Malaysia Outranks Thailand as Southeast Asia’s Top Tourist Destination for Two Years Running

A Historic Shift in Southeast Asia Tourism

Southeast Asia has witnessed a remarkable transformation in its tourism landscape. Malaysia has officially secured its position as the region’s top tourist destination for the second consecutive year, surpassing long-standing leader Thailand in international visitor arrivals. The latest data shows Malaysia welcomed 38.3 million foreign arrivals in the first 11 months of 2025, exceeding the total recorded for the entire 2024. In contrast, Thailand received only 32.9 million arrivals for the full year 2025, representing a 7% year-on-year decrease and marking the first annual drop in international visitors in a decade outside the pandemic period.

This reversal of fortunes represents more than just statistics on a spreadsheet. It signals changing traveler preferences, effective policy shifts, and the evolving competitive dynamics between two of Southeast Asia’s most popular destinations. While Thailand has traditionally dominated regional tourism, Malaysia’s strategic investments and welcoming policies have propelled it to the forefront of international travel in the region.

The tourism industry serves as a crucial economic engine for both nations. Thailand’s tourism sector typically accounts for approximately 18-20% of its GDP, while Malaysia’s tourism contributes around 15-16% to its economy. The shift in visitor numbers carries significant implications for economic growth, employment, and foreign exchange earnings for both countries. Understanding the factors behind this change offers valuable insights into the broader trends shaping Asian tourism.

Malaysia’s Tourism Surge: What’s Driving the Numbers?

Malaysia’s ascent to the top of Southeast Asian tourism rankings did not happen by chance. The country has implemented a series of strategic policies and investments designed to attract international visitors and enhance their experience. These efforts have yielded impressive results, with Malaysia recording a 10% increase in tourist arrivals in the first quarter of 2025 compared to the same period in 2024.

The United Nations Tourism Organization has recognized this growth trajectory, acknowledging Malaysia’s effective approach to tourism development. The country has successfully positioned itself as a diverse travel destination offering something for everyone, from pristine beaches and lush rainforests to modern cities with world-class shopping and dining.

Visa Policies Attract Key Markets

Perhaps the most significant factor in Malaysia’s tourism success has been its progressive visa policies. The country implemented extensive visa relaxation measures targeting major source markets, particularly China and India. In December 2023, Malaysia rolled out a visa exemption for Chinese travelers, which has now been extended for another five years until 2026, with the possibility of an additional extension until 2036 according to Malaysian Home Minister Datuk Seri Saifuddin Nasution Ismail.

Similarly, Malaysia offers visa-free entry for Indian travelers until 2026. These policies have directly impacted visitor numbers, with Chinese tourists forming the second-largest group of visitors to Malaysia, reaching 1.12 million in the first quarter of 2025 alone. The ease of access has made Malaysia a more attractive option compared to regional competitors with more stringent entry requirements.

Malaysia has also improved its digital visa systems, streamlining the application process and reducing bureaucratic hurdles for travelers. Enhanced airport coordination and efficient processing have further improved the visitor experience, making entry into the country seamless and hassle-free.

Infrastructure Improvements Enhance Visitor Experience

Beyond visa policies, Malaysia has invested significantly in upgrading its tourism infrastructure. The expansion of international air routes has improved connectivity, making it easier for travelers from around the world to reach Malaysian destinations. Kuala Lumpur International Airport’s Terminal 1 underwent substantial upgrades, enhancing capacity and passenger comfort.

These infrastructure improvements extend beyond airports to include tourist facilities, transportation networks, and hospitality establishments. Popular destinations such as Kuala Lumpur, Langkawi, Penang, Borneo (Sabah and Sarawak), and the Cameron Highlands have all benefited from enhanced infrastructure, offering visitors better access and more comfortable experiences during their stay.

Malaysia’s tourism campaigns have also been effective in promoting the country’s diverse attractions. From the iconic Petronas Towers and Batu Caves to the pristine beaches of Langkawi and the cultural richness of George Town, Malaysia has successfully marketed its unique blend of Malay, Chinese, and Indian cultures to international audiences.

Thailand’s Decline: Multiple Challenges Impact Visitor Numbers

Thailand’s drop in tourism numbers stems from a combination of factors, both internal and external. The country, which had held the title of Southeast Asia’s most visited destination for years, faced significant setbacks in 2025 that dampened visitor enthusiasm and affected travel decisions.

The Thai government cut its forecast for foreign tourist arrivals in 2025 to 33 million from 37 million, reflecting the challenges faced by the sector. Prior to the pandemic, Thailand had welcomed a record of nearly 40 million visitors in 2019, setting a high bar that the country has struggled to reach again in the post-pandemic recovery period.

Safety Concerns Affect Traveler Confidence

Several high-profile incidents in 2025 raised safety concerns among potential visitors. Kidnapping incidents received widespread media coverage, creating apprehension about personal security. While such events remain relatively rare, their impact on tourist perceptions can be significant and long-lasting.

