Travel Agents (Amendment) Bill

Order for Second Reading read.

4.32 pm

The Senior Minister of State for Trade and Industry (Ms Sim Ann) (for the Minister for Trade and Industry): Mr Speaker, on behalf of the Minister for Trade and Industry, I beg to move, "That the Bill be now read a Second time."

The number of licensed travel agents in Singapore has grown from approximately 800 in 2007, to 1,200 in 2017. Our travel agents play an important role in the tourism ecosystem as they deliver memorable experiences to both visitors and locals. At the same time, the travel agent industry provides good jobs for Singaporeans.

Since the Travel Agents Act came into force in 1976, MTI and STB had reviewed and amended the Travel Agents Act in 1993 and the Travel Agents Regulations in 2007 to ensure that the regulatory regime remains relevant. Compared to 10 years ago, the travel industry has evolved significantly, in particular, with the intensifying growth of e-commerce. Consumers can now browse and compare a wider range of travel products online on various platforms. There is also greater demand for experiential travel that is immersive and authentic while personalised for consumers' needs and preferences.

To keep up with these changes, many travel agents are seeking additional channels to reach out to customers. Some of them have evolved from the traditional brick-and-mortar model to new operating models, or developed new and niche areas of business. It is thus timely for us to amend the travel agent legislation to take into account these emerging business models and ensure that consumers continue to be adequately protected.

The majority of Singapore's travel agents provide quality travel experiences and contribute to a positive image of the industry. Unfortunately, there is a small minority that conducts their businesses irresponsibly. In this regard, STB regulates the travel agent industry through a licensing framework implemented via the Travel Agents Act and Regulations. The framework allows STB to take action against fly-by-night travel agents and provides safeguards against malpractices that pose risks to travellers. At the same time, the Government works with the Consumers Association of Singapore (CASE) and industry associations to safeguard consumer interests.

In the course of our review, MTI and STB have sought feedback from more than 180 industry stakeholders, including a diverse group of travel agents, industry associations, tourist guides and CASE. With their valuable input, we had put forth a draft Bill for public consultation earlier this year. The respondents were generally supportive and provided constructive input on how to facilitate more effective implementation on the ground. MTI and STB have carefully considered all feedback received and incorporated them where relevant.

Mr Speaker, the Bill before us is the outcome of our review and consultation. We have sought to balance consumer and business interests when finalising these amendments, which I will now outline.

One key objective of this legislative review is to better protect consumers against potential malpractice by travel agents. Sudden closures that affect a larger number of consumers also remain a concern, even though these cases are infrequent. To address these issues, we have proposed the following amendments.

First, we have tightened the criteria that travel agents must fulfil in order to be granted a licence. Clause 6 highlights that in making licensing decisions, STB will consider additional factors, including whether the individuals involved with the travel agency, such as company directors, are suitable to hold the licence. For instance, individuals who had previously contravened travel agent legislation might be denied licences.

Second, the amendments seek to equip STB with sufficient investigation and enforcement powers, so as to enable them to take action against errant operators more promptly and effectively. Clause 10 enhances STB's investigation and enforcement powers, for example, by empowering STB to take photographs, audio and video recordings that may facilitate investigations and that can serve as evidence for any contraventions of the travel agent legislation.

Third, we have reduced the "show cause period" for a travel agent facing potential suspension and revocation, from 21 to 14 days. The show cause period is the period after STB issues the initial notice of suspension or revocation, during which the travel agent will have the opportunity to explain why they should be allowed to keep their licences. If the travel agent is unsuccessful in making a case for retaining its licence, STB will issue the order of suspension/revocation after the show cause period. As travel agents are still able to conduct business and collect payments from customers during the show cause period, we have shortened the time required for STB to complete the licence suspension or revocation process, thus reducing the risk consumers are exposed to. The new 14-day period has been pegged to the provisions in other similar legislation, to ensure that licensees have a reasonable amount of time to present their case.

