All is not well with tourism industry in Penang – graft and scandals untold

 |Aug 2, 2017


ESCAPE theme park founder claims his park has been boycotted by many quarters, including taxi operators to tour organisers over refusal to pay kickbacks to them. – Facebook pic

GEORGE TOWN: Under-table payments, intimidation, corruption and other issues are said to be plaguing the tourism industry in Penang, which is headed for doom if these are allowed to go on.

This was pointed out by several industry players in the tourism sector in Penang, frequent visitors to the state, and one being a specialist on global theme parks and tourism.

Sim Choo Kheng, the founder and CEO of Dubai-based Sim Leisure Group, whose company has designed and built high-profile theme parks in more than 50 countries, claimed corruption was the order of the day in the tourist attraction business in Penang.

Sim Choo Kheng says his theme park refuses to pay ‘duit kopi’ to secure business.

Describing the industry in Penang as “very corrupt”, Sim claimed that many quarters, from taxi operators to tour organisers, have demanded kickbacks from his ESCAPE theme park and other tourist attraction centre operators in Penang. His theme park refuses to pay “duit kopi” to secure business.

He claimed some organisers have even resorted to violence and aggression when their demands were not met, which has also resulted in his theme park in Teluk Bahang being boycotted and he and his ticketing staff facing threats and intimidation since its opening in 2012.

“We’ve been facing boycotts from day 1 but we will never give in to intimidation tactics. As a result of these boycotts, ESCAPE had to work harder, to innovate to enhance customer experience and our reputation, which in turn has given us positive ‘word-of-mouth’ marketing. Hence we do not have to rely on kickbacks to drive the business.”

“Like many theme parks around the world, we give legitimate discounts to all registered tour agents, and it’s then entirely up to them to package it to promote our theme park and earn their profit margin.

“But this is often not what we find in Penang as tour companies bring their guests to ESCAPE and then their employees would ask for kickbacks and ‘parking fee’. This bribery system is now rampant with many places in George Town giving a standard 50% in kickbacks.

“We even have a travel agent bring three bus loads of students from Kuala Lumpur who then refused to let the students leave the buses when we refused to pay them a ‘parking fee’.

“I find it disappointing many tourism bodies leaders are justifying the bribery system under different names such as calling it as commissions and incentives with many justifying that such a system has been around for a long time.

“The many tourist places that are boycotted and intimidated because they won’t pay ‘under-table money’ is a manifestation of a corrupt practice. It’s as simple as that and there is no other explanation or ‘excuse’.”

Sim recalled how he was yelled at during a meeting in a tourism event years ago with one of the members allegedly saying giving kickbacks was the only solution to avoid their business from going under.

“Another very senior player in the industry advised me “not to bring Dubai standards to Penang,” he claimed.

When asked about the Penang tourism direction, Sim sums up “Having been involved in many tourism development projects overseas, it breaks my heart to see my Penang missing the tremendous opportunity.

“It’s quite pointless to explain as most of the industry players are entrapped in their own blinkered vision.

“Just how much can we progress when the tourism industry and association leaders don’t see how wrong it is for the industry to compete based on the size of the kickbacks – you don’t have to be good, you just have to bribe. As long as the system is corrupt, there can be no progress.”

Sim said he had gone to the authorities several times to report the matter but was met with surprise.

“They told me they were not aware that such things were happening in the industry.

“It’s time for that to change and for corruption to stop,” he told Malaysia Outlook.

Sean Connell, a tourist from Ireland who has been a frequent visitor to Penang since 2010, said that he was surprised that taxi drivers would often try to talk him out of visiting a certain place he wanted to visit and recommended some other outlets and once was even driven to the “recommended place” against his will.

“At first I thought it was strange but after having speaking to a friend I learnt that taxi drivers were getting kickbacks for the number of tourists they bring to a certain tourist attraction by the operators of such places.” said Connell.

A prominent expatriate hotel general manager who spoke on grounds of anonymity, confirms such scams are very widespread. “I have many of my hotel guests taken to some chocolate and coffee outlets to shop without them asking. Such incidents have compromised my guests’ holiday, and in a way, their safety.”

