The Angst of Malaysian Artists: Taxes and Permits

The postponement of the launch for the musical “A Funny Thing Happened on the Way to the Forum” last Friday came as a strong reminder of the difficult conditions artists operate under in Malaysia.

We are not even referring here to the complaints from local performers that the government offers them little financial or logistical support, while it lends its help and money (in the case of the probably very expensive Malaysian Philharmonic Orchestra, subsidised by state-owned Petronas) in bringing foreign artists and productions.

No, we are talking here about the permits and taxes that arts companies are submitted too in order to perform publicly.

Any performance needs to acquire a permit from the licensing department of DBKL, with a reasonable load of papers to submit, and preliminary approvals from Special branch, the police and the Ministry of Culture, Arts and Tourism. In addition, each company must pay a RM600 refundable deposit.

The permit procedure seems to have little relevance to contemporary Malaysia. It traces its origins back to the British and Japanese occupation: Bangsawan stories had to be approved by the Japanese, while the British required permits for sandiwara plays as they sometimes contained nationalist themes, and had political speeches during the intervals. Also during the Emergency permits were instituted for Chinese Opera.

Local musicians and dancers (actors too until 1997) also have to pay a tax of 25% on ticket sales (sales, not profits) to the income tax department before they can sell any tickets.

Now, the 1997 budget announced that all dramatic productions in the federal capital, and with more than half local performers, were exempted of this sales tax. One doesn’t know whether the spirit behind this was to absolve ALL artistic productions from the tax, but the narrow understanding of it is that only theatre is exempt, although it is no surprise that some dance shows try to register as dramatic productions.

Also the cost and bureaucracy involved explain why many shows are “by invitation” (meaning they are private functions and do not necessitate a permit), or charity events. Indeed, most artists operate on a shoestring, and often at a loss. Most do not have the extra time to process all the administrative forms, nor the extra cash to pay the tax and deposit up-front.

And things only get worse when foreign artists are involved. The producer can opt for getting a professional visit pass for the foreign artist, as for any other profession. This pass is necessary even if the performer only comes for one evening (like in the case of American jazz player Freddy Cole, brought in by IMG Artists). And this pass requires bank guarantees (RM1,000 for Commonwealth citizen, RM1,500 for Americans), the payment up-front to the tax department of 15-20% of estimated income, and a few sessions at immigration to present various documents.

“It is really laborious”, says Mindy Teasdale, director of IMG Arts Projects”, but it has to be done if you want to do the show”. IMG has one person whose only job is to deal with the work permits of all performers brought into Malaysia by IMG (such as guest musicians at the Dewan Filharmonik Petronas or the team for Fame).

The second option, attractive in that it waives the sales tax, is to apply for “cultural exchange” status. It is however more cumbersome in that it requires exchanges of letters and documents between the Embassy of the country, the Ministry of Foreign Affairs, the Ministry of Culture, Arts and Tourism, the Immigration Department, DBKL, special branch, the local police, the income tax department, the special tax department in the Ministry of Finance, the KLIA immigration office, the boarder immigration office, and the local producer. The whole process takes about two months, and many hours of queuing at the Immigration Department. A one stop centre was set up in February this year at the Ministry of Culture to simplify things, but it is yet to prove its effectiveness.

“It’s all about timing”, says Teoh Ming-Jin, theatre manager at The Actors Studio, who spends a fair amount of time processing work permits every month.

And it is timing that seems to have taken Gardner & Wife, the producers of” A Funny Thing Happened on the Way to the Forum “, by surprise. They discovered on the opening day of the show that their submission for work permits for the four foreign performers was inadequate and the permits were not granted.

The implications of these taxes, permits and immigration bureaucracy are far-reaching.

For one, the government is not creating a very friendly environment for artists to work in. Indeed, the tax on ticket sales cannot really add much to the government’s tax revenue, rather it hampers the growth of Malaysia’s cultural life.

Furthermore, why did the Minister of Culture, Arts and Tourism announce at the launch of the musical Fame a tax waiver for international productions only, and not extend it to local productions? IMG, the organisers of Fame, argued that a foreign musical would not be economically viable if it paid a 25% sales tax, but surely this is true for local productions too?

The DBKL permit is also a means of control, although it is very rare approval is not granted. The Actors Studio’s Teoh Ming Jin estimates he applies for at least twelve permits a month, and finds it now quite easy to get approval, although absent DBKL employees and short working hours mean he sometimes gets the permit at the last minute. He also gets called by special branch sometimes, to answer whether the show is anti-government, or whether any VIPs are coming. “They’re just doing their job, they’re not hard on us”, he says.

Secondly, there would be a case for a separate type of work permit for foreign artists, one that is lighter in processing and allows for more flexibility. Indeed the existing work permits make it illegal for foreign performers to work at any venue and date other than specified in their permit. This means that either foreign performers play without the adequate permit (with the risk for them and their producer of having the show cancelled and being taken to immigration), or they limit their performances to the exact list given to immigration.

This explains partly why there are not more foreign productions. IMG’s Mindy Teasdale says it would be daunting for someone without IMG’s five years experience in dealing with immigration (IMG initially recruited all the Malaysian Philharmonic Orchestra musicians and processed their work permits) to produce a foreign musical such as Fame.

This also means a massive under-utilisation of a huge pool of foreign talent that could be used to cross-fertilise local arts, and develop networks between local artists and other countries. For instance none of the one hundred or so foreign musicians at the Malaysian Philharmonic Orchestra, all of high international level, can play outside of the Dewan Filharmonik Petronas unless they do the required paper work for every extra show. Would local musicians not benefit from performing with them?

Finally, on a broader level, is it not in Malaysia’s interest as a country to offer a friendly environment to its artists? Yes, artists tend to be free-minded and difficult to control. But they also channel the creative energies of a country, and spear-head change.

And is encouraging creativity not part of Malaysia’s next economic model of development, as it has to rely more on value-added and less on cheap labor?

Also, to use an argument closer to the government’s heart, more plays, musicals, concerts, make Malaysia a better place to live, and would encourage skilled foreigners as well as overseas Malaysians to come and work here.


First Published: 25.04.2002 on Kakiseni

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