KUALA LUMPUR, 30 October 2024: The Malaysian Association of Tour and Travel Agents (MATTA) organised a town hall session earlier this month with 53 MATTA ‘Bumiputera’ members involved in business with the government to address concerns and challenges implemented by the revised guidelines released by the Ministry of Finance, Malaysia.

New directives have raised significant concerns among travel agents, who play a crucial role in facilitating ticketing services for government-related visits and official trips of civil servants.

Concerns focused on PB 3.1 Public Service Expenditure Control Guidelines (2024) and PS 2.6 Corporate Credit Cards (May 2024 Amendment).

During the “town hall” discussion, MATTA Members highlighted two major concerns about the amendments:

Public Expenditure Control Guidelines (2024): The regulation stipulates that government officials are encouraged to use corporate credit cards to directly purchase airline tickets from the airlines instead of using travel warrants for official business. [Clause 3.15 PB 3.1].

PS 2.6 Government Corporate Credit Card: The credit limit for each Responsibility Centre (Pusat Tanggungjawab) has been raised from MYR1.8 million to a maximum of MYR2 million. [Clause 5.4 PB 2.6]. (The previous 2023 circular had a limit of MYR800,000.00 with a maximum limit of MYR1 million.)

Government departments, agencies, and government-linked companies (GLCs) are now favouring direct purchases from airlines and hotels, bypassing the use of travel warrants and travel agent services. The impact of this updated circular has rendered travel agent services unnecessary.

MATTA conducted a comprehensive survey among its members, and the results showed a major decline in the development of ‘Bumiputera’ travel agents’ businesses. The survey highlighted that 100% of travel agents have been providing valuable services including rescheduling, cancellations, itinerary changes, thus saving the government the extra cost on making new purchases when changes are necessary. Additionally, 65% of these agents covered their operational costs, indirectly preventing additional expenses for new bookings or ticket purchases.

“Purchasing airline tickets directly from carriers doesn’t always guarantee the lowest price. Airlines use dynamic pricing, where ticket prices fluctuate based on demand, timing, and other factors. As a result, even direct purchases are subject to price fluctuation, leading to cost unpredictability.”

“Travel agents help mitigate this issue by offering extra services such as access to negotiated rates, fare monitoring, and added support for cancellations or changes. These services ensure a more stable and sometimes cheaper purchase, as agents can lock in better deals and aid throughout the travel process. Thus, they offer a more reliable option than direct bookings with airlines,” said MATTA Deputy President Sheikh Awadh Bin Sheikh Abdullah.

Since 2023, 76.5% of travel companies have reported a sharp drop in profits, with 65% facing losses exceeding MYR500,000.00 in total since 2022. This financial strain has led to a 70% retrenchment rate across these travel companies. Since the last movement control order during the Covid-19 pandemic, they must work hard to rebuild their businesses.

MATTA understands the Government’s need for cost-saving measures. Still, it is important to implement a strategic approach that does not unintentionally restrain economic growth and limit the growth of local private sector businesses in a very challenging market space.

The tourism sector, especially travel agencies, is a pillar of Malaysia’s economic growth and development. The ‘Bumiputera’ travel agencies, as part of the Bumiputera Small and Medium-sized Industry (SME), contribute to the growth of the national Gross Domestic Product (GDP). They also create job opportunities for the people, thus improving the standard of community living.

This aligns with the policy of Ekonomi Madani: Memperkasa Rakyat and the Bumiputera Economic Transformation Plan 2035 (PuTERA 35), which emphasises support for small entrepreneurs, especially from the Bumiputera community. Every policy introduced should be evaluated more holistically, considering the direct and indirect impact on the country’s and people’s economic ecosystem.

MATTA concluded the government should revisit and reconsider the implementation of these two circulars by the Ministry of Finance to enable further opportunities for ‘Bumiputera’ travel agencies to serve the government-related departments, agencies and companies (GLCs).