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SST: Tourism Sector Braces For Price Hike

The SST hike, announced by Prime Minister Datuk Seri Anwar Ibrahim, will be effective nationwide from March.

The Malaysia Tourism Federation (MTF) said the increase in prices is due to a combination of factors such as escalating operating costs, global inflation, a weak local currency and the added 2pc SST.

This combination is expected to push overall hotel rates up by potentially 30 per cent.

MTF President Datuk Tan Kok Liang expressed concern over the cascading and compounding tax index in the supply chain.

He said the percentage of increase could be higher for budget and SME hotels as they have a lower pricing base.

Tan stressed that while the existing hotel rates are the lowest in the region, the impact of the hike on the tourism industry is unpredictable.

However, he believes that the low currency and visa-free policies can still attract foreign tourists from major source markets.

When asked about the government’s role in mitigating the impact of high rates on the tourism sector, Tan suggested that policy makers should look at the industry framework holistically, ensuring sustainability of the hospitality and tourism industry.

This involves serious engagement with tourism players and practical rebates and incentives to offset uncontrollable price hikes in the supply chain.

In Kuala Lumpur, Malaysian Hotel Association (MAH) president Datin Christina Toh reassured that despite the SST hike, Malaysia still boasts some of the lowest hotel room rates in the Southeast Asian region.

She also said that upcoming promotions and government support, including visa-free entry for tourists from China, India, and other Asean countries, would continue to attract visitors.

However, the Malaysia Budget & Business Hotel Association (MyBHA) National President Ganesh Michiel warned that hotel prices could soar by up to 50 per cent due to the cascading effects of the SST rate on the entire supply chain of the industry.

“As the tourism industry in Malaysia faces these challenges, it is clear that a balanced and thoughtful approach is needed to ensure the sustainability of the sector while maintaining the country’s appeal to both local and foreign tourists.”

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