In response, the Thai government introduced the “Trusted Thailand” program in late 2025, a certification initiative designed to restore international confidence in Thai tourism. This program ensures that hospitality businesses adhere to stringent safety standards across four pillars: general safety with mandatory CCTV and emergency response systems, secure payments with integration of platforms like Alipay and WeChat Pay, multilingual visitor care, and standardized safe transport routes.

Natural Disasters and Border Tensions

Beyond safety concerns, Thailand faced several natural disasters in 2025 that disrupted travel plans and affected visitor experiences. A deadly earthquake struck the country, causing damage to infrastructure and creating uncertainty about travel safety. Severe flooding in various regions further complicated travel logistics and diminished the appeal of affected destinations.

Border tensions with Cambodia also played a role in Thailand’s tourism challenges. The government issued curfews and heightened security in districts like Sa Kaeo and Trat near the Cambodian border. While major tourist hubs like Bangkok, Phuket, and Chiang Mai remained unaffected, the border disputes created negative publicity and raised concerns among potential visitors about regional stability.

The cumulative effect of these challenges was a decline in tourist numbers, particularly from key markets like China, which saw a 34.97% drop to 3.41 million visitors in the first nine months of 2025. Even regional neighbors showed reduced interest, with South Korea arrivals down 17.7% and Taiwan down 9.14% during the same period.

Economic Impact of Tourism Shifts

The shift in tourism rankings has significant economic implications for both countries. Tourism serves as a crucial contributor to GDP, employment, and foreign exchange earnings. Malaysia’s tourism surge has provided a boost to its economy, which posted notable growth with GDP expanding at 5.2% year on year in the third quarter of 2025.

The services and manufacturing sectors in Malaysia benefited from strong performance in tourism-related industries and consumer spending. The construction sector also sustained robust double-digit growth, partly driven by infrastructure improvements related to tourism development. This economic momentum has helped Malaysia achieve better-than-expected growth despite external headwinds.

In contrast, Thailand’s economy continued to lose momentum, expanding by just 1.2% year on year in the third quarter of 2025, the slowest growth rate in four years. The slowdown in tourism contributed to this weak performance, as key growth drivers including exports, production, and investments also weakened over the quarter.

Despite the decline in visitor numbers, Thailand managed to maintain some economic resilience in tourism revenue. The average expenditure per trip increased, with visitors spending an estimated 46,000 baht per person in 2025, a rise of 1.74% compared to the previous year. This suggests that while fewer tourists visited, those who did spent more, partially offsetting the impact of reduced arrivals.

The Regional Landscape: Vietnam’s Rising Profile

The changing tourism landscape in Southeast Asia extends beyond the Malaysia-Thailand dynamic. Vietnam has emerged as another strong competitor, posting remarkable growth in visitor numbers. In 2024, Vietnam recorded a 38.64% increase in international arrivals compared with 2023, ranking fourth globally among fastest-growing tourist destinations.

Vietnam is on track to reach a record-breaking 21 million international visitors by the end of 2025, cementing its position as one of the fastest-growing tourism destinations globally. The country has outpaced many regional counterparts in tourism recovery, thanks to visa reforms, improved infrastructure, and expansion of international flights.

Key airports including Tan Son Nhat International in Ho Chi Minh City and Noi Bai International in Hanoi have seen significant passenger increases. The Vietnamese government’s strong marketing efforts and policies encouraging investment in the tourism sector have yielded tremendous results, making Vietnam a prime destination for families, adventure-seekers, and cultural explorers alike.

This regional diversification presents both challenges and opportunities for traditional leaders like Thailand. Travelers now have more options than ever when planning Southeast Asian itineraries, increasing competition but also potentially growing the overall regional tourism pie through more diverse offerings.

Key Differences in Tourist Demographics

Understanding the composition of visitors to each country reveals interesting patterns and strategic implications. Malaysia’s success has been driven significantly by regional visitors, with Singapore forming the largest source market. Over 4.9 million Singaporeans visited Malaysia in the first quarter of 2025 alone, reflecting the strong cross-border travel facilitated by geographical proximity and excellent connectivity.

China and Indonesia rounded out Malaysia’s top three source markets, with 1.12 million and 1.08 million visitors respectively in the first quarter of 2025. This diverse mix of visitors provides Malaysia with stability across different market segments and reduces dependence on any single source country.

Thailand’s visitor demographics showed notable shifts in 2025. For the first time in recent years, Malaysia surpassed China as Thailand’s top source market. By the end of 2025, Malaysia contributed 4.38 million visitors to Thailand, slightly edging out China’s 4.36 million. India ranked third with 2.4 million visitors, followed by Russia and South Korea.

