End of the Road for Many Tour Buses?

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Bernama recently reported that the Covid-19 pandemic has affected operators of more than 10,000 tour buses in the country, and they are also facing pressure from creditors for repayment of their vehicle loans.

While those buying private vehicles could obtain hire-purchase loans from banks governed by Bank Negara Malaysia (BNM), Bas Persiaran operators must turn elsewhere for financing as tour buses are deemed higher risks.

This demand is met by leasing companies that have been operating in Malaysia since 1973, and their business model resemble that of taxi companies that charged cabbies interest rates commensurate with higher risks plus the rental of taxi permit at around RM20 daily.

However, Bas Persiaran permits are granted only to companies licensed by the Ministry of Tourism, Arts and Culture (MoTAC). In turn, a number of these permits are rented out to individual drivers investing in tour buses and working as owner-operators.

As the number of foreign tourists to Malaysia has surpassed 20 million for the past 13 years, enterprising drivers have raked in good money from charters by tour companies, corporations and others. These drivers also enjoy side incomes from tipping by passengers and shops.

But this year, the number of foreign tourists and local demand will drop to a level so low that it is no longer viable to carry on with the business. An operator disclosed that the instalment for a tour bus is between RM12,000 to RM13,000 a month.

He claimed that due to the absence of loan moratorium on tour buses, most operators in dire financial straits are almost bankrupt. He called on the Ministry of Finance to restructure monthly payments. Otherwise, they could close shop in three or four months.

But leasing is under the purview of the Housing and Local Government Ministry and governed by the Moneylenders Act 1951 (Act 400) and Moneylenders (Control and Licensing) Regulations 2003, and Moneylenders (Compounding of Offences) Regulations 2003.

Leasing companies are adamant not to follow the six-month moratorium set by BNM. But if they have good reasons to allow only a two- or three-month moratorium, they ought to be more transparent instead of causing further consternation in the tourism industry reeling under a pandemonium caused by the prevailing pandemic.

Perhaps they are aware that six-month moratorium until September 2020 will make no difference, as tour bus operators will still be unable to earn enough to pay for monthly instalments from November.

Some people refuse to face reality and accept that Malaysia may never receive a large number of foreign tourists again, with the highest number hitting 27.44 million in the last Visit Malaysia Year 2014. It will be no surprise if we record less than seven million tourists this year.

Even for the whole of next year, the volume of business will not be enough to sustain the majority of tour bus operators. If this will be the case, any financial aid given would be like throwing good money after bad.

It is sad when tour buses are repossessed by leasing companies, but it will be a greater tragedy if operators obtain loans to continue operating a business that will eventually succumb, and it would be difficult to do business again with a mountain of debts.

Clearly, tour bus operators cannot continue with the same business model that has brought them success in the past. They must find or create new markets instead of remaining clueless. All of them are members of a trade association sanctioned by MoTAC.

The Ministry through these seven trade associations could run a contest for fresh proposals to revive tour bus services as they are needed to run inbound and domestic group tours. Sharing these concepts could also spark more ideas in the industry.

Through innovation, new and interesting tours can be created in every major city and town that could also boost the local economy. They can become so popular with the locals that these new tours, not found in Cuti Cuti Malaysia packages, could be conducted daily.

But if we were to continue dishing out more of the same by promoting existing tours, it will be the end of the road for many tour buses.

The views expressed here are strictly those of The True Net reader YS Chan from Petaling Jaya.