Page 178 - Contributed Paper Session (CPS) - Volume 8

CPS2231 Syafawati A. R. et al.

The impact of tourism industry on consumer
price index: The case of Melaka
Syafawati Abdul Refai, Mohamad Hamizan Abdullah
Department of Statistics Malaysia

Abstract
The tourism industry is a dynamic industry where it is one of the fastest
growing services industries in Malaysia’s economy. The tourism industry is the
third major contributor to the Malaysia’s Gross Domestic Product (GDP) of
which in 2017 it contributed 14.9 per cent to the GDP. Since the launched of
Visit Malaysia Year campaign in 1990, the tourism industry has thrive
vigorously over the years as a backbone of the services sector. This article
presents the relationship between tourist arrival and Consumer Price Index
(CPI) to observe the impact of tourism industry on Melaka’s CPI. Simple Linear
Regression was applied to examine the relationship between both variables.
Finding indicates that there exist a positive relationship between tourist arrival
and CPI. The tourism industry in Melaka need to undergo several phases of
transformation and development through plans and programs developed by
the government in order to remain sustainable and robust.

Keywords
tourism industry; tourist arrival; consumer price index

1. Introduction
Over the decade, Malaysia’s tourism industry has experienced dynamic
growth and rapid development to become one of the fastest growing
economy sector in Malaysia. As Malaysia move from industrialized economy
to services driven economy, the tourism industry plays an important role as
one of the main contributor to the country’s economy. In order to sustain
growth and face challenges particularly competition among other countries,
the Malaysia government has implemented the Malaysia Tourism
Transformation Plan 2020 and Tourism Malaysia Integrated Promotion Plan
(2018-2020) with the vision to make Malaysia’s tourism industry a primary
source of national revenue and a prime contributor to the socio-economic
development of the nation.
Tourism industry continues to be the prime mover of the services sector
growth where its share of Gross Value Added of Tourism Industries (GVATI) to
Malaysia’s GDP increased to 14.9 per cent in 2017 as against 14.8 per cent in
2016. GVATI value in 2017 recorded an increase of 10.3 per cent to RM201.4
billion as compared to RM182.6 billion in 2016. The Malaysia’s tourism

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