Malaysia’s Border Reopening: Boost for Tourism Sector, Hiring in Palm Oil Industry

May 6, 2022 Posted by ASEAN Briefing Written by Nguyen Minh Hanh Reading Time: 3 minutes

Malaysia’s border reopening will have immediate consequences for two major industries in the country, namely, tourism and palm oil production. Travel restrictions due to Covid-19 resulted in the severe decline of tourism businesses and loss of jobs while the Ukraine-Russia crisis and Indonesia’s ban on export of crude palm oil and cooking oil has led to spiraling commodity prices. The relaxation of Malaysia’s entry requirements should boost foreign tourist footfall and ease hiring migrant workers in the agriculture sector.

Following the Singapore-Malaysia land border reopening via the Johor-Singapore Causeway and the Taus Second Link bridge, Malaysia is the latest country to open its border to all international visitors on April 1, 2022, after two years of closure. Regardless of vaccination status, foreign nationals can enter Malaysia without prior approval. Fully vaccinated visitors are also not required to undergo quarantine measures.

The border reopening is expected to revitalize the tourism industry and benefit Malaysia’s palm oil industry by easing the migrant worker shortage.

What are the requirements to enter Malaysia?

Covid-19 testing and quarantine

Effective May 1, 2022, fully vaccinated visitors are no longer required to take a PCR test. By fully vaccinated, the traveler is expected to have completed a full regimen of a COVID-19 vaccine recognized by the WHO and taken at least 14 days before departure.

Partially and unvaccinated visitors will need to take a PCR test at least 48 hours before departure in addition to an antigen test 24 hours after arrival. They will also need to undergo five days of quarantine at home or at a designated hotel.

Further, only unvaccinated visitors who have proof of medical exemption from vaccination are not required to undergo quarantine, but are still required to undertake a PCR test 48 hours before departure and an antigen test 24 hours after arrival.

Partially and unvaccinated travelers are required to undergo five days of quarantine, known as a Home Surveillance Order, from their date of arrival in Malaysia. There is a quarantine exemption for partially and unvaccinated travelers who are aged 17 years and below.

Travel insurance

As of May 1, 2022, foreign travelers are not required to acquire travel insurance to enter Malaysia.

Installation of the MySejahtera application

Travelers need to download the MySejahtera contact tracing app on their mobile phones within a week of departing for Malaysia.

Travelers are required to fill a pre-departure form; upon completion, the traveler will receive a traveler card.

Revitalizing Malaysia’s tourism industry

As with other ASEAN countries, Malaysia’s economy is strongly driven by its tourism industry. In 2019, the sector contributed to 15.9 percent of national GDP, attracting 26.1 million international arrivals and generating US$20.6 billion for the economy and 3.6 million jobs.

As the pandemic struck, there was an 83.4 percent decline in international arrivals to a mere 4.3 million people in 2020. The average hotel occupancy rate also dropped from 64 percent in 2019 to 32 percent in 2020. Since then, the Malaysian government has mainly relied on domestic tourists while also implementing exceptions, such as opening the Langkawi tourism bubble for foreigners and initiating the Vaccinated Travel Lane (VTL) for fully vaccinated passengers between Malaysia and Singapore.

Navigate Supply Chain Disruptions and Mitigate Future Risks

To support domestic tourism, the government provided tax relief for domestic travel expenses of up to 1,000 ringgit (US$228). This is extended until December 31, 2022.

With the full border reopening, Malaysia’s tourism industry is on track to recovery. In addition, Malaysia is also focusing on “Smart Tourism,” which involves the digitization and development of smart products and infrastructures, to secure a resilient and sustainable tourism industry against future crises, such as another pandemic. According to Monitor Deloitte, the Smart Tourism 4.0 initiative is expected to increase the revenue for Malaysia’s tourism industry four-fold from the current US$25 billion to US$110 billion by 2030.

Migrant workers needed for Malaysia’s palm oil industry

Malaysia is a net exporter of palm oil that produces 25 percent of global supply and 34 percent of global exports. External global demand for crude palm oil (CPO), coupled with lower production in Malaysia have put pressure on CPO prices, with the price currently hovering around US$1,600 per ton from around US$633 in 2019. This was further exacerbated by the Ukraine-Russia crisis and Indonesia’s decision to curb exports before finally placing a blanket ban on all crude palm oil and cooking oil exports. Indonesia is the world’s largest exporter of crude palm oil.

The crisis should generate higher sales and greater revenue streams for Malaysia as it tries to fill the gap, however, the country is suffering from an acute shortage of labor, particularly in harvesting jobs. The palm oil industry heavily relies on migrant workers as local workers often view the job as low-end and demeaning. The Malaysian government, meanwhile, had placed a freeze on migrant intake due to the pandemic, which saw the number of foreign workers decrease from 1.9 million in 2018 to 1.1 million in 2021.

Malaysia is now speeding up the process to hire nearly 180,000 foreign workers between April and May this year.