Malaysian Tourism Federation urges government to implement diesel subsidy for van, tour bus operators

The Malaysian Tourism Federation (MTF) has urged the Malaysian government to implement an “immediate and substantial” diesel subsidy mechanism for van and tour bus operators, reported The Star.

According to MTF president Datuk Tan Kok Liang, floating diesel prices have inflicted severe financial losses on tour operators and travel agencies already dealing with an extremely competitive business environment. The matter of diesel subsidy is not just about passing the extra costs to tourists, but also about honouring contractual tour package arrangements and established obligations for the next six to nine months, he said.

Subsidy rationalisation for diesel fuel in Peninsular Malaysia commenced on June 10, seeing the floated retail price of diesel increase to RM3.35 per litre Euro 5 B10 and B20 diesel, and RM3.55 per litre for Euro 5 B7 diesel. Sabah and Sarawak continues to get retail diesel at the subsidised price of RM2.15 per litre.

Operators of tour bus services have appealed to the government to be added to the subsidised diesel control system (SKDS) programme, having said earlier this month that their exclusion from the targeted diesel subsidy list would result in them incurring losses. The subsidised diesel control system 2.0 (SKDS 2.0) for land transport began in March, while for private owners of diesel vehicles and agriculture smallholders, the subsidy assistance is dispensed via Budi Madani.

“Tourism business involves goodwill and relationships, and some of these key source destinations are particularly price-sensitive, especially the Indian, ASEAN, and Chinese markets,” Tan said in a statement, according to the news report.

Tan also called on the government to recognise that most tour operators are micro-, small and medium enterprises, and that they are already fighting for survival in a fiercely competitive regional and global market. To that end, Tan proposed an extension of the RM2.15 per litre rate in diesel subsidies for the sector up to March 31, 2025.

Additionally, the MTF president also proposed a minimum quota of 3,000 litres of subsidised diesel each month for each vehicle up to March 31, 2025. “Remedial action is critical to provide tour operators the necessary time to adjust to the new pricing structure and alleviate the financial burden caused by rising diesel costs. Tour operators are the backbone of our tourism industry and vital to our economy,” he said.

“While we understand and support the objectives of the Madani government and the rationalisation of diesel subsidies, the industry requires immediate and decisive support from public stakeholders to navigate this crisis,” Tan continued.

Each trip made by these buses on pre-committed rates prior to the subsidy rationalisation for diesel fuel incurred losses, making its unsustainable for tour operators, he added.

“Each month, tour operators are losing approximately RM3,600 per bus based on the average consumption rate of 3,000 litres per month and the diesel price increase,” adding that there are around 10,000 tourism vehicles on the road without targeted assistance for the next six months, and that tourism operators could lose more than RM100 million over the same period.

“The tourism ecosystem comprises multiple service providers and intermediaries. Ultimately, the final contractual party may have to bear the brunt of the increase,” Tan said in urging the finance, transport, and tourism, arts and culture ministries to act quickly and consider the federation’s proposals.

The Peninsular Tour Bus Operators Association stated earlier this month that operators would face a 30% increase in operation costs through the subsidy rationalisation. As of this month, a total of 33 types of land transport vehicles are eligible to receive subsidised diesel under the subsidised diesel control system (SKDS) 1.0 and 2.0 schemes, and the government is looking to include more vehicle types to be eligible.

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