Fourth, we have adjusted the penalty amounts for contraventions of travel agent legislation, following their last update in 1993. The amounts need to be sufficiently high to deter potential malpractice. Clause 5 raises the penalty ceiling for the offence of unlicensed travel agent activities from $10,000 to $25,000. The maximum fine for other offences has also been doubled. For compoundable offences, clause 18 provides for a maximum composition amount of half the maximum fine prescribed or $5,000, whichever is lower. This is an increase from the current maximum composition sum of $1,000.

Even as we raise the penalty ceilings in some cases, we are also conscious that penalties imposed should be proportionate to the severity of the contravention. Clause 7 introduces administrative financial penalties set at a maximum of $2,000 for minor contraventions. Certain minor and technical contraventions will consequently be decriminalised. STB will thus be able to take swifter and proportionate enforcement action against travel agents in such cases, instead of going through a lengthy prosecution process.

Another key plank of our efforts to enhance consumer protection measures is based on the principle of "caveat emptor", or "let the buyer beware". While we have made the relevant changes to empower STB to do more to ensure that travel agents are professional and responsible, it is, ultimately, the consumers who make the final purchasing decisions. In this light, we have also taken steps to ensure that travel agents will provide the information necessary for consumers to make informed purchasing decisions, with a greater awareness of the potential risks.

Clause 7 allows STB to require travel agents to disclose to all customers that they have been issued a notice of suspension or revocation. If required by STB, travel agents have to make this disclosure during the show cause or appeal periods. This is important as travel agents are still able to collect payments from customers during these periods, when there is a chance that they may not be able to fulfil these obligations. With this disclosure by travel agents, customers can take this information into account when deciding whether to continue transacting with the travel agent facing suspension or revocation. STB may also publish the notice or order of suspension or revocation on its website, to further raise awareness of travel agents that are facing suspension or revocation.

Taken together, the measures I have outlined above are a comprehensive suite of consumer protection measures that facilitates STB's role as the regulator, while also empowering consumers to make more informed purchasing decisions. At the same time, we have also taken care to ensure that the regulatory regime remains fair to licensees, who will continue to have the right to show cause and not be subjected to overly punitive measures.

Mr Speaker, I will now elaborate on the second category of amendments which seeks to reduce regulatory cost where possible, so as to ensure that the business environment remains conducive for travel agents to innovate and thrive. We want our travel agents to remain relevant and enhance their capabilities in meeting the rising demand for experiential and customised travel.

To cater to travel agents with different areas of business, clause 6 provides for the creation of different classes of licences with different minimum financial requirements. For instance, we intend to introduce a "niche licence" tier in the Travel Agents Regulations targeted at travel agents who sell or arrange local tours with passenger-carrying conveyance, but without accommodation.

This refers to tours that bring travellers around Singapore with dedicated transport provided to ferry the tour group around, including coach tours or bum boat tours. Niche licensees will be subjected to lower minimum financial requirements compared to general licensees. At the moment, we intend to require niche licensees to meet a minimum requirement of $50,000 in paid-up capital and net worth, compared to $100,000 for general licensees. While we have reduced the regulatory costs, we will still need to retain regulatory oversight over such niche licensees so as to protect consumers from possible errant operators who may carry out malpractices, such as forced shopping expeditions, or commonly known in the industry as "zero-fare tours".

We are also making a related amendment to the Travel Agents Regulations to calibrate the licensing regime according to different levels of risk posed to consumers. We will exempt some entities from needing travel agent licences, such as entities who sell or arrange tours within Singapore without providing passenger-carrying conveyance. These tours tend to be more experiential as the participants operate the conveyance themselves, including bicycle tours, segway tours and kayaking tours. Walking tours will also fall under this category. Such entities pose much lower risk to consumers as prepayment is typically low or not required. We hope that this exemption will encourage more entities to offer consumers innovative and experiential tours and, in turn add to the vibrancy of our tourism landscape. As tour models constantly evolve, we will review the exemption from time to time to ensure that it remains relevant and balances innovation and consumer protection.

