KUALA LUMPUR, 28 OCTOBER 2024 – The Malaysian Association of Tour and Travel Agents (MATTA) had organised a townhall session on 7 October 2024 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 specifically on PB 3.1 Public Service Expenditure Control Guidelines (2024), and PS 2.6 Corporate Credit Cards (May 2024 Amendment).
These new directives have raised significant concerns among the Bumiputera travel agents, who play a crucial role in facilitating ticketing services for government-related visits and official trips of civil servants.
During the discussion, MATTA Members highlighted two major concerns from the amendments:
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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].
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PS 2.6 Government Corporate Credit Card: The credit limit for each Responsibility Centre (Pusat Tanggungjawab) has been raised from RM1.8 million with a maximum of RM2 million. [Clause 5.4 PB 2.6]. (The previous 2023 circular had a limit of RM800,000.00 with a maximum limit of RM1 million.)
Government departments, agencies, and government-linked companies (GLCs) are now favoring direct purchases from airlines and hotels, bypassing the use of travel warrants and travel agent services. The impact of this updated circular has rendered the use of travel agent services unnecessary.
MATTA carried out 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 own 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 unpredictability in costs.”
“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 compared to direct bookings with airlines.” – Sheikh Awadh Bin Sheikh Abdullah, Deputy President of MATTA.
Since 2023, 76.5% of travel companies reported a sharp drop in profits, with 65% facing losses exceeding RM500,000.00 in total since 2022. This financial strain has led to a 70% retrenchment rate across these travel companies who now must work hard to rebuild their businesses since the last movement control order during the Covid-19 pandemic.
MATTA understands the Government’s need for cost-saving measures, but 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 agents, 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) contributes to the growth of the national Gross Domestic Product (GDP) and creating job opportunities for the people; thus, improving the standard of community living.
This is in line with the policy of Ekonomi Madani: Memperkasa Rakyat and the Bumiputera Economic Transformation Plan 2035 (PuTERA 35), which emphasizes support for small entrepreneurs, especially from the Bumiputera community. Every policy that is introduced should be evaluated more holistically, considering the direct and indirect impact on the whole economic ecosystem of the country and the people.
MATTA urges the government to revisit and reconsider the implementation of these 2 circulars by the Ministry of Finance; thus, enabling further opportunities for Bumiputera travel agencies to serve the Government-related departments, agencies and companies (GLCs).