This article first appeared in The Edge Financial Daily on May 23, 2018 - May 29, 2018

KUALA LUMPUR: Local tour and travel agents have called on the Pakatan Harapan government to abolish the tourism tax, as the new government moves forward with its plans to remove the 6% goods and services tax.

The tourism tax, enforced on Sept 1 last year, applies to foreign tourists who are charged a flat rate of RM10 per room per night.

“The Malaysian Association of Tour and Travel Agents (Matta) has objected and expressed concerns to the ministry of tourism and culture on the tourism tax from day one as it would have impacted the tourism industry, particularly price-sensitive tourists, as well as long-haul travellers who spend longer durations in the country,” said its president Datuk Tan Kok Liang in a statement yesterday.

Tan pointed out that the amount of tourism tax collected is only a fraction of what the government gains from other forms of taxes, which are also less obvious compared with the “in-your-face tourism tax”.

“We welcome tourists to have an enjoyable holiday experience and spend freely on accommodation, food and beverages, tourist attractions and tour excursions, but collecting tax from tourists would be counterproductive,” he added.

He also noted that Malaysia’s tourism sector is trailing behind neighbouring countries such as Thailand, Singapore and the Philippines.

“Tourist arrivals for Asean countries recorded positive growth in 2017, with a 7.8% increase for Thailand, 6.2% for Singapore and 11% for the Philippines, while that for Malaysia dropped by 3% with 25.95 million tourists in 2017 compared with 26.76 million in 2016.

“Putting up more barriers may deter tourists from choosing Malaysia as a preferred holiday destination. Without the tourism tax, foreigners would be delighted to come to our country, stay longer and spend more freely,” said Tan, adding that Matta is ready to contribute to the discussions with the relevant ministries in reviewing and removing the tourism tax.