Round-Up Speech by SMS Sim Ann at the Second Reading of the Travel Agents (Amendment) Bill 2017

​Round-Up Speech by Ms Sim Ann, Senior Minister of State, Ministry of Trade and Industry & Ministry of Culture, Community and Youth at the Second Reading of the Travel Agents (Amendment) Bill 2017

Mr Speaker, I thank the MPs who have spoken on the Travel Agents (Amendment) Bill, for their support and comments. Let me now address the pertinent points they raised, which can be classified into four main categories.

Dealing with closures of travel agencies

2.              Several Members have raised queries and suggestions on dealing with this matter.

3.              Mr Desmond Choo noted in his speech that about 125 travel agents have ceased operations since the beginning of 2017. I would like to clarify that more than 95% of these 125 cessations were in fact orderly and voluntary, where the travel agents chose to cease their licenses.  In such instances, there is typically minimal consumer impact, as these travel agents cease operations after fulfilling all contractual obligations. Over the past 3 years, we have also noticed that around 40% of business cessations were by travel agents who were already dormant. As such, we should not be overly alarmed by this kind of usual cessation of businesses. 

4.              As pointed out by Mr Lim Biow Chuan, the issue of concern is sudden closures. On this note, sudden closures remain relatively infrequent; from 2012 to 2017, there were 10[1] such sudden closures, making up around 1.5% of all business cessations in that period.

5.              Nonetheless, every such closure can be a case of concern. The case of MISA Travel was widely-reported earlier this year, where the business decision was made to not continue operating. In MISA’s case, the business failure which resulted in the closure was not due to malpractices or any ill intent on MISA’s part. The Government does not have regulatory oversight over such business decisions made independently by travel agents. 

6.              Mr Ang Hin Kee asked for early intervention and Mr Lim urged STB to constantly check on the financial health of our travel agents. STB conducts regular checks on the audited accounts of all licensed travel agents annually. While such checks can provide possible tell-tale signs of financial difficulties, we cannot safeguard against business failures. 

7.              What the Government does is to monitor such closures very closely and work with CASE and other industry stakeholders to minimise consumer impact. We will also continue encouraging consumers to take measures to protect their interests by purchasing travel insurance that covers against travel agent insolvency. 

8.              Mr Louis Ng asked how the new section 28(1)(ga)(i) would be helpful to consumers in cases of sudden closure, as even if STB varies the contract or directs that the licensee compensates consumers, travel agents might not be willing and able to do so.  I would like to share that the purpose of this provision is to prescribe Regulations to govern the business practices of travel agents in general, rather than to be overly intrusive and empower STB to intervene in each and every such case. 

9.              Mr Choo and Mr Ang expressed concern for the impact of sudden closures on tourist guides. Thus far, the cases of sudden closures relate to travel agents dealing primarily with travel out of Singapore, which typically do not involve the hiring of local tourist guides. 

10.           In terms of impact to employees, voluntary closures are typically planned for, and travel agents usually make plans to account for their employees’ welfare. Mr Choo suggested ring-fencing a percentage of net worth capital required for the travel agent licence, for the purpose of paying workers when travel agents close. The minimum paid-up capital requirement was introduced with the intention of ensuring that travel agents have a certain level of financial resources before they are granted licences. The intention was not to dictate how these funds should be used, but rather to seek broad assurance that the travel agent is unlikely to default on its obligations. In the event of sudden closures, STB works with the appropriate government agencies to lessen the impact on employees. Employees may also reach out to these agencies for assistance, and STB can facilitate link-ups where possible.

Minimising travel agent malpractice

11.           I agree with Mr Ang on the importance of ensuring responsible behaviour by travel agents. Most of our travel agents act responsibly and fulfil their obligations to customers. Our proposed amendments are a further effort to improve transparency and help consumers make more informed purchasing decisions. A case in point is the power that STB will have to require travel agents facing suspension or revocation to disclose this fact to their customers. STB may also choose to publish information relating to such suspensions or revocations on their website. 

12.           To Mr Choo’s query on whether there is a list of errant travel agents, consumers can access STB’s TRUST platform to check the status of the travel agent they are transacting with, including whether the travel agent has had its licence suspended or revoked. Mr Choo has suggested to include a list of travel agents with chequered customer service records. To clarify, the policy intent of the travel agent legislation is to take action against errant travel agents, rather than to police all service-related issues. That said, the travel agent legislation does address more egregious service issues, such as the need to inform consumers of any material changes to tours once a contract has been formed.

