Travel Agent NewsBudget is good, but falls short of industry expectations.

Mixed feelings over US$390 million aid for Malaysia's travel trade

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Malaysia's travel sector said the budget missed some of the industry's expectations and hopes for better incentives and aid.
Malaysia's travel sector said the budget missed some of the industry's expectations and hopes for better incentives and aid. Photo Credit: Getty Images/Sean Pavone

Malaysia has revealed benefits amounting to RM1.6 billion (US$390 million) for the travel industry under the National Budget 2022 — but industry leaders are sounding mixed feelings over unmet expectations.

The Malaysian Association of Tour and Travel Agents (MATTA) had earlier in September sent an urgent plea to Finance Minister, Tengku Zafrul Abdul Aziz "to provide practical financial assistance" — since tourism companies are unable to benefit from tax-related incentives.

MATTA said that while several proposals raised in 29 October's budget are good, they were hoping for a more "generous" budget to help a badly injured industry since March 2020.

Said MATTA president Tan Kok Liang, "We welcome the targeted assistance to protect the tourism industry staff force through the extension of the wage subsidy programme while waiting for the gradual opening of border for international tourists.

"[However], the rest of the budget initiatives fall short of the expectations to rehabilitate and stimulate domestic travel."

The Malaysian Association of Hotels (MAH) agrees.

MAH President N. Subramaniam pointed out that while the industry had requested, and was given extension on the exemption of tourism tax and also personal income tax relief for 2022 — MAH's proposed amount was RM5,000 while MATTA asked for RM8,000.

This means that under the new budget, financial support only amounts to RM210 tax savings if under the main tax bracket, MATTA's Tan pointed out.

“There were also no tax incentives for local companies carrying out incentives’ trips or holidays for their staff within the country to boost domestic travel."

A general tourism marketing and operational budget was also not
mentioned in the budget.

MATTA’s Tan (left) and Subramaniam from MAH hopes that when more budget details emerge, it would include financing at zero or low interest to help the industry get back on their feet.
MATTA’s Tan (left) and Subramaniam from MAH hopes that when more budget details emerge, it would include financing at zero or low interest to help the industry get back on their feet.

Still, the sector still looks forward to an incentive fund of RM60 million encouraging domestic travel, and are waiting for more details of the RM600 million under the Penjana Tourism Financing and BPMB Rehabilitation scheme — [which] could be beneficial to stakeholders if made accessible at low or even zero interest.

This RM600 million would be for tour operators who have experienced at least a 30% dip in income, and the financing should benefit more than 26,000 employers and 330,000 workers, said the Finance Minister.

Subramaniam also welcomed the various funds for the upkeep and upgrade of tourism infrastructure; grants and promotional funding to encourage tourism, arts and culture initiatives; and the exemption of entertainment tax for operators in the federal territories.

A tax incentive for events has also been included in the budget, with Tan pointing out that the setting up of the new Business Travellers Centre in Johor will help improve the business travel segment due to its proximity to Singapore — a key contributor of foreign tourists’ arrivals to Malaysia.

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