ASEAN Market Watch: Malaysia Tourism, Thailand’s Railway Network, and Laos’ Economic Growth Forecast

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Malaysia: Incentives on Offer to Attract More Chinese Tourists

After the Philippines, Malaysia is all set to lure Chinese tourists with a raft of initiatives. Earlier this year, Malaysia signed a Memorandum of Understanding (MoU) with Chinese e-commerce company Alibaba, which allows Chinese consumers to access Malaysian tourism and services on its website. In addition, the Malaysian government launched an e-visa programme to ease entry restriction for Chinese tourists. At present, the government allows visa-free entry for Chinese tourists staying for 15 days or less.

China currently has the largest outbound tourism market. In 2015, around 120 million Chinese nationals traveled abroad, with Malaysia a key destination. Chinese tourists to Malaysia were 1.68 million in 2015, a 4 percent increase from the previous year. In 2016, inbound traffic from China continued to increase. This is shown by an upsurge in the number of flights. For example, AirAsia has increased weekly flights from Beijing and Shanghai to Kuala Lumpur. The government has set a target of bringing 30.5 million visitors by the end of 2016. Other initiatives include investing in transport infrastructure. A high-speed rail service between Malaysia and Singapore is expected to be completed in 2026. An integrated transport system is also planned in Penang which is expected to increase tourist activity.

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Thailand: Regional Partners to Help Expand Rail Network

Thailand is expected to expand its rail network over the next decade with the help of regional partners China and Japan. The expansion of the rail network is expected to improve domestic and regional connectivity while boosting economic growth. In September, announcements were made regarding the first phase of the Chinese-Thai high-speed rail network, which is expected to start construction in the second quarter of next year. While Chinese technology will be used, Thailand would be fully responsible for the investment. The railway line will connect China with Thailand via Laos.

Earlier in August, Thailand signed a MoU with Japan for a 416 miles (670km) high-speed railway between Bangkok and Chiang Mai at an estimated cost of US$ 12.3 billion. In addition, Japanese companies are conducting studies for rail projects that will connect Thailand with neighboring countries such as Myanmar, Laos and Cambodia. The railway projects are part of Thailand’s larger plan to improve infrastructure, which according to the government is one of the main obstacles of the country’s economic development. Once complete such projects are expected to have knock-on benefits in the construction and tourism sectors.

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Laos: Economic Growth to Remain Steady Up To 2018

The World Bank on October 6 stated that Lao’s economic growth will remain steady through 2016 to 2018. While moderate, growth will continue to be around 7 percent in 2016. This growth will be driven by the power sector and recovery of agriculture and manufacturing sectors. While growing electricity exports have helped, low commodity prices negatively affected fiscal revenues and have widened the deficit.

Nevertheless, power generation is expected to increase by 20 percent this year. In addition, construction has continued to grow, supported by pipeline power projects and real estate. Government authorities now need to improve connectivity and productivity. Analysts have further stated that the government should also give sufficient attention to the fiscal outlook and manage the exchange rate and financial sector risks. In addition, Special Economic Zones (SEZs) have increasingly become more attractive to foreign investors due to tax incentives. Around 300 companies have invested in such SEZs with a total registered capital of US$ 8 billion.


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