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Malaysia Drafting New Guidelines For Timeshare Industry

The Timeshare Beat
April 30, 2001
On the heels of a 6-month study conducted by the MCA Consumers Bureau that showed an increase in consumer complaints against timeshare companies in Malaysia, the Domestic Trade and Consumer Affairs Ministry is drafting new guidelines for the timeshare industry to ensure better protection for consumers.

According to Bureau head Datkin Paduka Dr. Tan Yee Key, complaints range from companies using 'hard sell' techniques to deceptive marketing practices and it is time that the rapidly growing industry is reined in. Dr. Tan mentioned that the bureau and the ministry had received 48 formal complaints on the issue and she feels that this is just the tip of the iceberg. Her take on the matter is that for every complaint filed there are probably one hundred who did not take any action.

One of the most frequent complaints throughout the Federation, as is also true in other areas of the world, is the promise of free or inexpensive vacations that neglect to mention the necessity of attending a timeshare presentation as part of the deal.

Dr. Tan has submitted a memorandum on the timeshare industry to Domestic Trade and Consumer Affairs Minister Tan Sri Muhyiddin Yassin.

Also at the meeting were Registrar of Companies director-general Datuk Idrus Harun, the Ministry’s Enforcement Division deputy director of operations Abd Raman Ghazali and Consumer Affair’s Division principle assistant director Ismail Jantan.

There are approximately 65,000 timeshare purchasers in Malaysia and the industry is growing fast, and the legislation regulating timeshare, provided in the Companies Act 1960, is now considered inadequate to protect consumers. The memo submitted by Dr. Tan outlines some of the problems encountered by purchasers of timeshare programs, problems involved in the way the industry is currently set up as well as the inadequacy of the in-place legislation.

Amon other issues is the lack of disclosure of rescission rights, with many purchasers unaware that they have10 days to change their minds. Other common complaints include misrepresentation by sales personnel about the benefits of purchasing, including issues of flexibility, quality of resorts and extra costs such as exchange fees. There is also a suspicion that some timeshare companies have oversold inventory, making it next to impossible to book a vacation for many owners.

In a press conference held after Dr. Tan presented the memorandum, she said: “There is no policing powers given to the Registrar of Companies and the guidelines do not have the enforcement of law. We also suggested that the role of the ROC be extended to monitoring and investigating some of the timeshare companies and we proposed the setting up of a disciplinary board to take action against errant companies.”

It is the Bureau's position that all timeshare companies should be registered with the Federation of Timeshare Companies to facilitate better coordination and monitoring.

Proposals outlined in the memorandum that would improve the situation include:

Providing a clear definition of "hard sell'' and for a regular review in keeping with the changing marketing tactics used by companies employing this tactic
Extending the role of the Registrar of Companies to include monitoring the presentations and marketing techniques undertaken by timeshare companies
Imposing a ban on earnest deposits and other up-front fees
Full disclosure of all details of the timeshare which are likely to affect a consumers' decision

With some 15 member timeshare companies registered with the Ministry, there are currently nearly 30 timeshare resorts affiliated with RCI in Malaysia and another 10-plus affiliated with Interval International, with more in the pipeline. The majority of people owning timeshare in the country are from Malaysia and other Asian countries, while the majority of people exchanging into the timeshare resorts there are from North America and Europe.

More study is expected concerning the issues raised, and it is likely that new regulations and stricter enforcement of current regulation will both be a result of this memorandum.

The Federation of Malaysia was created in 1963 through the merging of Malaya (independent in 1957) and the former British Singapore, both of which formed West Malaysia, and Sabah and Sarawak in north Borneo, which composed East Malaysia. The first three years of independence were marred by hostilities with Indonesia. Singapore seceded from the union in 1965. The country is located in southeastern Asia, peninsula and northern one-third of the island of Borneo, bordering Indonesia and the South China Sea, south of Vietnam.

It is a constitutional monarchy, with its capital city being Kuala Lumpur.