Monetary incentives provided in a national budget in any country is bound not to please everyone, and that is the case in Malaysia’s Budget 2021 with the country’s tourism groups expressing disappointment that the incentives fell short of expectations.
The annual budget presented in Parliament last Friday, 6 November, was the biggest ever for Malaysia and the first by the Perikatan Nasional administration. A total of RM322.5 billion (US$297.7 billion) has been allocated, about RM7.8 billion more than the RM314.7 billion in the 2020 Budget. Titled “Resilient As One, Together We Triumph”, it aims to help the country cope with the economic impact of Covid-19 and pave the way for recovery.
The budget, tabled by Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz, has numerous ‘goodies’ to help resuscitate the travel industry amid Covid. One is the extension of the implementation of the Wage Subsidy Programme for another three months for the tourism sector (including the retail sector) at RM600 per month for workers earning RM4,000 ringgit and below, applicable for up to 500 employees.
The other tourism incentives are:
RM50 million for retraining programmes for 8,000 airline staff who lost their jobs
Human Resource Development Fund (HRDF) levy exemptions for companies in the tourism sector and those still affected by Covid-19 for six months
500 jobs for Orang Asli and local communities to become tour guides in all national parks to spur the ecotourism industry.
RM50 million for the maintenance and restoration of tourism facilities nationwide
RM35 million for the Malaysia Healthcare Travel Council to further empower the health tourism industry.
Special RM1,000 grant for traders, taxi drivers, e-hailing drivers and tour guides in Sabah
Tengku Zafrul said these allocations were to soften the effect felt by workers in the tourism industry, one of the sectors worst hit by the coronavirus. “The government is aware the tourism sector, especially aviation companies, are those most badly affected.”
Apart from these initiatives, there was little mention on sustaining tourism businesses in the current turbulent times.
Travel agents and hoteliers call for immediate assistance
This has led to both the Malaysian Association of Tour and Travel Agents (MATTA) and the Malaysia Association of Hotels (MAH) calling on the government for “immediate assistance” to rescue the industry before it is too late.
MATTA, in a statement, said the budget has failed to provide solid relief programmes to protect jobs and tourism businesses, and would not do much to help the tourism sector on its road to recovery.
“Given the vulnerable and fragile situation of the tourism industry, Budget 2021 does not take into consideration the welfare of 3.6 million workers in the field and SME tourism companies,” said MATTA president Datuk Tan Kok Liang.
“Travel demands will continue to diminish with the ongoing travel restrictions until a vaccine is widely made available.”
He added the budget also did not address the key issue of protecting jobs.
“The wage subsidy programmes should have been enhanced to avoid continuing lay-offs and the loan moratorium should be extended up to June 2021 for tourism businesses..”
He also said the budget did not include any incentive to boost domestic tourism, and was seen as “inadequate to empower the tourism industry during these challenging times.”
Additionally, the allocation of RM50 million for maintenance works and overhaul of tourism facilities was not enough to improve tourism products. “The future outlook for the next 12 months is bleak and without the right support, we will inevitably see the industry contracting quickly and drastically.” (This was MATTA’s Budget 2021 ‘wishist’)
In a separate statement issued today (9 November), MATTA highlighted the RM50 million allocated for the re-skilling and deployment programmes for the 8,000 airline staff that was retrenched.
“MATTA views this support as unfair and biased to only one sector, airlines, in the tourism industry which also consists of travel agents/tour operators, hotels, land transportation, F&B operators, shopping and others that employs more than 3.6 million people and contributes 15% to the national gross domestic product,” reads part of the statement.
The association said while it sympathised with the plight of workers in the aviation sector and “glad with the allocation of RM50 million to help them”, it felt support for re-skilling and deployment programmes for retrenched workers should include all workers in the tourism industry affected by Covid.
“In the travel agency/tour operator sector alone, for example with 5,000 travel companies on an average that had to lay off five staff per company it would be at least 25,000 workers. What about the other sectors in the industry with their number of workers retrenched?”, it added. (Read the full statement here).
The Malaysian Association of Hotels also shared MATTA’s view that more assistance from the government is needed to help tourism businesses survive.
The industry, however, acknowledged initiatives and allocations announced for public healthcare as well as to ease hardship of B40 and disabled persons, said MAH in a statement. (B40 is the base group that earns less than RM4,360 in monthly household income.)
“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,” it added.
The association revealed Malaysia’s hotel occupancy fell to an unprecedented low of 5% in March when the movement control order (MCO) was implemented. Occupancy slowly picked up and peaked over the National Day (31 August) weekend at 42%, but dropped to 20% in the last week of October when the country was hit by a third wave of Covid cases.
There is also a drop in average daily hotel room rates of between 30% and 70% due to discounts and promotions introduced by hotels to capture the domestic tourism market, MAH revealed.
“The government needs to acknowledge these indicators and that the industry is in need of more assistance.”
MAH opined the continued wage subsidy of RM600 per employee was insufficient, as the industry has lost 80% of its business and urged the government to consider a highter amount.
While the association welcomed the six-month levy exemption for the human resources development fund, the association said the industry required further cash aid to sustain business.
“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.”
Exacerbating the rather dire situation in the tourism sector is the reimposition of the conditional movement control order (CMCO) in all states in Peninsular Malaysia (except for Perlis, Pahang, Kelantan), as well as in Sabah and Sarawak. Starting today (9 November) and lasting for four week till 6 December, the CMCO is dealing a severe blow to domestic tourism as inter-district and inter-state travel is banned.
The domestic travel sector was only revived on 7 June when the country entered the recovery phase, which is scheduled to end 31 December. Life under this phase returned to near normal with travel between states allowed (interrupted now with the CMCO), although foreign tourists are still barred from entering the country and Malaysians from going abroad.
The government said the CMCO’s reimposition was necessary to break the chain of infection, as the number of Covid cases in the country has spiked in the last few weeks, ranging from over 800 to four digits daily.
Aviation sector needs more help
Meanwhile, the National Union of Flight Attendants Malaysia (Nufam) said the battered aviation industry need more help apart from the RM50 million allocation to retrain the 8,000 airline staff who were laid off.
The union’s president Ismail Nasaruddin was quoted in a report on online portal freemalaysiatoday.com as saying this was because more people from the industry are likely to lose their jobs in the near future.
He called for more protection to cushion the impact of the pandemic on airlines and tourism companies. “These are companies that have seen the most retrenchments. If this continues, then next year we could be seeing more lay-offs,” he said in the report.
Airlines in the country have been trimming their staff numbers. AirAsia and AirAsia X have laid off 10% of their 24,000 employees. Last week Malindo Air launched a retrenchment exercise with either termination or a year’s unpaid leave, affecting about 2,600 employees or more than half its workforce, .