Proceedings of the 3 rd Regional Conference on Tourism Research, 29-31 Oct, 2013, Langkawi, Malaysia.  Correlational Studies on the Impact of Tourism Industry Towards Malaysian Economy Mokthar Ismail Department of Economics, Faculty of Management and Muamalah, International Islamic University College Selangor, 43000 Kajang, Selangor, Malaysia (mokthar@kuis.edu.my ABSTRACT This paper elaborated on how tourism industry could contribute to the economic growth of Malaysia. It also highlighted the differences in term of modus operandi and economic contributions between tourism industry and other types of industry in Malaysia. Tourism refers to a form of economic transaction that imports its users into the home country that provides the services. This feature is unique as compared to other economic transactions that need to export goods and services to host countries in order to obtain financial gains. Secondary data was used to establish the correlation between tourism industry and Malaysian economy. The study found that there are strong correlations between tourism industry and economic growth variables of Malaysia. The findings also highlighted that tourism industry in the form of eco-tourism and agro-tourism could play significant roles towards rural areas’ economic development. Keywords: tourism industry, Malaysian economy, growth 1.0 Introduction To know Malaysia is to love Malaysia. This is the catchy phrase frequently used in promoting Malaysia to prospective tourist groups. Malaysia is truly Asia is another phrase used to reflect the reality of Malaysian society. As one of the ex-protectorate of British Empire for nearly 100 years, Malaysia inherited diverse racial and cultural backgrounds. The sons of the soil or Bumiputera live harmoniously with immigrants - mostly from the mainland of China and India. Today, both groups are known as Malaysian and pledged their loyalty to the King, Seri Paduka Baginda Yang Dipertuan Agong or the Supreme Head of Malaysia and the motherland. They are the rakyat or people of Malaysia. Malaysia has experienced positive and negative economic progresses for the last 56 years of independence. Never has the rakyat lost hope to the young nation. Lots of economic opportunities have been created and ready to be grabbed by entrepreneurial Malaysian. Among the major economic sectors in Malaysia is tourism. It refers to a form of economic transaction that imports users into the home country that provides the services. As long as tourism products and services are properly maintained and preserve by the host country, more visitors will come and enjoy them. High numbers of visitors bring positive spillover effects towards the economic performance of the country. Foods and beverage, accommodation, places of interest and transportation as well as other related industries would receive direct contributions from tourists. This feature is unique as compared to other economic transactions that need to export goods and services to host countries in order to obtain financial gains. Tourism sector is expanding exponentially and becoming increasingly important contributor to Malaysian economy. In fact, tourism industry is one of the country’s major foreign exchange earners (Melasutra, M.D., 2001). 2.0 Literature Review