The reopening of the air link between Singapore’s Changi Airport and Malaysia’s Kuala Lumpur International Airport (KLIA) is “music to the ears” for Malaysia’s tourism sector, says OCBC Bank economist Wellian Wiranto.
In an OCBC Treasury Research report, Wiranto notes that the sector — which accounts for about 5% of Malaysia’s gross domestic product (GDP) — will especially benefit from the reopening as tourists from China stay grounded.
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Singaporeans used to make up 39% of all visitors to Malaysia, easily the biggest block of tourism receipts, says Wiranto. “Even though Singapore has travel lane arrangements with a total of 16 countries, jumping on that 50-minute flight to Kuala Lumpur may be the easiest and quickest getaway for most,” he adds.
The bigger boost aside from tourism, however, is harder to quantify. Singapore has been one of the largest foreign direct investors (FDI) in Malaysia, comprising nearly 14% of total investment in 2020 despite the pandemic. The city-state has also been the second or third-largest trading partner for Malaysia over the years.
“While such links remained robust despite the travel constraints, they should receive a fillip now that business owners can be on the ground a lot more easily once again. Everyone is sick of Zoom meetings by now, and checking on that new factory site physically or ironing out tricky product specifications with that supplier face-to-face should make things that much easier,” says Wiranto.
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Malaysia and Singapore’s vaccinated travel lane will start from Nov 29, initially confined to air travel. “Given that it is the world’s second-busiest air corridor – passengers to and from Singapore comprise nearly 10% of all KLIA’s 2019 throughput, for one – that is a significant boost in and of its own,” says Wiranto.
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The air link reopening may also be a sign of more travel corridor resumptions to come. The governments of both countries have noted that they were in active discussions to reopen land travel between the two countries.
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Before the Covid-19 pandemic, the Johor Causeway was home to one of the world’s busiest border crossings, with 350,000 travellers heading either way.
Photo: Albert Chua/ The Edge Singapore
