even in this riotous clip ( BERNAMA, 2009 ) . The new bundles that have been introduced are Aureate Third Age ( G3A ) , Sophisticated Office Ladies ( SOL ) , Sophisticated Office Men ( SOM ) , Building Bridges, Family Enrichment Travel and UNESCO 3 in 1 ( Amran, 2004 ; Norlida Hanim et Al. 2008 ) . The G3A bundles would be customized to the demands of senior citizens where it will be organized during non-peak seasons and weekdays. The staying bundles would be advanced, attractive and value for money in order to provide the demands of working grownups, young persons and households. Sing the significance touristry sector towards Malayan economic system, the proposed schemes under 9MP in the following five old ages would concentrate on the touristry potency as an of import beginning for bring forthing foreign exchange net incomes, entrepreneurship development and employment.

1.1 Problem Statement

Tourism is non a individual incorporate sector but selectively cuts across and impacts many traditional and emerging sectors. It consists of legion providers who provide services and goods viz. adjustment, nutrients and drinks, inbound and outward transit every bit good as jaunts ( Tapper et. Al, 2004 ) . In add-on to this, this sector involves figure of mediators whom play a important portion in the selling and distribution of touristry goods and services to the concluding clients or in this instance tourer. The complex nature of touristry concern, motivates touristry houses to stress on the both perpendicular and horizontal integrating of their goods and services with and among the channel members i.e. providers and mediators ( Yamaguchi, 2004 ; Mitchell and Phuc, 2007 ) . The complexness of touristry sector is said to be greater with regard to international touristry activities due to the engagement of different civilizations and industry systems. In such a closely interlinked supply system, any behaviour of any party can arouse concatenation reactions that will straight act upon the public presentation of single organisation ( Murphy and Smith, 2009 ) . Hence, the acceptance of effectual supply concatenation direction ( SCM ) has become critical for touristry houses to heighten their fight ( Chen, 2009 ; Zhang and Murphy, 2009 ) .

SCM construct has originated from fabricating sector ( Dimitrov, 2005 ; Sengupta et al. , 2006, Shashank and Goldsby, 2008 ) and presently it concentrates in a smattering of industry sectors such as agribusiness ( e.g. Peterson, 2002 ) , building ( e.g. Carter and Dresner, 2001 ) , retailing ( e.g. Flickers and Wagner, 2002 ) and others. However, in comparing with sectors which deal with touchable merchandises e.g. fabrication sector, small attending has been paid to the sectors which deal with intangible merchandises or services e.g. services sector ( Burgess et al. , 2006 ; Sachan and Datta, 2005 ) . It can be justified with the complex nature of services sector due to its intangibleness feature every bit good as its dependence on worlds. This is perceived to likely impede the thorough coordination and integrating among the concatenation participants. It is besides surprising sing the greater sum of SCM researches in other services sectors compared to touristry sector. Examples of other services sectors that have been researched in relation to SCM patterns are instruction sector ( e.g. Melnyk and Stank, 2000 ) , retailing sector ( e.g. Hugos and Thomas, 2006 ) , information engineering sector ( e.g. Shashank and Goldsby, 2008 ) , fiscal sector ( e.g. Field and Meile, 2008 ) , and health care sector ( e.g. Haszlinna and Porter, 2009 ) .

However, some researches have been undertaken in SCM-related countries of touristry sector sing that success of SCM patterns in other services and non-services sectors could be applied into this sector. The SCM countries that have been largely covered by touristry research workers are perpendicular integrating ( Diego and Juan, 2000 ; Lafferty and Fossen, 2001 ; Theuvsen, 2004 ; Yamaguchi, 2005 ) , value concatenation analysis ( Mitchell and Phuc, 2007 ; Guzman et al. 2008 ; Tejada and Linan, 2009 ) , distribution channel ( Buhalis, 2000 ; Alamdari, 2002 ; Pearce and Schott, 2005 ; Pearce, 2008 ) . Furthermore, it was besides highlighted that the supply side of touristry sector has been greatly neglected since merely marketing position has been utilized to look into the distribution, integrating and value concatenation of touristry sector ( Pearce and Schott, 2005 ; Zhang et Al. 2009 ) . The deficiency of attending to provide webs is non merely alone to tourism researches as most of researches in services sector focus more on the selling instead than the supply side ( Sachan and Datta, 2005 ; Sengupta et Al. 2006 ; Shashank and Goldsby, 2008 ) . Improvement of the distribution side entirely is deficient to profit single touristry houses or the touristry sector as a whole ( Zhang et al. 2009 ; Pibbonrungroj and Disney, 2009 ; Rusko et Al. 2009 ) . Hence, the sector has to be analyzed from an integrated position that is as a web of touristry supply ironss.

