ON the surface, the Terengganu tourism sector is roaring at the height of the summer holiday season.

Its resorts, which overlook the crystal blue waters of Pulau Redang and Pulau Lang Tengah, are jam-packed with Europeans, mainland Chinese and well-off Malaysians.

But in the state’s capital of Kuala Terengganu, batik and souvenir sellers, such as Abdul Manaf Omar, are seeing shrinking profits and fewer customers by the month.

“It’s only during school and public holidays that there are people at my shop. And I am lucky that I am in Pasar Payang as it’s a famous destination,” said the 48-year-old at his stall.

This difference is reflected in Terengganu’s tourism figures released by the state’s Economic Planning Unit. In 2015, it recorded a 12.6% growth in foreign tourists compared with only 3% growth for domestic ones.

It is also a disparity that reflects the unequal impact of a sluggish economy on different income classes, just like how the recent encouraging growth is not being felt by most Malaysians.

The decline in domestic tourists will challenge the Terengganu government’s aim of weaning itself off revenue from oil and gas and making the sector a major contributor to the state’s coffers.

So, while the destinations and hotels mainly targeted at wealthy Malaysians and foreigners have seen an increase in visitors, businesses relying on domestic tourists have not.

The Monsoon Cup sailing race is an example. The luxury hotels in Kuala Terengganu, such as the Ri Yaz Heritage and Spa resort and the Duyong Marina Resort, took the lion’s share of all the revenue during the event.

The smaller players, such as restaurants, shops and even taxis, saw little trickle-down effect during the one-month tournament.

This latter group, which include shops selling clothing and foods aimed at Malaysians, said the goods and services tax (GST) and inflation are depressing sales.

The government is also a source of frustration but for different reasons. On the one hand, retailers and hoteliers believe that the state government has not done enough to bring visitors to stay and spend in Kuala Terengganu.

On the other hand, cuts in government budgets for training have led to fewer seminars and workshops being held in Terengganu, which then leads to a big drop in domestic visitors.

Just passing through

Another batik seller Wan Mohamad Yusof Wan Awang said sales have been dropping about three to four years ago, at the same time when the government introduced GST and cut funds for training.

“In the past, the government would host teacher training workshops in Terengganu. When teachers came, they would spend half a day shopping at Pasar Payang,” said the 59-year-old.

When the ringgit’s value to the US dollar started shrinking, the cloth used for batik became more expensive to import from China and Indonesia, said Manaf.

“So producers increased the wholesale prices to us and some even charged GST. We could not pass off the price increase to customers without suffering a drop in sales. So, we absorbed these higher costs.”

The drop in visitors has also been felt by restaurants, said Long Jin, who manages a cafe in the historic Chinatown enclave.

“We only get a lot of visitors during school holidays. Tourists often do not stay in Kuala Terengganu itself. They just pass by on their way to the islands,” said Long, 46.

“Kuala Terengganu lacks publicity and attractions to keep people in the city.”

The rich benefit

Even on the state’s fabled islands, resorts mainly caterinng to lower-middle to middle-income tourists have seen a drop in visitors, said hotelier SP Chong.

“It’s the RM200 per night places that suffered the most. If you make RM6,000 a month and have two kids, you will really think hard about having an island holiday,” said Chong, who owns a hotel in the state capital and on Pulau Lang Tengah.

“But resorts that typically charge RM400 a night are doing well. Some are even seeing a 10% increase in visitors. Wealthier visitors are still taking holidays.”

Although the islands are a major draw for visitors from mainland China and Europe, about half of all island tourists are from Malaysia, he said.

In order to grow the industry, he said, the government needs to invest in more tourist-friendly infrastructure, such as a dependable public transport system and a food court showcasing local food and crafts.

And even though the state has said it does promote Terengganu overseas, Chong said, these campaigns are uncoordinated and ineffective.

“They promote Terengganu to Europeans but they don’t do the same with Asean, Taiwanese, Korean or Japanese tourists. They have an international airport, yet there are no direct flights from China.”

Despite it being well known, Terengganu’s tourism potential has not been fully tapped, he said. – September 1, 2017.