Where does the tourism tax go? Here’s Penang’s story

Tourist arrivals to Penang has been on the rise since 2014. — Picture by KE Ooi
Tourist arrivals to Penang has been on the rise since 2014. — Picture by KE Ooi

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GEORGE TOWN, July 29 ― While sceptics are still holding out on the benefits of the federal government’s tourism tax, they might be able to get a good picture by looking at how Penang has bloomed from its collection over the past three years.

Tourism industry players told Malay Mail Online that tourist arrivals to Penang has been on the rise since 2014, when the state government first imposed a room fee for all guests at hotels rated one-star and above.

Hotel room occupancy rates have increased over the years and the state is expected to breach seven million visitors this year, all thanks to the hotel room fees collected and put to good use, said Danny Law, the Penang executive councillor in charge of tourism development.

The hotel room fee is set at between RM2 and RM3 a night, depending on the hotel’s star rating.

Penang has collected a total RM23 million from its tourism tax as at May this year, Law said in an interview this week.

“So, far, we have used about RM15 million from the funds to promote the state in international tourism trade shows, international conferences and to charter direct flights to Penang,” he said.

Who decides on the money’s use?

Law explained that the tax fund’s use are made by a 10-man committee comprising the state government and hotel industry players, and that their decisions are all for the purpose of promoting tourism in Penang.

The committee will be meeting again next month to approve allocation of another RM3 million to RM4 million to participate in conferences, trade missions and organise events, he said.

“One of it is a Seberang Perai Food Fiesta and we are also bidding for the World Latin Dancing Championship to be held here,” he said.

Law also said the fund is never emptied out as the committee might need some money to charter direct flights to Penang.

“We've chartered direct flights from Sanya, Hainan and Wuhan in China to Penang previously and if there is a demand, we can charter direct flights from Seoul too,” he said.

The Malaysian Association of Hotels Penang chapter chairman Khoo Boo Lim said the hotel room occupancy rates have increased between 4 to 5 per cent.

“The tourism sector in Penang has definitely benefited from the promotional efforts funded by the hotel room fees collection,” Khoo said.

Khoo, who is also in the committee, said they have recently started a digital promotional campaign in China to attract more Chinese tourists.

“The types of promotional events approved by the committee are not decided by the state but by all in the committee,” he said.

Association of Tourism Attractions Penang chairman Ch'ng Huck Theng also agreed that these promotional efforts have helped to promote Penang tourism.

“The government has been doing a good job with the money collected overall,” he said.

But Ch’ng also hopes the funds can also be used to create practical hospitality courses to groom those in the industry to play a better role.

“When we promote Penang, it is also important to make sure guests will have a good service from our tourism industry,” he said.

Penang recorded a total 6.7 million visitors in 2016 while the Penang International Airport recorded a 8.71 per cent increase in passengers.

The Penang government has been appealing to the federal government for the airport to be expanded as it only has capacity to handle 6.5 million passengers.

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