Collectively, these measures benefit entities who pose lower consumer risk, enabling them to obtain travel agent licences more easily and, in some cases, even exempting the need for a licence. By doing so, we hope to encourage more players to provide differentiated offerings to both tourists and locals, which will also help them to innovate, grow and maintain relevance in response to changing consumer preferences. With greater innovation in our tourism options, there could also be more appealing and flexible jobs available to Singaporeans who wish to join the tourism sector.

Mr Speaker, we have taken a calibrated approach in finalising the Bill, enhancing consumer safeguards while also remaining pro-business and pro-innovation. With these legislative amendments, we hope that the travel agent industry will be better positioned to grow and thrive in the fast-changing tourism landscape. MTI and STB will work towards implementing these changes in phases from 2018.

Effective legislation is just one component of the Government's continual efforts to strengthen the regulatory framework. The other key strategy is to step up our consumer education efforts. We will continue to work with all stakeholders, including the travel agent associations and CASE, to raise awareness of common malpractices and the benefits of purchasing travel insurance. We hope that these efforts will help consumers make more informed purchasing decisions. Mr Speaker, please allow me to say a few words in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Speaker, Parliamentary colleagues, there are currently close to 1,200 travel agents in Singapore. The majority of Singapore's travel agents are law-abiding and ethical operators. However, there are occasionally a few "black sheep" who tarnish the reputation of the industry. In such cases, the Government has to take action in accordance with the law to protect consumers' interest and safeguard the reputation of Singapore's tourism industry.

In order to better protect our consumers, the amendment Bill proposes the following key measures.

First, to tighten the criteria that travel agents must fulfil in order to be granted a licence.

Second, to enhance STB's investigation powers when dealing with errant travel agents.

Third, to reduce the "show cause period" for travel agents facing licence suspension or revocation from 21 days to 14 days and allow STB the option to require such travel agents to disclose this fact to their customers during this period. This will lower the chances of customers making misinformed decisions.

Fourth, to adjust the penalty framework to introduce administrative financial penalties for more minor contraventions, allowing STB to take more timely action against such contraventions, while raising the maximum fines to curb more serious contraventions.

In addition, after taking into consideration recent developments in the tourism industry, the amendment Bill will reduce regulatory requirements on lower-risk travel operators to encourage them to roll out more innovative and attractive travel products. This can also help to create more attractive and flexible job opportunities for Singaporeans who wish to join the tourism industry.

Besides amending the Travel Agents Act and Regulations, STB will continue to work with industry players to strengthen consumer education, encourage consumers to buy travel insurance and raise awareness of the updated provisions. I hope that all Members will support these measures.

(In English): Mr Speaker, I beg to move.

Question proposed.

4.47 pm

Mr Lim Biow Chuan (Mountbatten): Mr Speaker, Sir, allow me to declare my interest in speaking on this Bill as President of the Consumers' Association of Singapore (CASE).

Over the past five years, CASE has received 792 complaints against the closure of travel agencies. Most of these complaints relate to loss of deposits paid by consumers due to the closure of travel agencies. And based on our records, there were a total of 17 travel agencies which ceased operations over the last five years.

Even established brand names, like Five Star Travels, Asia Euro Travel, Ho Wah, S-Travel and MISA Travel, who have been in the travel business for many years, were unable to survive in the tough competitive business environment and, eventually, they ceased operations. When they did cease operations, consumers who had made travel bookings and payment in advance were left in the lurch. There is nothing they can do when businesses fail; even lodging claims will not get back their payment because consumers are unsecured creditors and rank last.

As not all affected consumers lodge their complaints with CASE, these reported figures of 792 complaints may represent only a fraction of the total number of consumers affected by the closure of the travel agencies. Many consumers, after finding out that the travel agency had ceased operations, do not lodge complaints to CASE because they know that they cannot recover their losses.

