The Pull Factor For Zoo Negara

Financing

Over the years, the major funding for Zoo Negara was derived from the sales of entrance tickets, rental income and income from sponsorships as well as subscriptions. Apart from that the zoo relies heavily on the grants provided by the government. With the declining economy, the number of visitors may decline, thus decreasing their sales revenue. Zoo Negara may face major shortfalls in its funding and income as with the declining economy, the government may impose cutbacks on the amount of grants provided and compiled with declining corporate sponsorship and tickets sales, Zoo Negara may face a major funding issue. In 2014 income from visitors made up 90.6% of the total income. Furthermore, the income from sponsorship and subscription may fluctuate from year to year thus hampering the normal activities of the zoo. Other income such as interest on short-term deposits, unit trust dividends and miscellaneous income makes up only 2.2% of the total income in 2014.

For Zoo Negara to be able to sustain itself in the future as well as meet all the 3 mission statements mentioned earlier stable funding plan is necessary, besides containing its expenditure. As such, to understand how Zoo Negara can perform better, we will look into the strengths and weaknesses in its financial position and provide commendations as to how Zoo Negara can look for other sources of funding and to have better expenditure management.

Strengths of Zoo Negara

One of Zoo Negara’s strength is the fact it is are one of the icon of Malaysia. It is one of Malaysia’s top attraction and landmark to visit. It is also the largest zoo in Malaysia which spans over 44 hectares (110 acres). Over the years, Zoo Negara (National Zoo) has transformed itself to an open concept zoo with over 90% of its animals confined in spacious exhibits with landscapes befitting its habitats giving the animals the freedom to move around whereby the visitors would be able to get a clear view of the animals. On top of that, Zoo Negara is the only place one can view the giant pandas in Malaysia. A pair of 8 years old giant panda called Xing Xing and Liang Liang is the new star attraction in Zoo Negara. The “panda diplomacy” is a way of fostering better relationship between China and Malaysia. This attraction also doubles up as a booster in increasing the visitor numbers and raise much needed revenue for Zoo Negara.

Next, the zoo’s strategic location also make it is easily accessible as it is located not far from Kuala Lumpur City Centre (KLCC). Even for those without their own transport, public transportation makes it easier for visitors to access the zoo. Various public transportation mode such as LRT, taxi or buses are available for locals and foreign visitors.

Furthermore, Zoo Negara relies heavily on donations to run its operations. The ability of Zoo Negara to portray itself as a non-governmental, non-profit organization, allows them to be able to collect huge sum of donations. In 2013 alone, they received more than RM300,000 in donation from the public.

Besides, the entrance fees are reasonable and affordable to all. The normal rate for visiting the zoo is RM11 for children, RM32 for adults and RM16 for senior citizens. There will be a group discount, for a minimum of 30 people, which means RM2 will be off from the normal ticket price. Foreigners are charged RM27 for children up to the age of 12 years and RM53 for adults. In contrast the Singapore Zoo the entrance fees is SGD 33 for adults which is equivalent to RM72 per person and children are SGD22 (RM48) whilst senior citizen pay SGD15(RM33).

Sponsorship for Zoo Negara

Sponsorships is one of the sources of income that support the management and operation of Zoo Negara. The Zoo currently has over 30 corporate sponsors, individuals and schools. Their main sponsorship program is the adoption of animals in Zoo Negara. This program is offered to the public or corporate sponsors in order to maintain annual animal food, enrichment and veterinary care. Besides that, the income from sponsorship is used towards upgrading animal exhibits, acquiring new animals and acquiring new expertise. The contribution is also critical for wildlife and nature conservation, research and public education programs. For example, with the arrival of the pandas, Zoo Negara took the opportunity to organize a campaign to highlight the importance of bears around the world, including Malaysia’s local sun bears and produced table calendars with various facts regarding the bears around the world. This helped to create awareness among the public on understanding the importance of wildlife.

In 2013, Zoo Negara received a total of RM391,138 from their sponsorship programs. In 2014, the sponsorship increased to RM1,031,035, which was a huge increase for their funding. Government grant amounting to RM765,109 in 2014 and RM916,202 in 2013, was also received for the construction and upgrading of the Giant Panda Conservation Centre.

Zoo Negara received various support from the donors and sponsors since the inception of the zoo, such as Sekolah Sri KL, 7 Eleven Malaysia and UMW Corporation. In 2014, Senheng Electric Sdn. Bhd. was one of the largest contributor, contributing RM400,000 for the Giant Panda Conservation Project. Malayan Banking Berhad sponsored 10 tigers with a total amount of RM267,020, while AmBank Group entered its 29th year in sponsoring Zoo Negara’s Dromedary camels which amounted to date RM40,000. It has been an annual practice of the company since 1985 and has contributed in excess of RM745,000 for the sponsorship of the program to date.