13.           Mr Lim has urged that travel agents publishing or distributing “inaccurate or erroneous” advertisements be taken to task. This will be punishable by a maximum administrative financial penalty of $2,000. For the specific example that Mr Lim shared, whereby a travel agent advertises “zero-fare tours”, but does not disclose to consumers that there will be forced spending on shopping or compulsory tips, such advertisements may be considered “false or misleading”, which will remain a criminal offence under the Travel Agent Regulations, punishable with a higher penalty of up to $10,000.

14.           Mr Ang asked if STB can set up a conciliation service to resolve disputes between travel agents and consumers or tourist guides. For disputes between travel agents and consumers, there already exists a regulation prohibiting travel agents from wilfully refusing or neglecting to resolve such disputes. There are also other avenues and bodies for dispute resolution between such parties.

15.           As for disputes between travel agents and tourist guides, STB has worked with NTUC to review the feasibility of setting up a mediation centre or conciliation service to manage such disputes. However, there are only a handful of such disputes brought to STB’s attention each year, and they are typically resolved without the need for further mediation. STB is monitoring this closely and will continue discussions with NTUC and other relevant agencies. At the same time, we are already exploring ways to have clearer contractual terms between travel agents and tourist guides, which may help reduce the occurrence of such disputes.

Balancing consumer protection with regulatory burden

16.           While we have made a number of amendments to improve consumer protection, we also need to ensure that our travel agents are not subjected to excessive regulatory burden.

17.           Mr Lim has asked if the Government would consider requiring travel agents to provide a performance bond, so that consumers can have confidence that the travel agent will fulfil its obligations. Mr Ng also asked if MTI or STB will consider establishing a Travel Industry Compensation Fund, which can provide reimbursement to travellers in specific situations such as travel agent insolvency.   

18.           STB has previously considered these direct consumer protection measures. However, we have decided not to implement these measures as it would increase business costs across the board for all travel agents, when in reality only a minority of our travel agents are likely to cause harm to consumers. Travel agents are also likely to pass on such increased business costs to consumers. In addition, such measures may duplicate the coverage provided by travel insurance, which a majority of consumers are already purchasing[2].

19.           Instead, we will legislate in the Travel Agent Regulations that travel agents are required to inform consumers of their option to purchase travel insurance that protects against travel agent insolvency. STB will also continue to work closely with industry stakeholders to encourage the uptake of travel insurance via consumer education efforts. We hope that these measures will help to enhance consumer protection, without increasing business costs significantly for travel agents.

20.           Mr Lim also asked if consumers who had already bought travel packages from a travel agent facing licence suspension or revocation can be allowed to terminate their contract without compensation. I would first like to reassure members that travel agents facing suspension and revocation remain obliged to fulfil their existing contractual obligations, failing which they should pass on these obligations to other travel agents to fulfil. Whether consumers can terminate their contracts with a travel agent will depend on the cancellation terms and conditions of each contract, which will apply even when the travel agent is facing suspension or revocation. Via the Travel Agent Regulations, we intend to require travel agents to make clear the cancellation terms and conditions before entering into a contract with consumers. Consumers will thus be fully aware of their rights under the contract before they sign it.

The emergence of new business models

21.           Mr Speaker, all the Members who have spoken have noted the emergence of new business models in the travel agent industry, particularly the increasing prevalence of online travel agents or booking platforms. 

22.           I agree with Mr Choo that it is important for the public and industry players to know which types of travel entities will now be exempted. STB will be raising awareness amongst the travel industry and the general public on this matter. 

23.           Mr Choo asked if we could make it compulsory for exempted entities to register themselves with STB, so that we retain some degree of oversight over their activities. I would like to share that STB has been very careful when determining which entities should be exempted, and which entities should continue to be regulated. We wanted to allow more room for “off-the-beaten-track” tours to grow and bring vibrancy to our tourism landscape, as Mr Choo highlighted. This is why we have exempted walking tours or cycling tours from needing a travel agent licence, as these tours typically do not collect significant prepayments from customers, and in some cases, none at all. 