CASE has been in constant dialogue with STB on the issue of closure of the travel agencies for the past few years. Allow me to put on record my appreciation to STB officers for meeting us regularly and discussing consumer protection with myself and my CASE officers.

In the consultation paper put up by STB in June 2017, it was stated that STB will enhance consumer protection by amending the regulations governing the Travel Agents Act. One such amendment to the regulations will prohibit travel agents from publishing "inaccurate or erroneous" advertisements. I welcome such an amendment as advertisements which contain inaccurate or erroneous details will be misleading to consumers. Thus, if a travel agent advertises its tours as "zero costs" and then recover its costs from consumers by imposing compulsory minimum spending or compulsory tips, that is clearly inaccurate and misleading.

I also welcome clause 10 of the Bill which imposes a requirement for travel agents facing suspension or revocation of their licences to disclose this fact to new and existing customers. This will allow consumers to be aware of the trading status of the travel agent. Hence, it is for consumers to make an informed decision whether to continue dealing with the same travel agent facing the restriction.

For this particular clause 10, may I ask the Senior Minister of State to clarify: for consumers who had already bought travel packages from a travel agent facing suspension or revocation of their licences, can these consumers be allowed the option of terminating their contract without compensation or losses?

For CASE, our main concern is about consumer protection whenever a travel agency ceases operations. Each time we read about a travel agency ceasing operations or had its licence revoked by STB, there will be losses suffered by consumers. There will also be loss of consumer confidence in travel agencies.

It has been reported in the media that the amount of sales generated by travel fairs every year has been about between $80 million and $100 million. And these figures exclude the sales recorded by some travel agencies which conduct pre-travel fair sales. And for each sale of a travel package, consumers typically pay deposits of between 20% and 50% of the package costs. Some consumers even pay for the entire package in full so as to obtain freebies from their credit card companies.

In response to our concerns about closure of travel agents, STB had implemented a policy that travel agencies must inform consumers about the importance and the need to purchase travel insurance. Unfortunately, not every consumer buys travel insurance as the insurance costs add up to the overall costs paid for by the consumers. So, I would ask the Government to consider requiring travel agencies to provide a performance bond or insurance to protect against business failure. It is part and parcel of doing business, just like lawyers and doctors are required to provide insurance against claims by their clients. The amount of insurance or performance bond may be set at 20% to 30% of the annual turnover of each travel agent so that their funds are not tied up excessively. And this, hopefully, will, at least, provide some form of protection for travellers who, for some reason or other, do not buy travel insurance.

I also urge STB to constantly check on the financials of the travel agencies. This will allow STB to better anticipate whether a travel agency may be facing financial difficulties and, thereafter, STB can step in to protect the deposits paid by consumers as early as possible.

I would also like to highlight another area, which is the prevalence of online travel portals like Agoda Travel, Hotels.com, Booking.com and so on. I understand that many of these companies are not registered in Singapore. In such a case, may I ask who regulates these online travel portals? In the event that these online travel agencies cease operations, how do consumers recover their payment made to such online travel companies? Perhaps, the Government can consider introducing regulations to regulate online travel agents as well. The Government should also consider an outreach programme to remind consumers who have bought their air tickets or hotels via such travel portal on the importance of purchasing travel insurance after making their booking.

In summary, CASE supports the amendments to the Travel Agents Act and the introduction of enhanced measures to protect consumers. We urge STB to regularly review the legislation and the regulations to ensure that consumer interests will always be protected.

4.53 pm

Mr Desmond Choo (Tampines): Mr Speaker, Singaporeans are big travellers, with more than nine million overseas trips made in a year by air and sea. Singapore also received 16 million visitors in 2016. Clearly, it is important that we strengthen our legal provisions for travel agents which are a key pillar of the industry.

The tourism industry has three key components: travellers, travel agents and workers. While I agree with the amendments proposed in this Bill, I hope that the Ministry can also review three other areas of enhancements: protecting consumers, having stronger travel agents and having a good workforce of tour guides and workers.