Sustainability of Zoo Negara in the Long Run

Zoo Negara Malaysia will not be able to survive without government support or grant. The following are the justification of the above mentioned statement.

Foremost, Zoo Negara is a non-profit organization managed by Malaysian Zoological Society. The upkeep and maintenance cost of the zoo is mainly funded by corporate sponsorships and entrance ticket collection. The construction fee for building the zoo (capital development) was by way of a Federal grant

amounting to RM1.25 million over the three years (“from: http://www.zoonegaramalaysia.my/journeythroughtime - Zoo Negara – Journey Through Time”, n.d.).

Secondly, according to “New Straits Time” article, Zoo Negara was said to be facing funding difficulty in 1981 and was nearly shut down due to lack of funds. There was a drastic fall in the number of visitors during that year probably due to increase in entrance fees. The then President cum Chairman of Zoo Negara, Tan Sri Hutson commented that zoo position may lead to a negative cashflow and predicted it will be facing another drop of 30% in the following year. In such situation, Selangor State Government has donated US$10,000 to Zoo Negara to help overcome the plight of the zoo. (New Straits Time, 1981).

Thirdly, government has been funding or supporting Zoo Negara for all these years despite the losses. According to Zoo Negara Director, Dr Mohamad Ngah who was appointed i 2005, Zoo Negara was incurring about RM2 million losses each year prior to 2005. However, in 2012, Zoo Negara made a net surplus of RM1 million. However the running costs such as food for animals, staff salaries, medical supplies and other miscellaneous expenses is rather high amounting to RM12 million annually. In the year 2014, the expenditure on the two pandas “Xing Xing and Liang Liang” cost approximately RM25 million inclusive of the panda exhibition housing. Other major expenses are maintenance cost, replacement of pumps and repair cost.

In fact, in 2009, The Ministry of Tourism under the Tourism Minister Datuk Seri Azalina, approved a sum of RM1.5 million for the upgrading work of the zoo’s entrance.

Lastly, in order to encourage more sponsorship from the public, government has given out certain tax exemptions to the sponsors. The sponsors that adopt animals in Zoo Negara by maintaining the animal’s annual food, enrichment and veterinary care, will be receiving tax exemption based on the amount sponsored with the criteria that complete cost will be covered.

In short, with all these supports provided by the government, Zoo Negara is able to survive without fail even though it has been incurring losses all these years.

Alternative Financing Methods Available

Based on the information extracted from the Zoo Negara official website, the amount donated varied between RM300,000 and RM600,000 per year, and this amount could only support a very small part of the operation costs of Zoo Negara. It is also noted that most of the institution only donate periodically and not repeatedly in the subsequent years. Zoo Negara is in a very passive position currently in term of merely receiving funds from public. Therefore, Zoo Negara will not be able to sustain in the long term just by receiving government support.

Most of the zoo’s operating budget comes from admission, food, beverage and gift sales, grants, contributions and other smaller revenue-producing activities such as rental of venue from the Kancil Hall and Tunku Abdul Rahman Hall for events.

Financial Weaknesses, Zoo Negara as a Non-Profit Organisation (NGO)

Zoo Negara is at a dangerous financial position as corporate sponsorships and ticket collection fees are getting lesser these days. This is probably due to the change in lifestyle whereby families prefer to visit the shopping malls and recreational malls rather than places like the zoos. Moreover, the 2014 annual report of the zoo showed a reduction in government grant from RM916, 202 in year 2013 to RM765, 109 in year the 2014. On the other hand, YAB Dato’ Sri Mohd Najib Abdul Razak, Prime Minister of Malaysia is trying to make Zoo Negara a world class zoo through the Panda project which is symbolic of the cordial relations between Malaysia and China. (from: http://www.zoonegaramalaysia.my/annualreport.html - Zoo Negara Annual Report 2014) This project had led to higher maintenance costs which are one of the significant costs components in its financial statement. Besides, staff expenses (highest component of expenditure) also increased about 18% in 2014 as compared to 2013.

Being solely dependent on sponsorship and the downward trend of ticket sales is too risky as the operating margin is still below average level. Zoo Negara would not sustain in future if they are not able to seek alternative financing to fund its operations with high expenditure burden.

Financial weakness, overspending on staff cost

According to the financial statements of Zoo Negara, the staff expenses are approximately RM5.8 million in year 2014. However, the number of employees including executive directors during the financial year is 154 people. This includes expenditure related to staff training, staff activities and staff incentives. Based on the 2014 annual report, in order to enhance staff knowledge and generate new ideas for Zoo Negara, the staffs were sent overseas for training and observations. The incentives for staff in the year 2014 included awards and allowances such as laundry allowance, meal allowance and special allowance for its staffs. (from: http://www.zoonegaramalaysia.my/annualreport.html - Zoo Negara Annual Report 2014)

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