Malaysia’s departure levy will impact Indian incentive business, say DMCs

Malaysia’s Air Passenger Departure Levy, to become effective in July, will adversely affect inbound business events from India and China, according to destination management companies (DMCs), who are apprehensive that it will render the destination uncompetitive.

The Air Passenger Departure Levy to be imposed on departing passengers to overseas destinations will follow a two-tier rate structure – Malaysian Ringgit (RM) 20, about US$4.80, per passenger travelling to ASEAN member countries and RM40 per those travelling to all other international destinations. This fee is in addition to the RM73 passenger service charge already imposed at airports. D. Anthony, director of Luxury Tours Malaysia, said: “Why do we need to tax business and leisure travellers who have come to Malaysia and are spending money here? This will not incentivise them to choose Malaysia. We are already at a disadvantage to Thailand and Singapore as both are regional hubs with better flight connectivity. This departure levy will add to the disadvantage. Most of my company’s inbound business events are from China and India, both price-sensitive markets.”

Adam Kamal, general manager of Tour East Malaysia, said: “An additional US$10 can affect the decision of business event organisers when choosing a destination.”

Other inbound DMCs explained that in addition to the departure levy a tourism tax is in place. The industry had thought that once the levy was implemented, the tourism tax would be abolished. Since that is not the case, an additional charge could become a deal breaker. One way to continue to attract inbound business events groups would be to offer greater value by way of additional activities. Outbound incentives are not expected to be affected as companies are likely absorb the extra cost as they have to motivate their employees and channel partners regardless of the additional expense.