Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0

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.


1. Álvarez-Albelo, C.D., Hernández-Martín, R., & Padrón-Fumero, N. (2017). Air Passenger Duties as Strategic Tourism Taxation. Tourism Management, 60, 442-453.

2. Andergassen, R., Candela, G., & Figini, P. (2013). An Economic Model for Tourism Destinations: Product Sophistication and Price Coordination. Tourism Management, 37, 86-98.

3. Balli, F., & Louis, R.J. (2015) Modelling the Tourism Receipt’s Volatility. Applied Economics Letters, 22, 110-115.

4. Bayer, C., & Hanck, C. (2013). Combining Non-cointegration Tests. Journal of Time Series Annals, 34, 83-95.

5. Bird, R.M. (1992). Taxing Tourism in Developing Countries. World Development, 20, 1145-1158.

6. Croes, R., & Kubickova, M. (2013). From Potential to Ability to Compete: Towards a Performance-Based Tourism Competitiveness Index. Journal of Destination Marketing & Management, 2, 146-154.

7. Crouch, G.I., & Ritchie, B. (1999). Tourism, Competitiveness and Societal Prosperity. Journal of Business Research, 44, 137-152.

8. Dai, B., Jiang, Y., Yang, L., & Ma, Y. (2017). China's Outbound Tourism – Stages, Policies and Choices. Tourism Management, 58, 253-258

9. De Keyser, R., & Vanhove, N. (1994). The Competitive Situation of Tourism in the Caribbean Area Methodological Approach. The Tourist Review, 49(3), 19-22.

10. Dickey, D., & Fuller, W. (1981). Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root. Econometrica, 49(4), 1057-1072.

11. Dogru, T., Sirakaya-Turk, E., & Crouch, G. I. (2017). Remodeling International Tourism Demand: Old Theory and New Evidence. Tourism Management, 60, 47-55

12. Dombrovski, R., & Hodžić, S. (2010). Impact of Value Added Tax on Tourism. International Business and Economics Research Journal, 10, 131-138.

13. Dwyer, L., Forsyth, P., & Spurr, R. (2016). Tourism Economics and Policy Analysis: Contributions and Legacy of the Sustainable Tourism Cooperative Research Centre. Journal of Hospitality and Tourism Management, 26, 91-99.

14. Falzon, J. (2012). The Price Competitive Position of Mediterranean Countries in Tourism: Evidence from the Thomson Brochure. Tourism Management, 33(5), 1080-1092.

15. Forsyth, P., Dwyer, L., Spurr, R., & Pham, T. (2014). The Impacts of Australia's Departure Tax: Tourism Versus the Economy? Tourism Management, 40, 126-136.

16. Gago, A., Labandeira, X., Picos, F., & Rodrı´guez, M. (2009). Specific and General Taxation of tourism activities. Evidence from Spain. Tourism Management, 30, 381-392.

17. Getz, D., & Page, S.J. (2016) Progress and Prospects for Event Tourism Research. Tourism Management, 52, 593-631.

18. Gooroochurn, N., & Sinclair, M.T. (2005). Economics of Tourism Taxation: Evidence from Mauritius. Annals of Tourism Research, 32(2), 478-498.

19. Jenkins C.L., & Henry, B.M. (1982). Government Involvement in Tourism in Developing Countries. Annals of Tourism Research, 9, 499-521.

20. Jensen, T.C., & Wanhil, S. (2002). Tourism’s Taxing Times: Value Added Tax in Europe and Denmark. Tourism Management, 23, 67-79.

21. Koenker, R., & Machado, J.A.F. (1999). Goodness of Fit and Related Inference Process for Quantile Regression. Journal of American Statistical Association, 99, 775-787.

22. Kwiatkowski, D., Phillips, P.C.B., Schmidt, P., & Shin, Y. (1992). Testing the Null Hypothesis of Stationarity against the Alternative of a Unit Root. Journal of Econometrics, 54, 159-178.

23. Lejárraga, I., & Walkenhorst, P. (2013) Economic Policy, Tourism Trade and Productive Diversification. International Economics, 135-136, 1-12.

