Malaysian Association of Theme Park & Family Attractions (Matfa) president Richard Koh said the law was counterproductive to new investments.
He said the colonial-era act was strongly anchored to the idea of entertainment being equivalent to a “sin tax” and used to be applied by the British to cabaret dancing, gaming, boxing, nightclubs and strip shows.
Koh said since then family entertainment had evolved much and had become more wholesome.
“Theme parks, waterparks and family entertainment centres are recreational activities. Zoos, museums, skating rinks, swimming pool activities and other participatory sports should also be classified as recreational businesses.”
Koh said theme parks were capital-intensive investments with returns on investment typically going through a long gestation period before the business breaks even or becomes profitable, adding that it involved a high capital investment to develop, construct and install rides.
“This is why Malaysia cannot realise its dream of becoming the theme park capital in the Southeast Asian region, as our regional peers don’t have this punitive entertainment tax,” he said in a statement.
Koh added that abolition of the entertainment tax would create job opportunities, provide entertainment at affordable prices and also allow for more investments.
In the immediate term to resolve the issue, Koh urged the government to freeze the Entertainment Duty Act 1953 for the next five years.
“For the medium term, revise the act to specifically exclude the theme park industry from the current tariff imposed under this act.
“For the long term, theme parks and family entertainment centres should be excluded from entertainment tax,” he said.
He said the abolition of the Entertainment Duty Act 1953 was crucial for the survival of the theme park industry, which attracts around 13 million visitors annually, contributed about RM3 billion to the country’s gross domestic product (GDP) and provided employment to 38,000 workers.
“We also seek the government to be more affirmative with all state governments to follow the federal government direction in at least providing the exemption until December 2022 while we work out a long-term solution.
“The survival (of the theme park industry) is in the hands of the government,” he said.
Meanwhile, regarding the 2022 budget, Koh said the special individual income tax relief for domestic tourism expenses of up to RM1,000 was lower than expected as it could hardly cover accommodation expenses, without considering transport and other expenses.
He also said although the RM20 million provided to the Malaysia Healthcare Travel Council might be useful, a higher allocation with targeted geographical emphasis (including Kuala Lumpur, Melaka and Penang) would be more welcome.