Collect Departure Tax But Reinvest It In Aviation Industry: Analyst

SERDANG (Selangor, Malaysia), Dec 21 (Bernama) -- Malaysian government, which is expected to collect US$215.36 million (RM900 million) per annum through the newly-introduced departure levy, should re-invest the money back into the aviation sector and not for any other purpose, Maybank Kim Eng Analyst Mohsin Aziz said on Thursday. Malaysia’s air transport infrastructure is currently ranked as 21st best in the world and the levy could be utilised to improve facilities and boost the ranking further, he said. "I believe the industry needs the money for investment and sustainability in the future," he told reporters on the sidelines of the Aircraft Airworthiness and Challenges in Ensuring Commonality of Regulations within ASEAN forum here. The departure levy of US$4.78 (RM20) for ASEAN destinations and US$9.57 (RM40) for beyond the region will take effect on June 1 next year. The levy was announced during the tabling of the 2019 Budget to increase the government revenue and to encourage domestic tourism. Mohsin, who was one of the speakers at a public forum titled Should Malaysia Charge Departure Levy For Air Passengers? revealed that the aviation industry actually pays very little tax and it is insufficient to cover the entire expenses of the industry which totals up to RM1.2 billion yearly. This is on top of the RM1.8 billion capital expenditure requirement, he said. Besides, in terms of tax burden, Malaysia is ranked third cheapest in Asia and seventh in the world. Hence, the departure levy can be seen as an attempt to improve the industry’s revenue stream and sustainably upgrade the facilities, system and hire more manpower, he explained. Mohsin said the industry’s revenue in 2018 is expected to be about RM1.17 billion, which is lower than the amount needed to finance the operation. He, however, hoped the government could exclude the departure levy on children to lessen parents’ burden. He also suggested the government start imposing the levy at RM10 for ASEAN destinations and RM20 for destinations beyond ASEAN so as not to shock the passengers. These, Mohsin said, can be gradually increased over a two-year period. The government should also be transparent with the collection and how it would be used, he added. (US$1 = RM4.18) -- BERNAMA