In an effort to position Malaysia as a premier duty free shopping destination, the Malaysian Government recently announced the waiver of duty on roughly 400 imported goods beginning in January 2011. The tax will be waived to attract a wider range of luxury brands to invest in Malaysia. The move also facilitates competitive pricing of imported merchandise, giving Malaysian retailers a competitive edge over retailers in other countries.
Malaysia’s introduction into duty free shopping began in 1987 when the island of Langkawi was established as the first duty free zone. Since then, the islands of Tioman and Labuan, and numerous other towns have followed suit. “Duty Free Zones” offer items that are exempted from import duties but are available only in designated shopping zones around Malaysia.
As shopping marks a major component of tourism revenue, focus is being placed on three main areas. The first is the implementation of tax exemptions on a wider range of goods. Next is the promotion of the Bukit Bintang/KLCC shopping district as the premier shopping hub, and the development of three new premium outlets.
Although the tax exemptions currently apply to only selected merchandise, it certainly adds appeal to Malaysia’s yearly sale carnivals: Malaysia Grand Prix Sale, Malaysia Mega Sale Carnival, and Malaysia Year End Sale. The carnivals increased tourist arrivals to Malaysia and set new shopping trends amongst the locals.
The success of these sale campaigns is evident in the growing number of tourist arrivals and tourism revenue each year. In 2009, shopping amounted to 28.3% of the total tourist receipts of RM53.4 billion. The waiver of tax on a wider range of goods may become a key reason for visitors to vacation in Malaysia.
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