Budget 2023: RM200 million insufficient to revive tourism, say MAH, Matta

SHAH ALAM – The Malaysian Association of Hotels (MAH) believes that the RM200 million Budget 2023 allocation for tourism is insufficient to aid the recovery of the industry.

Its president Christina Toh said the amount allocated which was less than 0.5 per cent of the targeted tourism receipts of RM47.6 billion for the year 2023 will not be enough for the industry to recover from the downfall of domestic tourism since the pandemic began.

Toh however said the association appreciated the government’s acknowledgment of the tourism industry during the tabling of the budget.

“MAH appreciates that during the tabling of the budget, the government acknowledges that the tourism industry is one of the most affected economic sectors during the Covid-19 pandemic,” she said in a statement.

In the its 2023 plan, MAH had hoped for personal tax relief to be extended for domestic travel as well as discounts in assessment rate, quit rent and to re-introduce wage subsidy programme.

It also hoped for discounts to be provided on utilities such as electricity and water and to regulate the home-sharing industry such as Airbnb in providing a level playing field for all industry players.

“We laud the effort of the Tourism, Arts and Culture Ministry for its active engagement with all stakeholders to ensure the recovery and success of the tourism industry in Malaysia,” Toh said.

Echoing the same view that the budget for the tourism industry was insufficient, Malaysian Association of Tours and Travel Agents (MATTA) president Datuk Tan Kok Liang said the government should consider personal tax relief of RM5,000 for domestic travel.

The 2023 Budget that was tabled yesterday (Friday) proposed among others a RM500 million in Bank Negara Malaysia's Tourism Financing (PTF) with an increase of financing size from RM300,000 to RM500,000.

Tan said MATTA welcomed Bank Negara's initiative but the accessibility of the funds needed to be effective.

"In the previous Penjana Tourism Financing, the take up rate was low.

“The government had allocated RM600 million for MSMes, only RM67.5 million was approved as of October 2021,” he said.

In an effort to help tour operators, the government announced a 100 per cent tax exemption for operators who brought at least 400 local tourists or 200 foreign tourists a year.

Tan said this was a good start for new tourism companies as they could benefit from the tax exemption to improve cash flows and expand their businesses.

“However, the financial impacts on existing tourism companies are not effective because these companies have significant tax losses the last two years to offset future taxable profits if any,” he said.

On a separate allocation, the MATTA President said he was of the view that 50 per cent duty exemption on purchase of completely knocked-down (CKD) tourism vehicles (for rent, drive and tour busses) was a kind gesture as it would minimise the capital cost on locally purchased assembled cars and also benefit a segment of ground transportation operators.

“This is a kind gesture but to upgrade our tourism vehicles we need Completely Built Up (CBU) vehicles such as Toyota Vellfire, Toyota Commuter, and other high end vehicles to meet the high end tourist segment,” he suggested.

In addition, the reinvestment allowance for selected hospitality and tourism projects were introduced under the Income Tax Act 1967 yesterday.

Tan welcomed the fundings and subsidies as these infrastructures needed substantial refurbishment due to poor maintenance and cash flow constraints from the last two years.

“Loss-making companies are unable to benefit from the reinvestment allowances. However, it may encourage new investments into the leisure and hospitality industry,” he said.

Meanwhile, Affin Bank Group president and chief executive officer Datuk Wan Razly Wan Abdullah said the group welcomed the government's RM200 million allocation, which among others will be used for the promotion and marketing efforts of the tourism industry.

"Especially given that international travel is expected to increase with the reopening of borders around the world.

"The development of the tourism industry will further increase the demand for local products and services,” he said.