While many recreational travellers plan their own itineraries, there is still a strong demand for the services of travel agents as they are convenient. Yet, the sudden closure of companies, including established players, such as Five Stars Tours and MISA Travel, left many consumers in the lurch. In 2014, when Five Stars Tours suddenly closed down, customers were stranded and some only knew through reports in the media.

STB has a website called Travel Related Users' System (TRUST) where the public can check on travel agents that have had their licences revoked or those companies that have ceased operations. This is useful, especially to prevent fraudulent transactions. It can be made more useful if companies with chequered customer service track records are also included.

On the website, there are two companies which had their licences revoked and 125 companies that had ceased operations since 1 January 2017. This could be a result of a fundamental structural shift in the tourism industry. Can the Minister share what are the main reasons for tour agents closing down? The relatively large number of closures suggest that greater protection for both consumers and workers is needed.

Under the proposed amendments for restricted travel agents' licence, there is a requirement of a net worth capital of $50,000. Can we ring-fence a percentage of that net worth capital required for the travel agents' licence to be used to pay the travel agencies' workers and guides when the travel agencies cease operations? In fact, could this be used for all the net worth capital requirements for the licences?

The tourist guides are largely freelancers engaged by the travel agents to bring the tourists around Singapore. When travel agents close, they are adversely impacted. Most guides are not paid CPF or might not be covered under any insurance paid by the travel agent. How can we better protect the guides?

As the travel industry transforms, we need to ensure that the workers as well as the tourist guides are trained in the relevant future skills. Digital skills, customer service, language abilities and emotional intelligence capabilities are increasingly valued highly. What are the training plans that STB has in place to help the travel agents and tourist guides to upgrade and upskill their workers so that they can help to grow the tourism industry?

Could STB also consider having training content that is bite-size and on-the-go so that it is easily accessed by tourist guides who are often moving about as their work entails? As freelancers, their income would be affected if they are to take time off for training. So, formal learning can be difficult for them.

To ensure the professionalism of the tourism industry, the future skills of the tourist guides should be tested to renew their licences. In addition, tourist guides go through a Mandatory Refresher Course (MRC) as part of the requirements for licence renewal. MRC is now conducted in both English and Mandarin. This prepares for the future as Chinese tourists are expected to be an important group for the tourism industry. We must not forget the key markets, such as India and Indonesia. In view of the changing landscape of the tourism industry, how is STB ensuring that the future skills of guides are developed when they renew their licences?

This Bill also proposes several measures to encourage greater innovation in travel products and services offered in Singapore. One provision exempts low risk/incidental players from the licensing regime to foster innovative and varied tour options. These measures will increase competition within the travel sector and will spur smaller agents and non-agents to be creative in coming up with programmes.

Airbnb, for example, has a platform for visitors to sign up for "Experiences" in the city. While there are some options offered in Singapore, such as hiking, bike riding and watercolour painting, the offerings are somewhat limited, compared to what one can get, say, in San Francisco, where you could pay $50 to explore Victorian buildings with an enthusiast on the topic. In New York, you can pay $71 to explore the Garment District with a local designer. These types of "off-the-beaten-track" tours give life, vibrancy and variety to the kind of experiences a visitor could have in a city. Now, hopefully, with the change in provisions, more Singaporeans with knowledge or talent in different fields could come forward to offer such experiences.

With regard to this change, I have two concerns.

First, for those who are exempted from licensing, what kind of safeguards will there be against entities that are not providing legitimate services, or those who are out to scam visitors, or those who do not carry out their duties responsibly? Will we just leave it to the market to give them poor ratings and regulate itself?

We must balance fostering a culture of innovation and Singapore as a reliable place for vacation. Rouge operators must be taken to task. Could STB make it compulsory for these entities to register themselves with STB so that we know who they are and what services they are offering? This will help the authorities in the event where investigations need to be made and tracking needs to be done.

Second, since the penalties for unlicensed travel agents may be increased to $25,000, could STB also come up with clear guidelines to educate the public and the players in the sector on when one is exempt from licensing and when one is not, so that members of the public, including our overseas visitors, are clear on the guidelines and will not unwittingly get themselves into trouble?

