The Malaysia Budget & Business Hotel Association (MyBHA®) strongly supports the Penang State Government’s implementation of the Private Homestay (Penang Local Authorities) By-Law 2026, describing it as an important step towards protecting legitimate accommodation businesses, safeguarding residents and tourists, while ensuring fairness and business legality.
The by-law, which came into effect on 1st August 2026, requires short-term rental accommodation (STRA) operators to obtain licences from the relevant local authority and comply with requirements covering operations, cleanliness, safety, prohibited activities and nuisance control.
It also empowers local authorities to inspect and investigate premises, take enforcement action and close non-compliant operations.
MyBHA® commends the Penang State Government, the Penang Island City Council (MBPP), the Seberang Perai City Council (MBSP), and State Local Government, Town and Country Planning Committee Chairman, Jason H’ng Mooi Lye for taking decisive action on an issue that has affected Malaysia’s accommodation industry for many years.
Dr Sri Ganesh Michiel, National President of MyBHA®, said: “Penang has demonstrated that effective action is possible when there is political will and a genuine commitment towards ensuring fairness and business legality”
“However, the effectiveness of this by-law will depend entirely on enforcement. Unlicensed operators must not be allowed to continue accepting bookings and profiting while legitimate accommodation providers comply with every legal requirement”
Under the framework, operators must pay a RM50 administrative application fee, an annual licence fee of RM1,000 for premises with up to three rooms, and RM200 annually for each additional room, subject to a maximum of two additional rooms.
An annual private accommodation fee of RM1,800 per unit also applies. Non-compliance may result in a fine of up to RM2,000, imprisonment of up to one year, or both.
MyBHA notes that MBPP received 364 complaints involving nuisance and safety concerns related to illegal private accommodation operations between 2020 and March 2026, while MBSP received 24 complaints during the same period.
These figures demonstrate the impact of uncontrolled accommodation activities on residential communities, including excessive noise, parking congestion, unauthorised access, overcrowding and increased maintenance costs.
The Association supports the local council’s prohibition of short-term rental accommodation operations in all stratified residential properties within its administrative area. Operations within the George Town World Heritage Site must comply with applicable heritage planning requirements, while MBSP will determine the relevant conditions within its jurisdiction.
“Residential properties must not be turned into unregulated hotels at the expense of the safety, privacy and well-being of local communities”
“A premises intended for residential use does not automatically become a lawful accommodation business simply because it is advertised online”
MyBHA stresses that licensed hotels comply with local authority licensing, planning approvals, fire safety requirements, employment regulations, insurance, taxes and other statutory obligations. Allowing unlicensed operators to compete without equivalent accountability creates an unfair operating environment, exposes guests to potential safety risks and contributes to possible revenue leakage.
“We are not asking for protection from competition. We are demanding protection from unlawful and unhealthy competition. “Licensed businesses cannot continue carrying the cost of compliance while illegal operators are allowed to profit from avoiding it”
The Association urges MBPP and MBSP to establish dedicated enforcement teams, conduct regular inspections, investigate complaints promptly and take decisive action against repeat offenders.
Enforcement must include joint operations involving relevant agencies, including local authorities, the Fire and Rescue Department, Royal Malaysian Police, the Royal Malaysian Customs Department, the Inland Revenue Board and other relevant bodies.
MCMC MUST ACT AGAINST ILLEGAL ONLINE ACCOMMODATION LISTINGS
MyBHA® also calls on the Malaysian Communications and Multimedia Commission(MCMC) to work closely with the Ministry of Tourism, Arts and Culture (MOTAC), the Ministry of Housing and Local Government (KPKT), state governments, local authorities and online accommodation platforms to identify and remove listings associated with unlicensed short-term rental accommodation.
The Association stresses that enforcement will remain incomplete if illegal operators can continue promoting their premises, receiving reservations and collecting payments through online platforms.
Accommodation platforms should be required to verify the licensing status of every property before publishing or maintaining a listing. All accommodation listings should display a valid licence number that can be verified against an official database. Listings without the necessary licences or approvals must be removed promptly.
Repeat offenders should be blacklisted, while platforms that knowingly or repeatedly facilitate unlawful accommodation activities should face appropriate regulatory action.
MyBHA also proposes a coordinated reporting mechanism through which local authorities can notify MCMC and relevant platforms when properties are found to be operating illegally, enabling the swift removal of associated listings.
“Illegal accommodation businesses cannot continue operating successfully without the online platforms that promote them. If a premises does not have a valid licence, its listing should not remain accessible to the public. MCMC must take a proactive role by working with the relevant authorities and digital platforms to identify unlawful accommodation listings and bring them down”
“There is little point in local authorities closing an illegal premises if the same operator can simply create another listing and continue accepting bookings online. Digital platforms must not become a safe space for unlawful business activities. If an accommodation operation is illegal on the ground, it must not be allowed to operate online”
MyBHA further urges all other state governments and local authorities to introduce similarly enforceable measures. The Association calls on the Federal Government, particularly MOTAC and KPKT, to immediately establish a coordinated nationwide framework governing short-term rental accommodation.
“This issue has been highlighted to the Federal Government repeatedly for years, yet meaningful nationwide action remains insufficient” Enough meetings, enough studies and enough delays. The industry needs clear regulations, coordinated enforcement and firm action against illegal operators. If Penang can act, other states can act. There is no justification for continued federal inaction while legitimate businesses remain disadvantaged.”
The national legal framework should cover mandatory licensing, planning approval, fire safety, guest protection, tax compliance, online platform verification and coordinated enforcement involving federal, state and local authorities.
MyBHA also calls for transparent reporting on enforcement outcomes, including the number of licence applications, premises inspected, illegal operators identified, online listings removed, premises closed and penalties imposed. MyBHA emphasises that sustainable tourism must protect residents, support lawful businesses, safeguard visitors and ensure that tourism growth benefits local communities.
“Penang has taken an important step, but the success of this initiative will be measured by enforcement, not announcements” Illegal operators must be identified, unlawful premises must be closed, and MCMC must work with the relevant authorities to ensure illegal accommodation listings are removed from online platforms “The law must apply equally to everyone: no licence, no listing, no booking, no operation.”
Press statement by Dr Sri Ganesh Michiel President for The Malaysia Budget & Business Hotel Association (MyBHA®)