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Steep entertainment tax not the main hitch for Malaysia's film industry

The problem, according to industry players, lies in the lack of reforms.

Nur Hasliza Mohd Salleh
4 minute read
Moviegoers pass a poster for 'Mat Kilau: Kebangkitan Pahlawan' at a cinema in Putrajaya.
Moviegoers pass a poster for 'Mat Kilau: Kebangkitan Pahlawan' at a cinema in Putrajaya.

Three weeks after its release, "Mat Kilau: Kebangkitan Pahlawan" is still going strong on the silver screen, raking in more than RM71.27 million and claiming first place on the local cinema chart as well as the highest collection ever recorded in Malaysia's film history. 

This, according to one film director in the country, is a positive development regardless of whether the film has won critical acclaim as the encouraging ticket sales are proof that public interest in local productions is on the rise. 

Al Jafree Md Yusop, who is also a script-writer, said it showed that people "with money" were beginning to display interest in the production process. 

But more than that, it is also a comment on Malaysia's entertainment tax which is often criticised as too high. 

Within a week of its release, "Mat Kilau" had already made more than RM12.2 million, but had yet to receive a return on its capital of RM8 million. 

This was because 25% of the collection had to go towards the entertainment tax. 

Movie producers must also fulfil an agreement with the cinema, where the proceeds of the film collection for the first week are split 50-50.

Some had complained about the amount of tax levied, saying it was too high for entertainment purposes. 

But Al Jafree said the tax collection had been mandatory for a long time, and that no issues had ever been raised among film producers. 

"People might not have known about this because there had never been a film able to rake in such collections," he added. 

He also said that the tax rate imposed by the government was not far off from those implemented in other countries. 

In the US, for example – the world's biggest movie producer after India and its popular film industry Bollywood – cinemas are charged 40% during the first week of release. 

Hollywood studios meanwhile take 60% of what is collected. 

For Al Jafree, the problems in the local film industry revolve around other issues which he says show no signs of reform so far. 

"True, 'Mat Kilau' has hit the box office," he said. 

"But the potential in films that people have overlooked all this time has been lost. There are no real efforts to develop the Malaysian cinema." 

Bigger issues

Malaysia's film industry began to gain pace in the late 1930s, with "Laila Majnun" the first movie screened in Malaya in 1933.  

To date, Malaysia produces about 20 films a year and between 300 and 400 television dramas. 

There are more than 200 cinemas throughout the country which screen both local and international movies. 

Film producer Kamal Akram Ibrahim acknowledged that the 25% entertainment tax appeared steep given the difference between cinemas and other entertainment centres such as night clubs and karaoke centres. 

But he, too, said that the tax was not the only major problem in Malaysia's film industry. 

For example, he said, international movies are given more perks than domestic productions. 

"It's like there's a cartel monopolising the film business," he said. 

"They are the ones who determine the time slots and screening halls, which greatly influence ticket sales." 

Kamal, who produced comedy "Bikers Ketal 2" in 2019, said local films placed under the compulsory screening scheme are only given two weeks in cinemas. 

It is then up to the cinemas whether to continue screening them, depending on ticket sales. 

"If they think that outside films will bring in more sales, these will be screened as frequently as possible," he said. 

"Local films will be pushed to smaller halls or completely removed from cinemas." 

According to Kamal, the body meant to regulate the film industry has also been sleeping on the job. 

Speaking to MalaysiaNow, he said the National Film Development Corporation Malaysia or Finas had been greatly influenced by "dream" people and now had political interests. 

"Finas should be led by those who understand the film industry and who truly wish to raise it to the global stage," he said. 

"But funding and grants are often given to those who have yet to prove themselves able to produce good shows." 

Al Jafree meanwhile said Malaysia's film industry would have difficulty moving ahead as the efforts made by previous administrators had not been continued. 

He cited the introduction of the standard contract system by former Finas director-general Kamil Othman for film crews and workers. 

The system had laid out guidelines for a number of issues including the ceiling price for salaries and services. 

Al Jafree said the effort had been well received by art activists and the system utilised by the Malaysian Advertising Film Producers Association.

"But when Kamil's contract ended, the system was scrapped by the new director-general," he said. 

"The problem is, changes can be made as and when people please when they are not protected by laws."