For the Preservation of World Heritage Site, Stadthuys, Melaka, Malaysia

Universiti Malaysia Terengganu Journal of Undergraduate Research eISSN: 2637-1138 Volume 2 Number 2, April 2020: 93-100 © Penerbit UMT

DOMESTIC VISITORS’ WILLINGNESS TO PAY (WTP) FOR THE PRESERVATION OF WORLD HERITAGE SITE, STADTHUYS, MELAKA, MALAYSIA

MUHD AZRIN SHAH RAZALI AND MAHIRAH KAMALUDIN*.

Faculty of Business, Economics, and Social Development, Universiti Malaysia Terengganu, Malaysia

*Corresponding authors: [email protected]

Abstract: This research explores the issue of local management system governing the heritage preservation in UNESCO World Heritage Site (WHS) Stadthuys, Melaka. Thus far, there is no clearly defned value of cultural heritage that justifes the benefts of preserving cultural heritage as a tourism product and as a sustainable heritage site. Most studies have proven that visitors in general are less interested in visiting cultural heritage sites due to the lack of information available there. Another issue identifed in the recent research on cultural heritage assessment is the lack of empirical references on the economic valuation of cultural heritage preservation. This study used contingent valuation method (CVM) and questionnaire for data collection. Four sets of questionnaires were designed and distributed to a total of 100 respondents consisting of local community and domestic tourists. On average, respondents are willing to pay RM8.82, in which this value is higher than the current fee, RM5.00, showing that visitors have the awareness to value cultural heritage through preservation in Stadthuys, Melaka, WHS. Finally, this research has established a framework to be considered by the management regarding the WTP value of the cultural heritage in order to create a more sustainable Melaka Historical City.

Keywords: cultural heritage, preservation, contingent valuation method, willingness to pay (WTP), stated preference.

Introduction artefacts and history of Melaka are stored in the Cultural heritage is part of a location’s identity, building. which is valued differently by the locals Most empirical studies on the conservation compared to outsiders like tourists. Heritage of cultural heritage have shown that the cost of Counts (2003) stated that a historical landscape is admission does not clearly defne the benefts of valuable in terms of existence, option, altruistic, cultural heritage (Fazamimah & Ariffn, 2015) community identity, and recreational. It also because the current prices for most heritage represents a potential revenue source through sources are no longer relevant to the current tourism and the use of building. Schaeffer and economy. With the increasing infation every Millerick (1991) posited that historical building year and the implementation of various new is high in value and offers many economic government policies, the local economy has opportunities within its neighbourhood. changed. Therefore, economic revision studies Stadthuys, which is in Melaka, Malaysia is should be conducted to obtain the real value one of the protected areas for the conservation that can translate the real benefts of cultural and protection of the world’s historical heritage heritage, thus contributing to the development of by UNESCO. Its red building portrays a strong local community, state, and national economies. historical evidence of the legacy of the Dutch Fazamimah and Ariffn (2015) also argued that in Melaka that used to be the administrative the lack of visitors to cultural heritage sites is centre of government. It has now turned into a due to the lack of dissemination of information historical museum. Furthermore, many ancient on tourist cultural tourism attractions. It is

Universiti Malaysia Terengganu Journal of Undergraduate Research Volume 2 Number 2, April 2020: 93-100 Muhd Azrin Shah Razali & Mahirah Kamaludin 94 signifcant to promote cultural heritage as a Logistic regression technique was used to resource and facilitate fnancial investment. estimate WTP (Hanemann, 1984). Using this Cultural heritage resources provide sustainable approach, the probability of saying “yes” to a bid development and illustrate many positive effects at different levels of the independent variable is on cultural, economic, social, and environmental estimated as below: conditions. P = (1 - e-x)-1 Tourist behaviour measures include their Where x is estimated regression logit interest and willingness to pay for responsible regression equation and P is the probability of tourism and holiday experiences to a heritage accepting the price. Mean WTP is estimated as site. Previous research proved that the greatest the area under this probability function. This success in infuencing visitors’ actions comes area shows the proportion of the population who from understanding what they think about would consume the good at each price level, and a particular behaviour especially about their associated utility. The area under the curve encouraging pro-environmental behaviour is estimated by integration techniques and can of visitors to act in ways that minimize be expressed as: environmental and experiential impacts of u tourism (Brown et al., 2010). a+ dPRICE -1 E(WTP) = ∫ L (1+e ) dPRICE where (1 + e’ a + bPRlCE) -1, is the Methodology probability of saying “yes” and U and L the upper Contingent Valuation Method (CVM) is one and lower limits of the integration respectively. of the conventional methods based on stated Estimating mean WTP within this preferences e.g. travel cost and hedonic price. framework relies on making some assumption Nowadays the use of this method is broadening about upper and lower limits of the integral to various research areas, and one of them is i.e. knowing the price amount at which the the cultural heritage tourism (Carson, 1997). probability of saying “no” is zero and the CVM measures the visitors’ willingness to pay probability of saying “yes” is one. Applying this using close-ended technique (CE). This study to Stadthuys Melaka, and if individuals will not employed CE as a WTP approach to estimate pay if they receive a disutility from it, negative the benefts of the cultural heritage preservation WTP can be ruled out and zero used as the lower efforts in Stadthuys, Melaka. limit. The CVM involved feld survey process Bishop and Heberlein (1979) used the upper includes informing respondents what is it range for the integration of their price amount as they are being asked to value, how it would the upper limit for the integration. Hanemann be provided, and how they would pay for it. (1984) argued that such an approach makes Individuals were asked whether they would pay assumption about the probability distribution specifc additional fees for a given commodity for the unknown WTP in the sample. He argued with possible responses being “yes” or “no”. that the upper limit should be infnity and that The bid amount varied across respondents using the highest offered amount may be a poor and the only information obtained from each approximation of the mean utility estimated individual is whether his/her maximum WTP is when integrating between zero and infnity. In above or below the bid offered. Their response this study, zero was chosen as the lower limit of either “yes” or “no” will change the future of of the integral and maximum value as the upper the Stadthuys as the world’s heritage site. The limit. Confdence interval of WTP was also information is presented in written or verbal calculated using the variance covariance matrix form and accompanied by photos and other and a technique adopted for dichotomous CVM visual contents to assist visitors’ understanding. (Park et. al., 1991).

