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ECONOMICS & SOCIOLOGY


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ISSN 2071-789X

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The effects of exchange rate, price competitiveness indices and taxation on international tourism demand in Malaysia

Vol. 12, No 3, 2019

Nanthakumar Loganatan,

 

Azman Hashim International Business School, Universiti Teknologi Malaysia, Malaysia

E-mail: n4nantha@yahoo.com

The effects of exchange rate, price competitiveness indices and taxation on international tourism demand in Malaysia

 

Norsiah Ahmad,

 

Faculty of Economics and Management Sciences, Universiti Sultan Zainal Abidin, Malaysia

E-mail: norsiah@unisza.edu.my


Tirta Nugraha Mursitama,

 

International Relations Department, Bina Nusantara University, Jakarta, Indonesia

E-mail: tmursitama@binus.edu


Roshaiza Taha,

 

School of Maritime Business and Management, Universiti Malaysia Terengganu, Malaysia

E-mail: roshaiza@umt.edu.my


Abbas Mardani,

 

Muma of Business School, University of South Florida, United States

E-mail: mabbas3@live.utm.my


Dalia Streimikiene,

 

Lithuanian Institute of Agrarian 

Economics, Lithuania

E-mail: dalia.streimikiene@knf.vu.lt

 


 

Abstract. This study examines the effect of Malaysia’s domestic taxation policy, price and exchange competitiveness with neighboring countries on international tourism demand in Malaysia based on the quantile estimation. Using monthly-based time series data, which set over the period of 1996-2017, we adopt the bootstrap quantile regression model to provide a comprehensive relationship of international tourism demand theory in Malaysia. The empirical results show that sales tax has a negative relationship with international inbound tourism demand, mainly at the middle quantile stages. Moreover, we also found that price competition from Thailand has a positive influence on Malaysia’s tourism demand; and appreciation of Indonesia’s exchange rate competitiveness tends to lead Malaysia’s tourism demand. These empirical findings open up new insights for policymakers in Malaysia as to how to improve fiscal policies and enhance continual increase of international inbound tourism demand in the upcoming years. 

 

Received: December, 2018

1st Revision: March, 2019

Accepted: July, 2019

 

DOI: 10.14254/2071-789X.2019/12-3/6

JEL ClassificationC50, G20, Z32

Keywords: exchange rate, international tourism, quantile regression; price competitiveness