High taxes will kill the theme park industry: Sunway CEO

Chan says a third of earnings would go to taxes alone (photo credit: Sunway Lagoon)

A high tax rate on Malaysia’s amusement parks industry is putting the existence of theme parks at peril, said operators, as they struggle with high overheads and stiff competition from regional rivals.

Sunway Group, which operates Sunway Lagoon Theme Park in Sunway City and Lost World of Tambun in Perak, has shelved plans for a new theme park in Johor due to high taxes.

Sunway has been lobbying extensively for the removal of the 25 per cent entertainment duty since it came into effect for the theme park industry in 2014, said HC Chan, CEO of Sunway Malls & Theme Parks.

Chan says a third of earnings would go to taxes alone (photo credit: Sunway Lagoon)

Responding to an email enquiry, Chan commented: “In our view, this ‘killer tax’ is detrimental as it places the industry in a very disadvantageous position and literally kills the industry. Adding to the predicament, the inclusion of the six per cent GST on top of the 25 per cent entertainment duty means a huge 31 per cent in taxes is levied on the industry. This means one third of earnings go to taxes alone – a very unsustainable practice. No other countries imposed this kind of high taxes on the industry.

“The government has heard our views and understands where we are coming from. From a tourism perspective, there is a lot of potential from the development of theme parks as they not only contribute to tourism revenue but creates spinoff of ancillary services and employment which has a positive multiplier effect. We are hopeful the government will remove the entertainment duty imposed on theme parks.”

Jeffrey Hanafiah, chief marketing officer at Movie Animation Park Studios (MAPS), agreed with Chan’s views that the high taxes are harmful to the industry and may discourage tourists from visiting attractions in Malaysia as other ASEAN countries that offer similar attractions at lower costs.

To counter this, he opined: “To command a strong market share despite of a higher pricing, the park offerings have to be very unique and attractive so that people will believe that it is worth spending the money at the park.

That said, Animation Theme Park (ATP), the registered business for MAPS, was granted an exemption from the entertainment tax until December 31, 2017. The entertainment duty for 2018 is capped at five per cent and this is absorbed by ATP and not passed onto visitors, revealed Jeffrey.

MAPS, which opened last year, is developed and managed by ATP, a joint-venture between Perak State Development Corporation subsidiary PCB Development and RSG MAPS.

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