The tourism industry is evolving rapidly. We need a robust regulatory framework, strong travel agents and capable travel workers and guides to prevail in the future. We are clearly in the correct direction with this Bill. Mr Speaker, I support the Bill.

5.01 pm

Mr Ang Hin Kee (Ang Mo Kio): Mr Speaker, Sir, we have heard of travel agents who defaulted in fulfilling their commitment to travellers, going bankrupt or shutting their business without giving notice to consumers or staff. How do we ensure that the interests of consumers and tour guides and even staff who are engaged by the travel agents are safeguarded?

I agree with Mr Desmond Choo's emphasis on the vulnerability of guides and the need to do more to protect them, as well as Mr Lim Biow Chuan's plea for us to do more to safeguard the interest of consumers. We need to keep a tight rein on offenders and a tighter rein on repeat offenders, especially the key appointment holders and directors of travel agencies. Giving STB more or new powers to impose financial penalties, suspend or revoke a licence is a strong indication that we want to safeguard our reputation as a reliable travel hub. We want a healthy travel eco-system with honest players.

My question is: will the amendments make errant travel agents act more responsibly? Or will it lead to a cat-and-mouse scenario whereby evading the regulators becomes the mode of operation? I am, therefore, keen to know if STB will have adequate manpower and authority to intervene and act when signs of early concerns are detected. The Minister earlier mentioned that they will be able to act more promptly. But I think the need is to really focus on them coming in to rectify the issue rather than when major damage has been committed.

Apart from regulations, Mr Speaker, we also need to evolve a culture of co-ownership and investing to grow the industry.

Technological advances, coupled with changes in consumer travel habits, have seen the travel agent business evolve. We need to keep track of what is happening elsewhere. How future-ready is our travel industry? How will STB help to equip our travel agents and tour guides with the necessary skills and tools in order to compete in an ever-changing travel and tourism landscape?

I am glad to learn that this amendment will enable certain exemptions for travel agent businesses that are niche and unique in nature. I think that is a step in the right direction.

There is a strong impetus for STB to rally industry stakeholders to co-drive the transformation for the travel industry. In short, the authority cannot do it alone. It requires the commitment and partnership of everybody in the travel industry. I hope STB will have the staff to work alongside the travel industry's stakeholders to develop more professional agents and workforce. These are industry development and capability development in nature, not necessarily enforcement.

A more professional travel industry will mean fewer instances of bad practices that will require regulatory intervention. How do we start building that culture? As they say, more dialogues can only mean more understanding and that is a good thing. To this end, I would like to suggest a conciliation service or a platform whereby STB can set it up with the unions, travel associations, agents, guides, to resolve disputes, to discuss matters and to set standards for professionalism. Such a platform will enable views to be heard, even though they may be diverging. Eventually, they will come to a convergence whereby it will be used to promote the betterment of the industry.

Finally, I would like to commend STB for doing a great job in attracting tourists to Singapore and to facilitate our locals going overseas.

Beyond just ensuring that we have a healthy regulatory environment, Mr Speaker, we also need the right tools, the right people, the right players and the right culture. We have just started operations in Terminal 4. This is a key tourism infrastructure. We will need to continue to invest heavily into future-ready tools, make our travel manpower ready for the challenges ahead and create a platform for stakeholders to resolve disputes and set standards, so as to cement our status as a travel hub. Mr Speaker, I support the amendments.

5.05 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, I stand in support of this Bill. Providing better consumer safeguards against errant travel agents, while balancing this with measures to facilitate a pro-business environment for the travel industry is welcomed.

I have comments and queries on two aspects of the Bill.

Clause 19 expands the regulation-making powers of STB. Amongst other things, this clause introduces a new section 28(1)(ga)(i) which confers powers on STB, such as "imposing restrictions or obligations on licensees in relation to any variation or termination of a contract for the supply by the licensee of a travel product".