This shift away from Chinese dominance reflects both China’s slower economic recovery and Thailand’s challenges in fully restoring confidence among Chinese travelers following the pandemic. The significant 34.97% drop in Chinese visitors to Thailand in the first nine months of 2025 underscores the importance of this market and the need for targeted recovery strategies.

Interestingly, while overall numbers declined, some markets showed growth. India provided a bright spot with a 15.28% increase to 1.77 million visitors in the first nine months of 2025. Russia also grew by 9.71% to 1.27 million visitors, while Japan, the United Kingdom, and the United States all posted modest increases, demonstrating resilience in long-haul markets.

Future Outlook: Thailand’s Recovery Strategy

Despite the challenges faced in 2025, Thailand has developed ambitious plans for recovery and growth in 2026. The government has set targets of 36 to 39 million foreign visitors and tourism revenue of 2.8 to 3.0 trillion baht (approximately $82-88 billion USD). The Tourism Authority of Thailand (TAT) is targeting 36 million visitors, while the Association of Thai Travel Agents (ATTA) believes 39 million visitors is achievable, contingent on Chinese market recovery.

Thailand’s new strategy for 2026, called “The New Thailand,” represents a significant shift in approach. Rather than focusing solely on volume, the strategy emphasizes high-value tourism catering to affluent travelers. Key focus areas include health and wellness tourism, digital nomads, and LGBTQ+ tourism. Key government projects backed by a 4.5 billion baht budget aim to elevate tourism quality and ensure sustainable growth.

This strategic pivot reflects lessons learned from 2025’s challenges and recognition that attracting fewer but higher-spending visitors may offer better economic returns than pursuing sheer volume at any cost. The Trusted Thailand safety certification program represents another component of this quality-focused approach, addressing concerns that deterred some visitors in 2025.

The success of these strategies will depend on Thailand’s ability to differentiate itself from regional competitors while addressing safety concerns effectively. The country’s natural advantages, including stunning beaches, vibrant culture, renowned cuisine, and affordability, provide a strong foundation for recovery if executed well.

What This Means for Travelers

For travelers planning Southeast Asian adventures, the shifting tourism landscape offers both opportunities and considerations. Malaysia’s rise means more options for travelers seeking diverse experiences, from the modern skyline of Kuala Lumpur to the cultural richness of Penang and the natural beauty of Borneo. The country’s family-friendly reputation, orderliness, and relative safety make it particularly attractive to families and cautious travelers.

Thailand remains a compelling destination despite its temporary setback. The country’s world-renowned beaches, vibrant nightlife, cultural treasures, and affordability continue to draw millions. The current period may offer advantages for travelers willing to visit during the recovery phase, including potentially fewer crowds and better value as destinations compete for visitors.

Vietnam’s emergence adds another dimension to regional travel, with its stunning coastlines, cultural treasures, and dynamic cities like Hanoi and Ho Chi Minh City. The country offers excellent value for budget-conscious travelers and provides experiences distinct from both Malaysia and Thailand.

Travelers should stay informed about visa policies, which continue to evolve as countries compete for visitors. Both Malaysia and Thailand have implemented visa-free access for key markets, making travel easier than ever. Checking official government websites or trusted travel platforms before departure ensures the most current information on entry requirements.

Flight accessibility has improved across the region, with more direct flights from major markets. Vietnam boasts improved connectivity particularly from Europe and Australia, while Malaysia has strengthened its position with enhanced flight services, especially from budget airlines catering to regional traffic. This increased competition benefits travelers with more options and potentially better prices.

Key Points

• Malaysia welcomed 38.3 million foreign arrivals in the first 11 months of 2025, exceeding its entire 2024 total and securing the top spot in Southeast Asia for the second consecutive year.
• Thailand received 32.9 million arrivals for the whole of 2025, a 7% year-on-year decrease marking the first annual drop in international visitors in a decade outside the pandemic period.
• Malaysia extended visa exemption for Chinese travelers for another five years until 2026, with possibility of extension until 2036, and offers visa-free entry for Indian travelers until 2026.
• Thailand faced setbacks from kidnapping incidents, a deadly earthquake, border tensions with Cambodia, and severe flooding in 2025.
• Singaporeans form the largest group of visitors to Malaysia, with over 4.9 million in Q1 2025 alone, followed by Chinese and Indonesian tourists.
• Malaysia surpassed China as Thailand’s top source market in 2025, with 4.38 million Malaysian visitors compared to 4.36 million from China.
• Vietnam emerged as another strong competitor, posting 38.64% growth in 2024 and on track for 21 million visitors in 2025.
• Thailand launched the “Trusted Thailand” program to address safety concerns and restore visitor confidence.
• Thailand aims for 36-39 million visitors and 2.8-3.0 trillion baht in tourism revenue in 2026 under its “New Thailand” strategy focusing on high-value tourism.
• Despite fewer tourists, Thailand saw average expenditure per trip increase by 1.74% to 46,000 baht in 2025.