Budget 2023 won’t help long-term recovery of hotel industry, says budget hoteliers

THE MALAYSIA Budget and Business Hotel Association (MyBHA) is of the view that Budget 2023 is unable to provide a positive, long-term effect toward the recovery of the hotel industry, and called for a special industry Budget to be drafted instead. 

Among the RM200 mil allocations for the tourism industry that were announced by Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz yesterday (Oct 7) include: 

  • A 100% tax exemption for statutory incomes, covering monthly salaries, commissions, bonuses and allowances for tourism operators; 
  • An excise duty exemption for completely knocked-down vehicles, such as rental cars and tourist buses, used in the sector; 
  • An RM90 mil grant to promote tourism activities in the country; and
  • RM10 mil for upgrading eco-tourism attractions.

MyBHA national president Dr Sri Ganesh Michiel also “thanked” the Government for acknowledging that the tourism sector has been severely affected by COVID-19 and has not yet reflected the achievements before the pandemic. 

Ganesh said his association previously outlined issues that should be emphasised by the Government in preparing Budget 2023 and expressed hope that Putrajaya would consider helping the hotel industry survive and gradually recover in the years to come. 

Dr Sri Ganesh Michiel

“However, we think that Budget 2023 cannot have a positive long-term effect towards the recovery efforts for the hotel industry,” Ganesh said in a statement. 

He said Putrajaya should have introduced a Budget that is “more effective” in solving the threats to the industry and recovering losses from taxes and revenue leakages. 

He said these losses came about due to the absence of specific laws to regulate Short-Term Residential Accommodations (STRA) and Online Travel Agencies (OTAs), which have impacted the hotel industry. 

“No tax incentives for domestic tourists” 

Besides that, he said the Government did not introduce any kind of tax incentives for domestic tourists to mobilise or encourage people to travel within the country and re-stimulate the tourism and hotel industry.   

“It (the Budget 2023 allocations for tourism) will not have the maximum effect for the recovery of the industry when the arrival of foreign tourists is still low and Malaysians choose to travel abroad,” he noted. 

The Government has targeted the arrival of more than 15 million foreign tourists in 2023 with an income value of RM47.6 bil.  

“We are also disappointed (that) there is no change in efforts to raise the annual threshold value of the Sales and Service Tax (SST) for the hotel industry from RM 500,000 to RM1,500,000,” Ganesh added.  

Ganesh said Budget 2023 could have been drafted better for the sustainability of the hotel industry in realising the recovery of the industry and being more “attentive” to industry stakeholders who were already struggling before COVID-19 and whose plight has taken a turn for the worse with the latest state of the economy.  

“We would also like to request the Government to extend the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 to provide special protection to those in the hotel and tourism industry from banking or financial institutions and property owners,” he added. 

Contrasting Ganesh, vacation rental company Airbnb welcomed the new tourism-related commitments and incentives, saying they will contribute to building a more “resilient, inclusive and sustainable” tourism industry in this critical time of recovery.

“We commend the Government’s provision of RM1.5 bil dedicated to tourism financing and a further RM200 mil to tourism rejuvenation efforts,” said Airbnb’s head of public policy for Southeast Asia Mich Goh in a statement.

“In particular, we believe that the allocations of RM90 mil to promote tourism programmes and RM25 mil in discounts, vouchers and rebates of up to RM100 will encourage domestic tourism spending and further drive tourism recovery.”

Goh added that the group continues to urge the Government to extend these ongoing initiatives and new incentives to the STRA industry, which she said was a key contributor to the tourism economy. – Oct 8, 2022  


Main photo credit: Agoda 

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