Budget 2021’s allocations not sufficient to rescue Malaysia’s travel businesses, say tourism groups

Monetary incentives offered in any country’s national budget are not destined to please everyone, as was the case with Malaysia’s 2021 Budget, where the country’s tourism groups expressed disappointment that the incentives fell short of expectations.

Annual budget tabled in Parliament on Friday 6 November, It was the biggest ever in Malaysia and a first for a Perikatan Nasional government. Allocations totaled RM322.5 billion (US$297.7 billion), some RM7.8 billion more than the 2020 budget of RM314.7 billion. Titled “Resilience, Together”, it aims to help the country cope with the economic impact of Covid-19 and pave the way for recovery.

The budget proposed by Finance Minister Datuk Seri Tunku Zavrul Abdul Aziz has many “goodies” to help revive the tourism industry amidst Covid. One of these is the extension of the wage subsidy scheme for the tourism industry (including retail) for another three months to RM600 per month for workers earning RM4,000 and below for up to 500 employees.

Other travel incentives include:

• RM50 million for retraining program for 8,000 airline workers who lost their jobs
• Human Resource Development Fund (HRDF) exempts six-month exemption for tourism industry companies and those still affected by Covid-19
• Provide 500 jobs for Aboriginal and local communities to become tour guides in all national parks to stimulate the ecotourism industry.
• RM50 million for maintenance and restoration of tourist facilities nationwide
• Allocation of RM35 million to the Malaysian Medical Tourism Council to further enhance the capabilities of the medical tourism industry.
• Special grant of RM1,000 for businessmen, taxi drivers, e-hailing drivers and tour guides in Sabah

Tengku Zafrul said the grants were meant to lessen the impact on workers in the tourism industry, one of the sectors hardest hit by the coronavirus. “The government recognizes that the tourism industry, especially airlines, is the sector that will be most affected.”

Aside from these initiatives, there has been little mention of sustaining tourism during the current turbulent times.

Travel agencies and hoteliers call for immediate help

This led the Malaysian Association of Tour and Travel Agents (MATTA) and the Malaysian Association of Hotels (MAH) to call on the government to provide “immediate assistance” to save the industry before it is too late.

In a statement, Matta said the budget had failed to deliver a credible rescue package to protect jobs and the tourism industry, and would not do much to help put the industry on the road to recovery.

MATTA Chairman Dato’ Tan Kok Leong said: “Given the fragile and vulnerable state of the tourism industry, Budget 2021 has not taken into account the welfare of the 3.6 million workers in the sector and SME tourism companies.”

“Travel demand will continue to decrease as travel restrictions remain in place until a vaccine is widely available.”

The budget also fails to address the critical issue of protecting jobs, he added.

“The wage subsidy scheme should be strengthened to avoid continued layoffs and the loan moratorium for tourism businesses should be extended until June 2021.”

He also said the budget did not include any incentives to boost domestic tourism and was seen as “not doing enough to empower tourism in these challenging times”.

Also, the allocation of RM50 million for maintenance works and major repairs of tourist facilities is not enough to improve tourism products. “The outlook for the next 12 months is bleak and without proper support we will inevitably see a rapid and significant contraction of the sector.” (This is MATTA’s Budget 2021 “aspiration”)

In a separate statement today (Nov 9), MATTA highlighted the allocation of RM50 million for the retraining and deployment program of the 8,000 airline staff who were retrenched.

“MATTA believes this support is unfair and biased against an industry within the travel industry that also includes travel agencies/tour operators, hotels, land transport, catering operators, shopping and others employing over 3.6 million people and doing Contributing industries account for 15 percent of gross domestic product,” read part of the statement.

The association said that while it sympathizes with the plight of workers in the aviation industry and is “pleased to allocate RM50 million to help them”, it believes that support for retraining and deployment programs for retrenched workers should include all workers in the tourism industry affected The impact of the new crown epidemic.

“Only in the travel agency/travel agency industry, for example with an average of 5,000 travel companies and each company has to lay off 5 employees, this would be at least 25,000 employees. What about the number of layoffs in other sectors of the industry?”, it added. (Read the full statement here).

The Malaysian Hotels Association also agrees with MATTA that more government assistance is needed to help the tourism industry survive.

However, the MAH said in a statement that the industry recognizes the initiatives and allocations announced for public healthcare and to alleviate hardship for B40 and persons with disabilities. (B40 is the grassroots group with a monthly household income below RM4,360.)

“The tourism and hospitality industry is deeply concerned about the lack of immediate assistance for stakeholders forced to bear heavy cash flow burdens due to international and domestic travel restrictions,” it added.

The association revealed that hotel occupancy rates in Malaysia fell to an unprecedented low of 5% in March when the movement control order (MCO) was imposed. Occupancy rates slowly recovered and peaked at 42% over the National Day (August 31) weekend, but fell to 20% in the last week of October when the country was hit by a third wave of Covid cases.

Average daily hotel room rates have also dropped by 30% to 70% due to discounts and promotions launched by hotels to capture the domestic tourism market, MAH revealed.

“The government needs to acknowledge these indicators, and the industry needs more help.”

MAH believes that the ongoing wage subsidy of RM600 per employee is not enough as the industry has lost 80% of its business and urged the government to consider a higher amount.

While the association welcomed the six-month tax exemption for the Human Resource Development Fund, it said the industry needed further cash assistance to stay in business.

“Without providing more cash assistance to businesses and again leaving the moratorium on lending at the discretion of financial institutions and commercial banks, industry stakeholders, especially hotel and tourism operators, will be stuck and will be forced to make difficult decisions , and take drastic action to survive.”

All states in Peninsular Malaysia (except Perlis, Pahang, Kelantan) and Sabah have reimposed the Conditional Movement Control Order (CMCO), exacerbating the rather dire situation for the tourism industry. Beginning today (Nov. 9) and lasting four weeks until Dec. 6, the CMCO will deal a severe blow to the domestic tourism industry as inter-regional and interstate travel is banned.

Domestic tourism only recovered on June 7 as the country entered a recovery phase scheduled to end on December 31. Life is returning to near normal at this stage, with travel between states allowed (now interrupted by the CMCO), although foreign tourists are still banned from entering the country and Malaysians are still banned from going abroad.

The government said the re-imposition of CMCO was necessary to break the chains of infection, as the number of Covid cases in the country has surged in the past few weeks, ranging from more than 800 cases per day to four figures.

Aviation industry needs more help

Meanwhile, the Malaysian National Flight Attendants Union (Nufam) said the battered aviation industry needed more help, in addition to allocating RM50 million to retrain 8,000 laid-off airline workers.

A report by online portal freemalaysiatoday.com quoted union president Ismail Nasaruddin as saying that this is because more people in the industry are likely to lose their jobs in the near future.

He called for stronger protections to cushion the impact of the outbreak on airlines and travel companies. “These are the companies that have cut the most jobs. If this continues, we may see even more layoffs next year,” he said in the report.

The country’s airlines have been cutting staff numbers. AirAsia and AirAsia X have laid off 10% of their 24,000 employees. Last week, Malindo Air launched a layoff program that includes layoffs or furloughs for a year, affecting about 2,600 employees, or more than half of its workforce.

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