Any price hike in tour packages resulting from the implementation of tourism tax will drive potential tourists to nearby countries, which are offering similar products.

The Sabah Tourist Association (STA) chairman Tonny Chew warned that certain segment of the customers especially Sabah's biggest customers - Chinese tourists - are sensitive to price.

"So they (Chinese tourists) may set their sights to Indonesia and Thailand which offer cheaper hotel rooms than Sabah as the tax will make our packages expensive" said Chew when asked to comment on the implementation of tourism tax which has been deferred to August 1 from the supposedly July 1.

He said the impending tax has set a precedent and the industry must take measures to reduce the impact to prevent further exaggeration.

"We may lose a substantial portion of our MICE segment due to short notice as they are unable to include the additional cost in their budget" said Chew.

And when the Sabah International Convention Centre is completed, he said Sabah prices for MICE groups will be higher than neighbouring countries.

He reiterated that STA‘s stand with other tourism non-governmental organisations is similar.

"We are not objecting the tax but we request for deferment until March 31, next year to honour the contractual obligation between the members and their clients.”

Furthermore, he said STA members are not ready with the software to register the tax and needed time to install and carry out the test run.

"I think we are not ready yet by August because we also need to upgrade the software too as it involves updating the inventory" he said.

"We only have less than a month to prepare and the hoteliers are still unsure of the software mechanism" said Chew, adding that their members are also facing increased costs of doing business in this challenging time.

According to him, STA representing 10 tourism sectors in Sabah plays a role in communicating their members' concerns.

He said although Thailand also imposed tourism tax, they have more activities and entertainment programmes for tourists to choose from. It is believed that Thailand is still cheaper than Sabah even with the tourism tax.

"If tourists make a conscious decision not to choose Sabah for their holiday destination it will not benefit us because our prices have been consistently rising over the years" said Chew.