24.           However, I should also point out that if these tours are targeted at tourists, and involve remuneration for the guiding services provided, these tours will still need to be led by licensed tourist guides. The tourist guide licensing framework gives STB some regulatory oversight and enforcement powers against irresponsible behaviour. Even as these entities are exempted, consumers can continue to reach out to CASE and STB if they require assistance. 

25.           Mr Ng asked if the Travel Agents Act and this Bill would include emerging models like Airbnb Experiences, Tripadvisor and Wego. Mr Lim also asked who regulates online travel entities in general, whether the Singapore government can consider regulating them, and how consumers may recover their prepayments if these online entities cease operations.

26.           Whether an online entity falls within the jurisdiction of Singapore’s legislation largely depends on whether it has physical presence in Singapore for the supply of travel products. For instance, if an online entity with physical presence in Singapore contracts with consumers for the supply of a travel product or sells or arranges tours in Singapore, the entity will require a travel agent licence.

27.           If the entity in question has no physical presence in Singapore for the supply of travel products, meaning that it is a foreign entity, we do not have regulatory mechanisms to take action against its malpractice as we do not have extraterritorial jurisdiction. In such cases, STB has been running consumer education campaigns to increase consumer awareness of measures they can undertake to protect their interests. We will also continue to encourage consumers to purchase travel insurance to safeguard against unforeseen travel inconveniences. 

28.           Mr Choo and Mr Ang highlighted that as the travel industry transforms, we also need to ensure that our travel agents and tourist guides upskill and keep up with the times. Indeed, STB worked with the National Association of Travel Agents Singapore, or “NATAS”, to launch the Travel Agent Roadmap last year, with the aim of enabling our travel agents to become designers of travel experiences. We have been encouraging manpower upskilling, technology adoption, and greater innovation and productivity in the industry. Since the launch of the Roadmap, STB has supported more than 30 projects under the Business Improvement Fund, ranging from the development of technology solutions for better customer engagement, data analytics and the redesigning of business models.  Employees can also tap on STB’s Training Industry Professionals in Tourism fund to send their staff for further training and professional development. 

29.           Mr Choo asked how STB is ensuring that the skills of tourist guides are tested. All tourist guides are required to undergo a Mandatory Refresh Course (MRC) before they can renew their licences. The MRC keeps tourist guides abreast of new tourism industry developments, while ensuring that they continue to be equipped with appropriate guiding skills to deliver quality visitor experiences. Our tourist guides also continue to benefit from a wide range of professional development courses.

30.           Earlier this year, STB published a prospectus covering 64 courses by 12 training providers, with the courses touching on a wide range of topics including storytelling skills, intercultural training, guiding skills, and Singapore’s art, culture, heritage and even nightlife scene. There are also a range of subsidies that cover up to 95% of the course fees. I encourage our tourist guides to utilise these resources fully. We agree with Mr Choo that it would be useful if training can be conducted online, and are exploring if this can be implemented.

Conclusion

31.           Mr Speaker, I would like to conclude by thanking the Members once again for their valuable feedback, and also for their support for this Bill.

32.           The majority of our travel agents conduct their businesses responsibly, and are important players in our tourism ecosystem that connect Singapore and Singaporeans with the rest of the world. The amendments to the Travel Agents Act and Regulations help to improve the travel experience by enhancing consumer protection and creating room for new business models to grow and thrive, while ensuring that regulatory cost remains manageable. We will also continue with our consumer education efforts to raise awareness of the measures consumers can take to protect themselves, and to communicate the intent and implications of the legislative amendments we are making now. 

33.           Lastly, the government will continue to work with all industry stakeholders to drive capability development within the travel agent and tourist guide industries, so that employers, workers and freelancers can all keep up with and benefit from a rapidly-changing tourism industry and reap benefits, as Mr Choo has also mentioned.

34.           Thank you, Mr Speaker, Sir, I beg to move.

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[1] MISA Travel, Sky Travel & Tours, S Travel, Asia-Euro Holidays, Ho Wah Travel, Journey of Dream, Five Stars Tours, Galaxy Travel, Shangrila Travel and GEL Travel

[2] In a 2016 STB survey of 415 consumers, it was found that about 80% of respondents purchased travel insurance for their most recent trip.

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