The Malaysian Tourism Federation (MTF) is calling for an efficient tourism allocation in the upcoming budget 2025 to revitalise the country’s tourism sector.
It is more than “pumping money” into the Ministry of Tourism, Arts and Culture Malaysia but advocating for a tailored approach which is crucial to ensure adequate funding and incentives are effectively channelled to private stakeholders and address the industry’s pressing challenges.
“Funding needs to be segmentalized accurately and channelled expeditiously into tourism infrastructure and facilities, products, incentivising key stakeholders, support private sector-initiated events and upskilling the tourism workforce”, says MTF President, Datuk Tan Kok Liang.
“In addition, the perennial challenges of the industry need to be tackled by the Malaysia MADANI government once and for all which includes overhauling the outdated tourism legislation and regulations, resolve entertainment tax issues, mitigate hike in operating costs especially manpower and utilities, upgrading of tourism vehicles and encourage domestic travel via tax reliefs.”
Given the competitiveness of the industry both regionally and globally, a robust tax incentive framework is needed to serve as a catalyst for tourism development. The Federation cautions that a “one size fits all” tax policy approach may not be suitable compared to a targeted approach under the current evolving circumstances.
For example, some locations in Malaysia are in dire need of a category 4 to 5 star hotel with international branding to attract high end tourists and provide better tourist experience, but it is perplexing that tax incentives are only given to category 1 to 3 star hotels. It doesn’t make sense as Malaysia as a tourist destination is still far behind other tourism destinations.
Towards that, MTF urged the policy-makers not to brush aside the proposals of the Malaysian Association of Hotels (MAH), Malaysian Association of Tour and Travel Agents (MATTA) and Malaysian Budget & Business Hotel Association (MyBHA). Taking grassroots opinions seriously is vital for progress.
Hotel associations have long advocated for investment incentives to promote sustainable development in the hospitality sector. While the government, through the National Tourism Policy, has set a clear goal of achieving a sustainable tourism industry by 2030, there still remains a lack of strong incentives to propel industry players toward this transition. We truly hope that the upcoming budget will finally prioritize and allocate funding to support this crucial initiative.
The traditional and currently available tax incentives for the past years up to budget 2024 need to be revisited, which includes pioneer status eligibility for up to 3 star category of hotels and convention centres, Income tax exemption for organising specific conference and sports events, investment tax allowance on building extension or modernisation, double deduction for overseas promotion expenses, tax exemption for motor races ,chartering of luxury yacht and special tax rates for film production. These incentives ought to be reviewed to ensure they remain relevant and practical to reflect the current business environment failing which it needs to be updated or repeal in budget 2025.
A broader and more inclusive tax incentives should be offered in budget 2025 to accelerate tourism development for significant sub-sectors of the tourism industry.
A glaring exclusion is the tax incentive for tour operators organising domestic or international tourists in Malaysia which was withdrawn in the year of tax assessment 2023. MTF urged the Ministry of Finance to reintroduce this incentive to support domestic travel and tax savings may be utilized for marketing activities.
To position Malaysia as a premier destination and increasing international arrivals have its complexities due to changing behavioural and travelling patterns and higher tourist expectations. It requires support and understanding from interlocking government agencies, more conducive policies and aggressive private sector driven initiatives backed by the government.
“We hope the budget allocation shall be monitored by the Ministry of Finance in preparation for Visit Malaysia Year 2026 (VMY 2026) with strong emphasis in infrastructure and facilities improvement, product development, enhancing and diversifying destination marketing, improving rural tourism infrastructure, expanding digitalisation and human resource development to drive tourism growth,” concluded Tan.
Source – MTF