Ideally, now would be the opportune time to establish a tourism bank to help revive the ‘almost paralysed’ industry
by AZREEN HANI / pic by MUHD AMIN NAHARUL
INNOVATIVE financing is needed if local financial institutions remain conservative in its approach towards the paralysed tourism industry.
On top of the government’s recovery aid, the sector needs a new financing model after the pandemic demonstrated that conventional methods have limited capacity to aid tourism, said Malaysia Tourism Council (MTC) president Uzaidi Udanis.
“From various engagements and feedback we’ve had, we realised that banks in particular are hesitant to give out loans because we are the high-risk sector.
“We understand that banks are also worried about non-performing loans (NPLs), so why not open up (financing capacity)? Let foreign lenders, or investors, even cryptocurrencies to help the industry,” Uzaidi told The Malaysian Reserve (TMR).
“Let the market decide what is the best, and also for players to have other opportunities,” he said.
The MTC chief said the current financing method is too rigid for industry players, especially for small and medium enterprises.
“For example, some of the government aid would require only businesses that have ‘x’ amount to be eligible for it, but some businesses could not qualify as their companies’ paid-up capital is higher.
“So, it is the chicken and egg situation.”
Ideally, Uzaidi said, now would be the opportune time to establish a tourism bank, similar to Agrobank (Bank Pertanian Malaysia Bhd) which focuses on agriculture, to help revive the “almost paralysed” tourism industry.
“I think having a tourism bank would be good for us moving forward. Just look at Agrobank, before it was met with scepticism, but now even other banks are investing in the industry,” he said.
Uzaidi said it is not impossible to set up such a bank as Malaysia’s tourism industry has a good reputation and abundant products. The industry needs a good reset and policies, or it risks losing out to our neighbouring country of Thailand.
“We have a lot to capitalise on and not only from eco-tourism, such as in Lenggong Valley and Rompin, but also in Labuan for offshore businesses. We cannot be too rigid to get back on our feet post-Covid,” he said.
Uzaidi, who is also the Malaysian Inbound Tourism Association president, said for the inbound sector alone, the pandemic has cost about more than RM100 billion.
The number could be higher, he said, as the industry had spent more in 2019 in anticipation of Visit Malaysia Year last year.
“We prepared up to 300 buses for inbound travellers and we had only one busload coming early last year, “ he said, noting that while some were lucky to pivot their businesses, others had to fold their businesses.
In 2019, Malaysia received 26 million foreign tourists with a revenue of RM89.1 billion, exceeding the exports of palm oil at RM70 billion and rubber gloves at RM22 billion.
Uzaidi welcomed the government’s decision to open up a tourism bubble project in Langkawi, saying it would pave the way for more destinations before the monsoon season, especially in the East Coast.
“I appreciate the government’s engagements with us, just as recently we had (a meeting) with Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz. It’s important for us to recognise that we cannot work in silos if we want to restart,” he said.
Meanwhile, the Malaysian Association of Tour and Travel Agents (Matta) urged the Ministry of Finance (MoF) to be specific in its allocation for the industry to make a comeback.
“Don’t ignore the industry now just because borders remain closed and because there is not much tourism activity. Our companies are in bad shape due to regulatory constraints imposed by the government, while other countries are recovering at a faster rate in their battle against Covid,” Matta president Datuk Tan Kok Liang said in a statement yesterday.
“As borders have remained closed for the last 18 months and with just a small travel bubble for Langkawi, we plead with Tengku Zafrul to provide targeted assistance for tourism businesses and workers directly affected.
“This includes providing an extension of the wage subsidy and automatic bank loan moratorium and waiver of interest at least until the end of this year for borrowers directly impacted by the pandemic,” he added.
Matta also said that the MoF needs to provide practical financial assistance beyond tax incentives or tax rebates or deferment of tax instalments, which players are unable to benefit from as they have already accumulated tax losses in 2020 and 2021.
“We urge the minister of finance to announce direct and accessible financial support in the national Budget 2022 next month,” said Tan.