Malaysia tour prices to rise as fuel subsidies are withdrawn

Inbound tour operators are prepared to absorb additional costs to honour existing contracts as the Malaysian government scraps fuel subsidies from next month, but higher package rates are on the table for the next contracting period.

Said Adam Kamal, CEO, Rakyat Travel: “We will monitor rates over the next three months and decide on a new rate mechanism for the next contracting period. We will likely put a clause in that transport rates are subject to change. We have a clause now for foreign exchange rates.”

Likewise, S Jayakumar, operations manager, Dayangti Transport & Tours, said: “For the next contracting period, we will cost our tours higher with a bigger buffer, just to play safe.”

Luxury Tours Malaysia senior manager, Arokia Das, said: “Our coach and van providers have indicated that new rates will go up by 10 to 15 per cent in 2015. GST will also be introduced on April 1, 2015. Thus our package prices will increase by a minimum of five per cent next year.”

The government announced over the weekend that from December 1 it will no longer be providing fuel subsidies for RON95 petrol and diesel. Retail prices will be based on a managed float and tied to international crude oil prices. This follows a recent hike in fuel and diesel prices by 10 per cent on October 2.

Some tour operators were unhappy with the removal of the subsidy. Arokia commented: “What the government should do is to fix a price for the tour and travel industry. They should give us some form of subsidy as we are bringing foreign tourists to the country, who come here and spend and benefit the economy.

“Already, our tour packages cost the second highest in this region, after Singapore.”

-TTG Asia.