Until really late, there are limited researches, both empirical and conceptual, which examine the full construct of SCM within touristry sector ( mention Muchina and Popovici, 2008 ; Kozak et Al. 2008 ; Zhang et Al. 2009 ; Veronneau and Roy, 2009 ; Pibbonrungroj and Disney, 2009 ; Rusko et Al. 2009 ) . Due to the scarce of touristry SCM researches, Pibbonrungroj and Disney ( 2009 ) have done a systematic literature hunt and it was found that there were merely 44 TSCM surveies and most of TSCM literatures ( about 66 % ) have been published in 2008 and 2009. It was besides discovered that there are two phases of TSCM researches. The first phase is the epoch before 2007 where there is merely conceptual-framework documents meanwhile in 2nd phase of TSCM research, more empirical surveies are published than conceptual model documents. Pibbonrungroj and Disney ( 2009 ) found that half of empirical surveies were found in Europe whereas merely about tierce of empirical surveies were found in Asia specifically in China and Thailand which are known as world-renowned tourer finishs. As such, it can be safely concluded that there is an impulse to analyze the full web of supply concatenation within touristry sector.

Compared to other services and non-services sectors, merchandises offerings of touristry sector are extensively dominated by information due to its intangibleness nature. Intangible touristry merchandises can non be physically displayed or checked at the point of sale before buying. These merchandises are normally bought prior to ingestion clip and ever off from the topographic point of ingestion. The deficiency of appealing illustration and descriptions about touristry merchandises provided by both providers and mediators shall badly neglect to pull consumers or tourers ‘ attending and involvement towards the merchandises ( Connor and Murphy, 2004 ; Deepthi, 2008 ) . As a regulation of pollex from AIDA ( attention-interest-desire-action ) theoretical account, without holding both attending and involvement of tourers towards the merchandises, it will be really improbable to make desires for tourers to buy and devour the touristry merchandises ( Kotler et al. 2009 ) . Seasonably, accurate, relevant and sufficient information is greatly needed to carry through the tourers ‘ questions refering to their touristry merchandises. With proper use of information regarding merchandises and services, touristry houses can easy fulfill the tourers ( Egziabher, 2001 ; Deepthi, 2008 ) . Therefore, the greatest challenge for the touristry sector is to supply a seamless integrating of information and physical services through the flexible constellations of the physical and informational parts ( Zhou, 2004 ; Buhalis and Law, 2008 ) .

Use of information engineerings ( IT ) greatly facilitates the integrating of information and physical services in touristry sector. IT is a general term that describes any engineering that helps to bring forth, pull strings, shop, communicate, and/or disseminate information ( Kumar, 2002 ) . Buhalis ( 1998 ) has stated that “ a whole system of IT is being quickly diffused throughout the touristry industry and no participant will get away its impacts ” . The of all time increasing supply and demand of touristry merchandises makes IT an imperative tool and therefore it plays a more critical function in touristry selling, distribution, publicity and co-ordination ( Connor and Murphy, 2004 ; Buhalis and Law, 2008 ) . The re-engineering of these procedures generates a standard alteration changing the full construction of touristry sector and hence IT has a dramatic impact on the touristry sector ( European E-Business Market Watch, 2003 ; Deepthi, 2008 ) . With the presence of information engineerings, there are three major inventions in touristry sector viz. Computer Reservations Systems ( CRS ) in 1970s ; Global Distribution Systems ( GDS ) in 1980s ; and Internet in 1990s ( Egziabher, 2001 ; Zhou, 2004 ; Usoro, 2007 ) . Existing researches have explored the use of IT in single divisions or activities of touristry sector. Consequently, reappraisal on bing literatures highlight that there is no or really limited surveies which examine the impact of IT on full supply concatenation direction patterns within touristry sector ( mention to e.g. Wyne and Berthon, 2001 ; Zhang et Al. 2009 ; Pibbonrungroj and Disney, 2009 ) . This scenario is wholly different in fabrication sector where there are presently legion surveies that have examined the impact of IT in supply concatenation direction patterns within that sector ( mention to e.g. Johnston and Mak, 2000 ; Hoek, 2001 ; Grieger, 2003 ; Lancaster et Al. 2006 ) . Hence, one of the purposes of this research is to analyze the impact of Internet use towards touristry supply concatenation direction.

