The Malaysian Tourism Federation calls for bold reforms in the national budget, advocating for strategic funding and a margin trading facility to boost tourism growth.
Ahead of the upcoming national budget presentation in parliament on October 18, the Malaysian Tourism Federation (MTF) is advocating for more strategic and effective allocation of tourism funding.
MTF is calling for a targeted approach to revitalise Malaysia’s tourism sector, ensuring that adequate funding and incentives reach private stakeholders, rather than being primarily channelled into the Ministry of Tourism, Arts and Culture.
Tan also emphasised the importance of addressing long-standing industry issues, such as updating outdated tourism laws, resolving entertainment tax concerns, managing rising operational costs (particularly in manpower and utilities), upgrading tourism vehicles, and incentivising domestic travel through tax relief measures.
In light of growing competition in the global and regional tourism sectors, MTF urged the government to establish a robust tax incentive framework to promote tourism development. Tan cautioned against a “one size fits all” tax policy, advocating for a more tailored approach that reflects the industry’s current needs. He called for a review of the existing tax incentives, which have remained mostly unchanged for many years, to ensure they are relevant and practical in today’s business environment.
He further noted the urgent need for four- and five-star hotels with international branding in some parts of Malaysia to attract high-end tourists and elevate the visitor experience. However, tax incentives currently only apply to one- to three-star hotels, a policy Tan described as illogical, especially considering Malaysia’s lagging position compared to other tourist destinations.
While the National Tourism Policy aims to achieve a sustainable tourism industry by 2030, Tan pointed out the lack of strong incentives to encourage industry players to pursue this goal.
Existing tax incentives include pioneer status eligibility for up to three-star hotels and convention centres, income tax exemptions for specific conferences and sports events, investment tax allowances for building upgrades, double deductions for overseas promotion expenses, tax exemptions for motor races, luxury yacht charters, and special tax rates for film productions.
MTF recommended that broader and more inclusive tax incentives be introduced in the 2025 budget to accelerate tourism development across key sub-sectors.
Tan also highlighted the removal of a key tax incentive for tour operators organising domestic or international travel, which was withdrawn in the 2023 tax assessment. MTF is urging the Ministry of Finance to reinstate this incentive, suggesting that the tax savings could be reinvested in marketing efforts to support domestic tourism.
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