In anticipation of the upcoming national budget presentation in parliament on October 18, the Malaysian Tourism Federation (MTF) is advocating for a more efficient allocation of tourism funding.
The goal is to revitalise Malaysia’s tourism sector with a well-targeted approach that ensures adequate funding and incentives reach private stakeholders, rather than simply funnelling money into the Ministry of Tourism, Arts and Culture.
MTF president Tan Kok Liang emphasised the need for precise allocation of funds to address pressing industry challenges: “Funding should be accurately segmented and swiftly directed towards improving tourism infrastructure, facilities, and products, while also incentivising key stakeholders, supporting private sector-led events, and upskilling the tourism workforce.”
He also stressed the importance of addressing longstanding industry challenges, such as overhauling outdated tourism legislation, resolving entertainment tax issues, managing rising operating costs, especially in manpower and utilities, upgrading tourism vehicles, and encouraging domestic travel through tax reliefs.
Given the intense competition within the global and regional tourism sectors, MTF called for a robust tax incentive framework to spur tourism development. Tan warned against a “one size fits all” approach to tax policy, advocating instead for a more targeted strategy that reflects current circumstances. He has called for a review of the current tax incentives, which have remained largely unchanged for many years, to ensure they remain relevant and practical to reflect the current business environment.
He elaborated that some areas in Malaysia urgently need four- and five-star hotels with international branding to attract high-end tourists and enhance the visitor experience. Yet, tax incentives are only provided to one- to three-star hotels. This approach is illogical, especially since Malaysia is still lagging behind other tourist destinations.
While the government’s National Tourism Policy sets a clear goal of achieving a sustainable tourism industry by 2030, Tan pointed out that there is a lack of strong incentives to drive industry players toward this transition.
“We sincerely hope that the upcoming budget will prioritise and allocate sufficient funding for this crucial initiative,” he stated.
These tax incentives include pioneer status eligibility for up to three-star hotels and convention centres, income tax exemptions for specific conferences and sports events, investment tax allowances for building extensions or modernisation, double deductions for overseas promotion expenses, tax exemption for motor races, chartering of luxury yachts and special tax rates for film productions.
MTF further recommended broader and more inclusive tax incentives in the 2025 budget to accelerate tourism development across significant sub-sectors.
One major exclusion highlighted by Tan was the tax incentive for tour operators organising domestic or international travel, which was withdrawn in the 2023 tax assessment. MTF urged the Ministry of Finance to reinstate this incentive to support domestic tourism, suggesting that the resulting tax savings could be used for marketing activities.
“We hope the budget allocation will be closely monitored by the Ministry of Finance, especially in preparation for Visit Malaysia Year 2026, with a strong focus on improving infrastructure and facilities, product development, diversifying destination marketing, upgrading rural tourism infrastructure, expanding digitalisation, and enhancing human resource development to drive tourism growth,” Tan concluded.