Despite the possible benefits of SCM execution, full integrating of supply concatenation is seldom achieved ( Fawcett and Magnan, 2002 ) . It is besides claimed that most of possible benefits resulted from SCM execution could be limited due to the lower integrating and coordination of supply concatenation activities ( Chandra and Kumar, 2000 ; Lafferty and Fossen, 2001 ; Harland, 2007 ) . There are legion factors that inhibit the execution and integrating of supply concatenation activities within both services and non-services sectors. By and large, SCM patterns within both sectors are hindered by about similar barriers such as deficiency of technological know-how, research and development, capital, managerial support and physical substructures ( Rosena et al. 2008 ; Tate, 2008 ; Ruteri and Xu, 2009 ) . However, it is one of the purposes of this research to analyze the specific barriers that inhibit touristry houses in implementing supply concatenation activities in their concern operations.

Measuring the public presentation of supply concatenation has proved to be disputing due to the complex features of the supply ironss. However, effectual public presentation measuring is important in commanding and supervising the supply concatenation activities every bit good as in measuring the attempts made by concatenation members within the sector ( Gunasekaran and McGaughey, 2004 ) . It is claimed that supply concatenation public presentation should be measured in overall ( Fauske et al. 2007 ) . As such, each entity of supply ironss is responsible for the overall public presentation alternatively of its ain public presentation. Despite the wealth of researches on supply concatenation public presentation measuring within fabrication sector, simply small attending has been paid to such measuring in touristry sector ( Frohlich and Westbrook, 2002 ; Yilmaz and Bititci, 2006 ; Sengupta et Al. 2006 ) . Therefore, there is an chance to farther analyze the overall public presentation of supply concatenation direction within touristry sector in this research.

1.2. Research Objectives and Research Questions

Researchs on SCM-related countries within touristry sector are mostly neglected. It should be noted that touristry sector, which is known for its complexness due to presence of multiple channel members, greatly needs a systematic attack to organize its legion activities. As such, SCM patterns through the use of IT are expected to ease the coordination and integrating of legion touristry activities. Factors that could suppress the execution of SCM patterns should be minimized or overcome in order to heighten the public presentation of touristry supply concatenation activities. Consequently, mensurating the public presentation of touristry supply concatenation patterns is critical job in order to measure its effectivity in accomplishing company ‘s intended aims. As such, this research is intended to research the legion issues involved in touristry supply concatenation direction by concentrating on Malayan touristry sector as the cardinal focal point.

To detect the current TSCM patterns among Malayan touristry houses

RQ1: What are the chief SC countries concentrated by touristry houses?

RQ2: What is the current degree of SC execution by touristry houses?

To find the factors that inhibit the patterns of TSCM

RQ3: What are the factors that inhibit touristry houses in pull offing their supply ironss?

RQ4: How make these inhibitors influence SC execution degree of touristry houses?

To analyze the impacts of IT use towards the touristry supply concatenation patterns

RQ5: What are the countries that IT is being utilized in touristry SC?

RQ6: What are the deductions of IT use for touristry SC?

RQ7: How does IT Internet influences the SC countries and execution degree of touristry


To critically analyse the overall supply concatenation public presentation of touristry houses

RQ8: How do SC patterns influence the overall public presentation of touristry houses?

1.3 Research Scope

As for this survey, TSCM is defined as a systematic processs in pull offing a group of touristry houses engaged in legion activities runing from the supply of different constituents of touristry merchandises or services to the distribution and selling of the concluding touristry merchandises to the tourers at a specific touristry finish ( Pibbonrungroj and Disney, 2009 ; Zhang et Al. 2009 ) . Consequently, this survey examines all activities involved in touristry SC from providing, piecing until selling the concluding touristry merchandises to the tourers. Therefore, relationship among all cardinal participants i.e. service manufacturers ( of attractive forces, adjustment, nutrients and drinks and transit ) , mediators ( dwelling of circuit operators and travel agents ) every bit good as tourers are comprehensively explored in this survey. Merely services manufacturers and mediators whom provide services to every bit good as tourers whom consume services at the chosen finishs are considered. It implies that the service providers ( e.g. transit houses ) and mediators could be perchance located at other topographic points but they have to supply services to the chosen finish in order to be considered for this survey. Besides that, the services providers and mediators should be a registered member of Malayan Associations of Hotel ( MAH ) , Malayan Association of Tour and Travel Agents ( MATTA ) or Ministry of Tourism Malaysia ( MOTOUR ) . All TSC activities dwelling of provision, piecing and selling concluding touristry merchandises, which involve the use of IT, are besides examined in this survey. Inhibitors for TSC patterns are assessed based on perceptual experiences of both services providers and mediators. Finally, tourers ‘ satisfaction with chosen finish and touristry houses, is used as a exclusive variable in order to mensurate the overall public presentation of touristry houses resulted from SC patterns.