Market Insights

Last updated on: 18 November 2010

Consumer confidence in Malaysia continues to rise with improving economic conditions. The Asian Consumer Confidence Index produced by InsightAsia registered an increase of 13 points to 125 in the first quarter of 2010, sustaining the trend of two previous quarters that lifted the index above 100 points.

Consumer confidence in Malaysia continues to rise with improving economic conditions. The Asian Consumer Confidence Index produced by InsightAsia.

registered an increase of 13 points to 125 in the first quarter of 2010, sustaining the trend of two previous quarters that lifted the index above 100 points.

Consumers believe the economy has improved and expect this to continue in 2011. Domestic consumption is important for further economic expansion.

Analysts indicate that Malaysia's economic rebound is on track, but the outlook is subdued. The Malaysian economy expanded by a better-than-expected 10.1 [per cent year on year in the first quarter of 2010, accelerating from the 4.4 per cent rise registered in the fourth quarter of 2009.

Importantly, the overall growth figure was bolstered by improving global trade, as exports rose by 19.3 per cent year on year, faster than the 6.0 per cent increase recorded in the previous quarter. The strong growth this year has prompted Malaysia's central bank to raise its GDP growth target for 2010 to 5.5% and The Economist newspaper has been even more positive, estimating that Malaysia's economy will grow by 6.8 per cent in 2010 and 4.3 per cent in 2011.

This is predicted to be followed by an expansion of 5.4 per cent in 2011. (source: The Star newspaper, Malaysia and Business Monitor International)

Visitor arrivals into New Zealand from Malaysia are forecast to increase on average by 4.4 per cent each year from 2010 to 2016.

Key Indicators

Sources:
www.economist.com (GDP Growth)
www.xe.com (Exchange rates)

Outbound Travel

Malaysian travellers are becoming increasingly price sensitive, a trend driven by the increased competition in the aviation sector, particularly by low cost carriers (LCCs).

The market is moving towards last-minute purchasing patterns, with consumers delaying bookings in anticipation of better deals closer to actual travel dates; however, 'early bird' deals/promotions by LCCs are changing such booking patterns.

Consumers still prefer to book through travel agents; however, there is a noticeable emergence of direct bookings particularly for flights, accommodation and car rental.

Airline Update

Competition between low cost carriers (LCCs) and full-service airlines is heating up, especially in destinations within Asia. These airlines are increasing flight frequencies, adding new destinations in their network and pushing short-term promo rates to persuade consumers to fly with them. This is fuelled by the growing trend in intra-regional travel preference, including Malaysia.

• Malaysia Airports Holdings Bhd (MAHB) believes the new RM2 billion low-cost carrier terminal (LCCT) at KLIA is on schedule for completion by the end of 2011, enhancing capacity for the regional LCC hub at KLIA. It will have a capacity of 30-35 million passengers per annum. AirAsia will be the main airline based at the new LCCT.
• Malaysia Airlines won two awards at the 2010 World Airline Awards in Germany recently for 'World's Best Economy Class' and 'Staff Service Excellence'.