Kuala Lampur:The Bahrain Grand Prix significantly boosted tourism and services in Malaysia during the fourth quarter. Economists are evaluating the overall financial impact to determine the feasibility of hosting Formula One races permanently.

According to BERNAMA News Agency, Dr. Geoffrey Williams from Williams Business Consultancy Sdn Bhd noted that the spending concentrated in Q4 would support end-of-year growth, even though Malaysia is already expected to post strong annual growth. He emphasized that the event offers a bonus to tourism spending and bolsters the ringgit through foreign currency inflows.

Hong Leong Investment Bank Bhd estimates that the Grand Prix in Malaysia could generate between RM1.1 billion and RM1.3 billion in economic output, with an output multiplier ranging from 1.5 to 2.1 times. The bank highlighted that each ringgit invested in the event potentially yields three times the economic returns, with F1 attracting a more affluent demographic whose average spending is significantly higher than typical tourists.

Juwai IQI's global chief economist, Shan Saeed, remarked that while RM1 billion in projected economic activity is meaningful, the composition of this activity is more critical than the headline figure. He described F1 as a fourth-quarter services accelerator, benefiting hotels, restaurants, aviation, transport, retail, and entertainment sectors through high-velocity spending.

Saeed also stressed the importance of international visitor numbers, their length of stay, daily expenditures, and the extent of spending that remains in Malaysia. He noted that foreign visitor spending represents an export of Malaysian services, making F1 an FX tailwind rather than a catalyst for the ringgit.

Discussing the potential for a permanent F1 return, Saeed stated that this year's race economics were attractive as Bahrain covered significant costs, allowing Malaysia to gain tourism and branding benefits without a heavy financial burden. He suggested that for a permanent slot to be viable, it would need to generate at least RM900 million to RM1 billion in incremental activity beyond the costs.

Williams added that the successful organization of the event could influence the decision to make F1 a regular feature in Malaysia, especially as the nation did not bear the hosting fees. The long-term profitability of such events depends on increased tourism, hotel occupancy, spending, and tax income.