ALL HOPES ON BUDGET 2021

“Industry In Need Of Rescue Before It Is Too Late”

Wisma MAH, Ampang (6 Nov 2020) – While the much anticipated Budget 2021 is set to steer the country into economic recovery with high hopes on tourism, potentially the second most important industry for the country, the tabled budget fell short of tourism industry’s expectations. The industry however, acknowledges initiatives and allocations announced for public healthcare as well as to ease hardship of B40 and disabled persons.

The tourism and hotel industry are deeply concerned with the lack of immediate assistance to stakeholders forced under heavy cash flow burden due to travel restrictions both international and domestic. Overall Malaysia’s hotel occupancy fell to an unprecedented low in March at  approximately 5% when the Movement Control Order (MCO) was implemented, but slowly picked up and peaked over the National Day weekend at 42%, at a compromise of room rates. Discounts and promotions introduced by hotels to capture domestic tourism market contributed to a drop of average daily hotel room rates between 30-70%.

Recent survey conducted by the Malaysian Association of Hotels (MAH) reported immediate drop in hotel occupancy with the spike in Covid-19 cases at end of September 2020, with overall occupancy dipping to 35% on the first week of October, 30% the second week and eventually down to only 20% on the last week of October. The Government needs to acknowledge these indicators and that the industry is in need of more assistance.

So far from the announced initiatives under Budget 2021, little was mentioned on sustaining tourism businesses other than the extension of wage subsidy at the same amount of RM600 per employee per month which the industry had long voiced that the amount is insufficient when the industry had lost almost 80% of business.

The industry had repeatedly urged the Government to consider a higher amount based on percentage, 50% for employees with wages up to RM4,000 per month and 30% for employees earning RM4,001 to RM8,000. This model is adopted in many countries to support the industry and to protect jobs of the people.

While the exemption of HRDF levy for six months is much welcomed which the industry had proposed before, without higher cash assistances to businesses and again leaving loan moratorium at discretion of financial institutions and commercial banks, industry stakeholders especially hotels and travel operators are left stranded and will be forced to make difficult decisions as well as take drastic actions to survive.

The industry however is grateful that the Government is extending direct assistance to displaced airline employees, but the Government needs to look at the situation in entirety where airlines, an essential stakeholder of the tourism industry must also be protected.

Malaysia cannot afford and should not allow anymore closures in the tourism industry or risk even higher cost of rebuilding the industry and losing tourism capacity leading to loss of revenue in the long run.

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