Travel Agent NewsFurther delays in disbursing the government’s RM10 billion (US$ 2.31 billion) aid to small- and medium tourism enterprises could hurt survival

MATTA calls for simplified procedures for loans to tourism businesses

By
|
The Malaysian government’s RM10 billion aid package provides a lifeline for the country’s two million small- and medium enterprises (SME), of which tourism makes up an estimated one million businesses.
The Malaysian government’s RM10 billion aid package provides a lifeline for the country’s two million small- and medium enterprises (SME), of which tourism makes up an estimated one million businesses. Photo Credit: Getty Images

KUALA LUMPUR – Almost 70% of travel agencies in Malaysia have reported they will not be shuttering business, according to a survey the Malaysian Association of Tour and Travel Agents (MATTA) conducted among its members.

While that is good news, further delays in loan processing could be costly for Malaysia’s travel agencies and tour operators struggling to keep afloat in the coming months.

The government’s RM10 billion (US$ 2.31 billion) third stimulus package in April provides a lifeline for the country’s two million small- and medium enterprises (SME), of which tourism makes up an estimated one million businesses.

In a webinar organised by MATTA (29 April) on financing and leasing options for agencies, the association’s president Datuk Tan Kok Liang called for more simplified procedures for loan processing in view of the unprecedented challenges the industry currently faces.

Mr Tan said that while the industry is grateful for the government’s relief, travel businesses face specific challenges in meeting the criteria required by banks when disbursing loans.

In a recent survey of MATTA members, nearly 60% have applied for loans from banks, but only 21.1% have secured approval, while 38.3% are pending approval.

According to the Association of Banks in Malaysia, some 1,300 loans applications have been approved as of 2 April. It is unclear how many approvals are for companies in the tourism industry.

Banking group Alliance Bank Malaysia Berhad’s Ernest Kwong, head, group SME, said that it has approved 722 loan applications totalling RM5 million, and as of Tuesday (28 April) evening, 80% have been allocated funds and approved by the Central Bank of Malaysia.

When asked about the challenges faced by banks in processing loan applications for travel agencies, Mr Kwong cited the difficulty in verifying whether agencies are operating unless they are referred to by an existing customer.

Another challenge is establishing the company’s financial position and loan repayment. “If a company is reporting losses for past three years prior to Covid-19, this will restrict their viability for the loans,” he said.

The road ahead for recovery will be long, says MATTA’s Mr Tan, who foresees the first bookings from August and September onwards and a ramp up towards the last quarter of 2020. Based on this timeline, it could mean the industry will see some stabilisation by June next year.

“That said, it depends very much on travel confidence. While we know that for the past years, travel has become an integral part of our lifestyle, much will depend on boosting confidence for travellers. This will involve new ways of travel and embracing new culture, with biosecurity procedures and precautions,” he said.

JDS Travel News JDS Viewpoints JDS Africa/MI