24. Martins, L. F., Gan, Y., & Ferreira-Lopes, A. (2017). An Empirical Analysis of the Influence of Macroeconomic Determinants on World Tourism Demand. Tourism Management, 61, 248-260.

25. Matteo, D.D., & Cavuta, G. (2016) Enogastronomic Tourism: Can it Mitigate the Intangibility of the Destination? Street Food as a New Business Model for the Management of Tourist Regions. Procedia-Economics and Finance, 39, 347-356.

26. MacNeill, T., &Wozniak, D. (2018). The Economic, Social and Environmental Impacts of Cruise Tourism. Tourism Management, 66, 387-404.

27. MOTAC. (2018). Ministry of Tourism and Culture Malaysia. Retrieved December 20, 2018, from

28. Palmer, T., & Riera, A. (2003) Tourism and Environmental Taxes: With Special Reference to the ‘‘Balearic Eco Tax’’. Tourism Management, 24, 665-674.

29. Palmer-Tous, T., Riera-Font, A., & Rossello´ Nadal, J. (2007). Taxing Tourism: The Case of Rental Cars in Mallorca. Tourism Management, 28, 271-279.

30. Pennerstorfer, D. (2017). Can Competition Keep the Restrooms Clean? Price, Quality and Spatial Competition. Regional Science and Urban Economics, 64, 117-136.

31. Phillip, P.C.B., & Perron, P. (1988). Testing the Unit Root for Time Series Regression. Biometrica, 75(2), 335-346.

32. Pjerotic, L., Delibasic, M., Joksiene, I., Griesiene, I., & Georgeta, C. P. (2017). Sustainable Tourism Development in the Rural Areas. Transformations in Business & Economics, 16(3) (42), 21-30.

33. Ponjan, P., & Thirawat, N. (2016). Impacts of Thailand’s Tourism Tax Cut: A CGE Analysis. Annals of Tourism Research, 61, 45-62.

34. Radjenovic, M. (2018). The Quality of Human Resources in Tourism and Hospitality Industry in Montenegro. Transformations in Business & Economics, 17(2) (44), 86-94.

35. Rey-Maquieira, J., Lozano, J., & Gómez, C. M. (2009). Quality Standards Versus Taxation in a Dynamic Environmental Model of a Tourism Economy. Environmental Modelling & Software, 24(12), 1483-1490.

36. Ruzic, P., & Demonja D. (2017). Economic Impacts of Rural Tourism in Rural Areas of Istria (Croatia). Transformations in Business & Economics, 16(3) (42), 31-41.

37. Seetaram, N., Forsyth, P., & Dwyer, L. (2016). Measuring Price Elasticities of Demand for Outbound Tourism using Competitiveness Indices. Annals of Tourism Research, 56, 65-79.

38. Sheng, L. (2011). Taxing Tourism and Subsidizing Non-Tourism: A Welfare-Enhancing Solution to “Dutch Disease”?. Tourism Management, 32, 1223-1228.

39. Sokhanvar, A., Çiftçioğlu, S., & Javid, E. (2018). Another Look at Tourism-Economic Development Nexus. Tourism Management Perspectives, 26, 97-106.

40. Spengler, J. O., & Uysal, M. (1989). Considerations in the Hotel Taxation Process. International Journal Hospitality Management, 8(4), 309-316.

41. Suess, C., Mody, M. (2016). Gaming Can be Sustainable Tool Using Social Representation Theory to Examine the Moderating Effects of Tourism Diversification on Residents' Tax Paying Behavior. Tourism Management, 56, 20-39.

42. United Nation World Tourism Organization. (2016). Retrieved December 24, 2017, from http://

43. Viglia, G., Mauri, A., & Carricano, M. (2016). The Exploration of Hotel Reference Prices Under Dynamic Pricing Scenarios and Different Forms of Competition. International Journal of Hospitality Management, 52, 46-55.

44. Vjekoslav, B., Bejaković, P., & Anton, D. (2012). Tax System as a Factor of Tourism Competitiveness: The Case of Croatia. Procedia-Social and Behavioral Sciences, 44, 250-257.

45. Wattanakuljarus, A., & Coxhead, I. (2008). Is Tourism-Based Development Good for the poor? A General Equilibrium Analysis for Thailand. Journal of Policy Modeling, 30, 929-955.