KOTA KINABALU, 26 November 2024: Malaysian Tourism Federation (MTF) president Datuk Tan Kok Liang reiterates the call for immediate and sweeping amendments to the outdated Tourism Industry Act 1992 (Act 482), emphasising the urgent need to modernise Malaysia’s tourism regulations. 

He told local media that without decisive action, the sector risks losing its competitive edge and undermining the efforts of local stakeholders striving to sustain and grow this critical industry.

As a cornerstone of Malaysia’s economy, the tourism sector demands a regulatory framework that is agile, forward-thinking, and resilient against evolving business practices, technological disruptions, and shifting consumer expectations. The existing legislation needs to be revised to meet these challenges and must be overhauled comprehensively.

Tan stressed that the framework must address glaring gaps, including regulating short-term rental accommodation providers and e-hailing services while enforcing severe penalties on unlicensed operators and rogue travel agencies. These unregulated activities undermine legitimate businesses and erode consumer trust.

Furthermore, he highlighted outdated regulations, such as prohibiting individuals from holding shares in multiple travel companies, calling it illogical and counterproductive.

“What purpose does this serve?” he questioned. Instead of stifling growth, the tourism ministry should implement innovation by encouraging mergers, acquisitions, and resource-sharing initiatives among small travel agencies, enabling them to remain competitive in a challenging market.

“The current laws are killing progress,” Tan declared, urging the government to adopt a holistic and progressive approach to reform.

By embracing these changes, Malaysia can ensure its tourism sector remains vibrant, resilient, and vital to economic growth. Tan further emphasised the need for stricter protections to ensure smaller sub-sectors of Malaysia’s tourism industry remain in the hands of Malaysians.

He criticised the current policy, which permits 100% foreign ownership of inbound travel agencies with a mere RM1.5 million paid-up capital, describing it as detrimental to local businesses. “This policy creates an unlevel playing field, allowing foreign players easy entry into a low-capital business environment while sidelining Malaysian entrepreneurs,” he asserted.

Tan called for the tourism ministry to establish stronger barriers to protect local businesses and ensure they benefit from the surge in tourist arrivals.

In a recent Dewan Rakyat sitting, Deputy Minister of Tourism, Arts, and Culture (MOTAC) Khairul Firdaus Akhbar Khan acknowledged the need to revisit and review the Tourism Industry Act, responding to issues raised by Temerloh MP Salamiah Mohd Nor. Among the concerns highlighted was Section 6(1)(i)(iii), which mandates that every tour bus must have a licensed tour guide – a requirement that has been criticised for imposing unnecessary burdens on small-scale domestic operators.

Tan supported a balanced and pragmatic approach, acknowledging that licensed tour guides are critical to ensuring safety and enhancing the tourist experience. However, he strongly opposed a rigid, one-size-fits-all policy.

“Let’s not force this down the throats of tour and bus operators. Circumstances vary, and companies should be trusted to decide based on their specific needs, customer expectations, and safety considerations,” he argued.

He pointed out the inconsistency in regulations, questioning why hire-and-drive vans or e-hailing MPVs booked by tourists are exempt from requiring licensed guides. “This double standard must be addressed. Rules and regulations need to be realigned to ensure a fair and level playing field for all stakeholders,” Tan added. Ultimately, he called for the establishment of a fairer system that implements growth while maintaining high standards of safety and service.

By encouraging a more nuanced approach, the tourism industry can empower smaller businesses, nurture local talent, and maintain Malaysia’s reputation as a world-class destination without stifling progress through outdated and misaligned policies.

Industry players are also concerned about the glaring failures of the Tourism Industry Act 1992, exposed during the COVID-19 pandemic. “The pandemic laid bare the fundamental flaws in our regulations, particularly the outdated Fourth Schedule, which caused immense financial distress to travel agencies struggling with refund disputes. This provision is long overdue for abolition or a complete overhaul,” he stated emphatically.

MOTAC has repeatedly pledged to address outdated provisions, clamp down on travel package scams, and enhance enforcement mechanisms. Yet, despite these assurances, little progress has been made.

Stakeholders are increasingly frustrated by the lack of decisive action, questioning the government’s sincerity and commitment to delivering meaningful change.

“The Tourism Industry Act has stagnated for over two decades despite persistent calls for reform. We’ve seen four or five federal ministers come and go, but the Act remains frozen in time. The delay in modernising this legislation is a profound disappointment. The private sector, the lifeblood of Malaysia’s tourism industry, deserves better,” stressed Tan.

“We need a regulatory framework that supports recovery, encourages innovation, and aligns with contemporary consumer behaviours and business practices. Every day this reform is delayed, we fall further behind in an intensely competitive global market.”

Tan urged the government to stop paying lip service and take immediate, tangible steps to revamp the Act. “Stakeholders cannot wait indefinitely for change. Malaysia’s tourism industry needs leadership, vision, and bold action now.”