A former taxi driver, Prabagaran, admitted that there is indeed such a practice and the tourist outlet operators would pay them between five and ten ringgit for bringing potential customers to their places.

“On top of that, sometimes we get sales commission too if they buy certain items such as souvenirs or foodstuff,” he said.

A check by Malaysia Outlook confirms this pactice, with certain taxi drivers and tour organisers making recommendations of “better places to visit” in Penang.

A worker at a tourist attraction in Penang also told Malaysia Outlook that sometimes there would be agents of other tourist attraction places hovering around offering guests free rides to other “more interesting” places.

Another tourist from Germany, Emmi Petrache, said she was shocked to come back to Penang after only two years to see what was happening on the island.

“What has happened to the Penang I used to know? I miss the old charm of Penang… everything is so plastic now and everywhere I turn is just another over-commercialised tourist spot selling almost the same things that are not even locally made.”

“Where is that natural charm that was once Penang?” said Petrache, who also complained about the condition of beaches in Penang.

“I used to be able to swim in Penang but the water is so dirty now and I think the reclamation has something to do with it,” she said.

A former 3D art museum owner lamented that his business could only survive for just over a year before it went under due to fierce kickback competition and undercutting to get more visitors.

Unable to cope and operating at a loss after ending up paying more and more kickbacks, he had to close down his business.

“There is a demand for kickbacks in the George Town area due to its popularity and the growing number of attractions there, with over 40 so-called ‘museums’ in George Town.”

“It has become a norm to be forced into giving kickbacks to tour organisers, from bus drivers, tour guides, and taxi drivers and some of them ask for the current standard rate of 50% cut from entrance fees and will boycott you if it’s not paid.”

“Some of these tour organisers and taxi operators get payments of between 40% and 60% of the ticket price, so you can imagine it was very hard to cope and I could only survive for a year before closing shop,” said Eek Yeoh.

Tour guide Joseph Teoh who is tired of seeing corruption in this tourism industry said he wants to see a change of guard in the tourist associations. He explained the perpetuation of the current status quo is that the leadership in these associations have vested interests.

“During so-called tourist-guide training, new tour guides are taken to the preferred places and they were showered with freebies. They were also taught their income would include ‘commissions’ from the participating places.”

“Most of the travel agents do not pay the tour-guides salaries and expect the guides to make a living out of receiving kickbacks from tourist places. In addition to the kickbacks, participating corrupt tourist places are also chipping in goodies to the leadership and the distribution are given to those who collude with them. Those who aren’t on good terms with the leadership will have difficulty surviving.”

“It is high time we get rid of the mafia system, everyone in the industry should stand up and speak up. Either we do this or our industry will fail. I have no doubt about that” he said when met.

Meanwhile, for Malaysian Hoteliers Association (MAH) Penang Chapter chairman Khoo Boo Lim, the scenario has been around for “donkey years” and will remain unsettled so long as there is no cooperation and agreement between tour agents and outlet operators.

“Everyone should just sit down and agree to a certain sum of commission to be paid to the tour agents or taxi drivers.

“Unfortunately the implementation of that is very hard as it is hard to achieve cooperation if one party undercuts the other” he said when contacted.

Mark Chay, the executive director of the Coalition for Business Integrity (CBI) when asked about the corrupt tourism system explains.


“Corruption happens when a tour guide or taxi driver abuses the trust given to him to perform in good faith by the tourist for undisclosed personal financial gain.

“A legitimate commission is one that adds value to the products and services to the tourists whereas a hidden illegitimate commission or kickback only distorts the cost of products and services with no benefit to the tourists. Obviously the price for goods and services paid by these clients would be inflated to accommodate the cost of bribery in the system, putting the tourists in a disadvantaged position.

“Unfortunately, most people see kickbacks as a norm due to the long practice in the marketplace that has blurred their vision on business integrity but to combat corruption in the tourism industry, stakeholders must first realise this existing practice is a corrupt practice,” he said.