Kota Kinabalu: The Malaysian Association of Tour and Travel Agents (Matta) Sabah Chapter said the Ministry of Tourism, Arts and Culture’s (Motac) proposal to require a RM250,000 bank guarantee for the renewal of travel agency licences could marginalise smaller operators.
Its Chairman Mohd Azlan Saleh Abd Salam, speaking in his personal capacity, said the move could severely affect small and medium sized agencies across the State.
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Although intended to strengthen consumer protection, the requirement would place an added burden on smaller agencies still recovering from the financial impact of the Covid-19 pandemic, he said.
He was commenting on Motac’s announcement that the requirement would take effect on May 15, 2026, and apply to both Umrah operators and outbound travel agencies.
He said a higher financial threshold does not necessarily prevent fraud or misconduct within the industry.
“Even if the guarantee is increased to RM1 million or RM2 million, it does not automatically stop malpractice. It simply creates barriers that only well capitalised players can overcome,” he said.
Azlan warned that the policy could lead to market concentration, with only larger and financially stronger operators able to remain in business.
“This effectively opens the market to those with strong financial backing, while SMEs, many of whom are still servicing debts and rebuilding after the pandemic, are left with no choice but to exit the industry,” he said.
He explained that unlike previous requirements such as fixed deposits, which allowed some liquidity, a bank guarantee ties up funds entirely, depriving operators of essential working capital.
“The RM250,000 could otherwise be used to run daily operations, pay staff and serve customers. Locking it away undermines the financial viability of smaller travel agencies,” he said.
As an alternative, Azlan proposed that the ministry consider insurance based protection schemes, such as indemnity insurance, as a more sustainable way to safeguard consumers without crippling industry players.
He said insurance coverage of up to RM1 million could be obtained with an annual premium of between RM3,000 and RM7,000, a far more manageable cost than a RM250,000 bank guarantee.
“With insurance, pilgrims and customers remain protected, while travel agents retain the liquidity needed to operate. This approach is currently in use and has proven effective,” he said.
Azlan noted that the requirement would affect a wide segment of the industry, as it applies not only to Umrah operators but also to outbound travel agencies.
He urged the ministry to engage industry stakeholders and reconsider the policy to avoid long term damage to the travel and tourism ecosystem.
“Consumer protection is important, but it must be balanced against the financial realities faced by operators. A regulated insurance based system would achieve both objectives,” he said.