Universiti Malaysia Terengganu Journal of Undergraduate Research Volume 2 Number 2, April 2020: 93-100 DOMESTIC VISITORS’ WILLINGNESS TO PAY (WTP) FOR THE PRESERVATION OF WORLD HERITAGE SITE, STADTHUYS, MELAKA, MALAYSIA 95

Data Collection variable showed that as visitors’ education level Providing information on the item being valued increases, the visitors’ WTP also increases. The is a fundamental component of a contingent increasing level of education helps visitors to valuation study. This study employed primary better understand the importance of preservation data and questionnaire as a data collection of world’s heritage site for future generation. 2 method. The survey was conducted in Stadthuys, The value of adjusted McFadden’s pseudo R is Melaka to obtain preservation awareness of the 0.6493. world’s heritage site through paying decision among domestic visitors. About 100 of domestic Table 1: Parameter Estimates for Contingent Valuation for Preservation of Cultural Heritage in visitors were involved in the study and the feld Stadthuys, Melaka site survey was conducted for one month in February 2019 at the targeted site. Selection of Variables Coeffcient sample size is a matter of choosing an acceptable Intercept 1.6425 level of precision within a given budget. The Age 0.1068* CV studies entail large sample size since large Income 0.0009*** variance in the WTP responses (Mitchell and Carson, 1989). In practise, most studies prefer Education 1.5973*** larger sample size with possible given according Log-likelihood -22.7077 to fnancial budget. Chi-square 84.07 McFadden R-square 0.6493 Results and Discussion Note: 5% (***), 10% (**) and 15% (*) The maximum likelihood estimates of the Based on the estimation results, equivalent specifcation for logit and the means of WTP WTP measures were calculated using logit were estimated using an econometric software, model (refer to Table 2). The calculated WTP Stata 15. An estimation of the model using means were ranged from RM8.32 to RM9.32 for all the socio-economic characteristics as the logit model based on 95% confdent interval. independent variables revealed that age, income, Therefore, the premium value of RM8.82 is and education level have signifcant positive taken as the conservative WTP measure. correlation with the visitors’ WTP as in Table 1. The chi-squared statistics shows that the model Table 2: Estimating the WTP Mean for the is highly signifcant. The variables of age of Conservation of Cultural Heritage in Stadthuys Melaka respondents were positive in its relationship towards dependent variable and signifcance at Lower Mean Upper limit 15% level. It was found that as the age of visitors’ limit 95% 95% confdent increases, they are willing to contribute for confdent interval preservation of the Stadthuys as UNESCO World interval Heritage Site, hence proving that respondents’ Logit 8.3178 8.8168 9.3158 maturity level will affect their decision on WTP. Model Meanwhile, “income” is highly signifcant at Source: Computed from feld survey 5% level and being represented as when income increases, visitors’ WTP also increases. Visitors Conclusion with higher income have more income and able to allocate their expenses to support positive The preservation of heritage buildings is vital as efforts for preservation and conservation at the it offers a sense of identity and continuity in a building. In addition, education has a positive rapidly changing world for future generations. relationship towards the WTP for preservation This study has shown that visitors to the and is highly signifcant at 5% level. The Stadthuys, Melaka are willing to pay more than

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