THE tourism industry is hoping for added tax relief, lower travel costs and strategic aid in Budget 2023 to help boost the sector.

Malaysia Inbound Tourism Association president Uzaidi Udanis said operators have to fork out a lot of money to promote the country as a tourism destination internationally.

“We propose a special marketing grant for domestic and international marketing activities for business-to-business and business-to-consumer trade shows,” Uzaidi told The Malaysian Insight.

Tour bus companies have also been unable to renew their road tax as the sector is still recovering from the effects of the pandemic.

“There are very few group tours that hire 40-seater buses, many of which have not even had their road tax renewed.

“A conversion incentive should be given for normal tour buses to be converted into recreation or luxury vehicles,” he said.

Uzaidi also called on Putrajaya to set up more charter flights from countries with a large number of tourists coming to Malaysia.

“A tourism bank can be set up to help expand the industry which does not just involve the provision of hotels and chalets for tourists. There is also potential in medical, agriculture, youth and education tourism.”

Malaysian Chinese Tourism Association president, Paul Paw, said although tourism activities are up and running, a lot of improvements are needed.

“Hotels are still not 100% open and many face a lack of staff as well,” he said.

He hopes that the government will continue providing subsidies by waiving renewal fees for tour guide and bus licences.

The government should also find ways to promote Malaysia overseas by taking part in exhibitions, Paw said.

“We hope that the government will assist us in encouraging the youth to join the industry.”

F&B businesses affected by depreciating ringgit

Restaurant and Bistro Owners Association vice-president Jeremy Lim said with the ringgit at a record low, eateries are hoping that the government will not increase import tax rates in the upcoming budget, as it will push up the cost of running a business.

“If we can no longer bear the cost, we have to pass it on to customers,” he said.

“We hope the tax will not be adjusted for the next two or three years so that we can have room to breathe.”

Already critically stretched due to the lack of manpower, the industry is also reeling from the reduced working hours introduced by the government – from 48 to 45 hours a week, Lim said.

“This regulation will definitely impact us, we hope they will reconsider it.”

The reduced working hour rule was to take effect on September 1, but its implementation has been deferred to January 1, 2023.

This followed amendments to the Employment Act 1955, which aimed to safeguard workers’ welfare, in line with the International Labour Organization Convention.

The amendments will also allow employees to work flexible hours, where they get to choose the location, time and days of work.

This would include flexibility to work from home during emergencies, such as the Covid-19 pandemic.

Wage subsidies

President of the Malaysian Association of Hotels (MAH), Christina Toh, said there is a need for wage subsidies in Budget 2023 to keep the sector afloat.

She said MAH is asking for a lower wage subsidy than previously requested – 30% for employees with wages up to RM4,000, and 15% for those with wages up to RM8,000.

A minimum wage mechanism across the board does not encourage productivity or efficiency. Instead, MAH proposes an industry-based wage mechanism that is based on productivity, skills and tasks performed, she said.

Toh said a live on-demand, centralised tourism platform should also be set up, to plan for the sustainable growth of the hotel and tourism industry to ensure reliable supply and demand of tourism-related data.

“After suffering losses for two years, MAH is also seeking tourism recovery funding via soft loans that are interest-free or with low interest for reinvestment, upgrading, repair and maintenance of hotel properties as well as for operating expenses.

“To drive domestic tourism, individual tax relief for travel and hotel expenditure within the country is proposed at RM5,000 per year.”

Exemption of the sales and service tax for hotels should also be extended till December 2022, while the counter-productive tourism tax should be abolished to encourage high yield and long-stay international arrivals, Toh said.

Additionally, a special budget should be allocated to the Malaysia Convention and Exhibition Bureau and Tourism Malaysia to pitch for international events, she said.

Raising the SST threshold

Sri Ganesh Michiel, national president of the Malaysia Budget and Business Hotel Association, said the sales and services tax threshold on hotels should be increased from RM500,000 to RM1.5 million before their income becomes taxable.

“The previous threshold doesn’t conform with the current economic conditions and there is a need to review the taxable income in Budget 2023,” Michiel said.

He urged the government to address the issue of Short-Term Rental guidelines as unlicensed operators are causing the government losses in income from taxes and levies.

Online travel agents should also be regulated to ensure that fair commissions are paid, he said.

“Online travel agencies are charging 20-30% in commission, which is very high. I hope the government will intervene and set a reasonable commission rate.”

Michiel said grants should also be included in Budget 2023 and they must be made fuss-free to allow all hotels to participate.

Commercial electricity rates for hotels also need to be lowered to allow the industry to recover, he added.

The budget will be tabled on October 7. – September 11, 2022.