Budget 2021: Subsidise PSC to woo foreign tourists, says academician

by BERNAMA / pic by BERNAMA

THE government should consider reducing passenger service charges (PSC) for international flights at all airports in the country to attract foreign tourists when the border reopens later, says an academician.

Currently, the gazetted PSC for domestic and ASEAN flight passengers at all local airports is RM11 and RM35 respectively, and RM73 for non-ASEAN international passengers.

Universiti Malaysia Sarawak’s (UNIMAS) economics and business faculty senior professor, Datuk Shazali Abu Mansor, said a cheaper airport tax would help to attract foreign visitors to the country.

He also said this would then create a great spillover effect for the economy and help boost gross domestic product (GDP) growth.

“We are relying on tourism, as such, we need to be more competitive compared to our neighbouring countries.

“It is a strategic move and this is an area that the government can consider to subsidise in Budget 2021 to attract more tourist and bring in more money into the country,” he told Bernama.

The PSC are set and regulated by the Malaysian Aviation Commission, an entity established by the government as an independent body to regulate economic and commercial matters of the aviation industry.

The tax is charged on all passengers departing the country for the use of airport facilities, and is collected by the airlines on behalf of the airport operator, Malaysia Airports Holdings Bhd.

Shazali pointed out that the airport should not be used as a platform to make a profit and the PSC collected should be just enough to cover the necessary costs.

“Sometimes we can see that the airfare is quite low, but the high airport tax adds up to the travel cost, making it more expensive,” he explained.

Malaysia’s international borders are still closed for general tourism, but the federal government has allowed those seeking medical care to enter the country beginning July 1.

On July 15, Tourism, Arts and Culture Minister Datuk Seri Nancy Shukri told Dewan Rakyat that Malaysia’s tourism sector is estimated to suffer losses of up to RM45 billion this year due to the closure of the country’s borders to curb the COVID-19 pandemic.

She said of the total, the international tourism segment was projected to suffer losses of more than RM31 billion, and the rest would be in the domestic segment.

At RM86.14 billion, the tourism sector is the third biggest contributor to Malaysia’s GDP growth after manufacturing and commodities.