This is an important power which allows STB to step in and ensure consumers are well protected in the event that travel agents are unable or perhaps unwilling to fulfil their contractual obligations.

However, I wonder if this broad power, as it is currently drafted, will have any practical use in a more likely situation, such as if a repeat case of MISA Travel occurs. MISA Travel closed in June 2017 and customers who had paid for travel plans and products were left in the lurch.

For illustration purposes, let us assume that a travel agent is not fraudulent and has a legitimate business. However, this travel agent suddenly shuts down or is unable to fulfil its primary contractual obligation of ensuring travel products are supplied to travellers for reasons whether in its control or not. This is often the situation that consumers face.

Even if STB invokes the power in the new section to vary the contract or even direct that the said travel agent has to compensate or refund the travellers, it is unlikely that the travel agent can, will and want to be able to fulfil their obligation.

If the travel agent could, would and wanted to fulfil its obligations, there would not have been a need for STB to step in in the first place. Can the Minister clarify how this new section will be able to help consumers in cases similar to MISA Travel?

On this note, to complement this new section 28(1)(ga)(i), will the Minister consider establishing a Travel Industry Compensation Fund to provide reimbursements as a last resort to travellers in specific situations, such as insolvency of the travel agents?

The Compensation Fund can be financed by all registered travel agents. While this will mean that travel agents have to pay into this fund, it is beneficial in the long term to instil consumer confidence considering that the travel industry is one of the top 10 most complained about industry, according to CASE.

This may help with providing a more robust regulatory framework and, eventually, re-direct much of the travel purchases and revenue back to travel agents, benefiting the travel agents. This might also help in reversing the trend of travellers purchasing travel through direct channels.

From a policy perspective, this Compensation Fund provides accountability and immediate practical recourse to travellers. I understand that this is the model already adopted in Ontario, Canada, and Hong Kong. I do hope we can implement this in Singapore as well.

Secondly, a minor clarification on whether the Travel Agents Act and this Bill cover businesses which operate innovative travel models powered by technology, such as Airbnb Experiences, Tripadvisor or Wego. Travellers are able to purchase travel products on such platforms and, while I appreciate that such businesses have online terms of use, that is merely equivalent to the contracts that traditional travel agents have with travellers. I wish to clarify whether such businesses are caught by the definition of licensees under the Travel Agents Act. If not, what plans are there to regulate such businesses to ensure that travellers who purchase travel products via such businesses equally have consumer safeguards?

Sir, notwithstanding the above clarifications, I stand in support of this Bill.

Mr Speaker: Minister of State Sim Ann.

5.09 pm

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

First, dealing with closures of travel agencies. Several Members raised queries and suggestions on dealing with this matter.

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 licences. In such instances, there is typically minimal consumer impact, as these travel agents ceased operations after fulfilling all contractual obligations. Over the past three 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 business.

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 such sudden closures, making up around 1.5% of all business cessations in that period.

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 its closure was not due to malpractice or any ill-intent on MISA's part. The Government does not have regulatory oversight over such business decisions made independently by travel agents.

Mr Ang Hin Kee asked for early intervention and Mr Lim Biow Chuan 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.

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.

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.

Mr Desmond Choo and Mr Ang Hin Kee expressed concerns 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.

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 Desmond 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.

I agree with Mr Ang Hin Kee 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.

To Mr Desmond 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 Desmond 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 Agents Regulation does address more egregious service issues, such as the need to inform customers of any material changes to tours once a contract has been formed.

Mr Lim Biow Chuan 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 has 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 Agents Regulations, punishable with a higher penalty of up to $10,000.

Mr Ang Hin Kee 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.

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 occurrences of such disputes.

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.

Mr Lim Biow Chuan 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 Louis 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.

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.

Instead, we will legislate in the Travel Agents 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.

Mr Lim Biow Chuan 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 Agents 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.

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.

I agree with Mr Desmond 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 among the travel industry and the general public on this matter.

Mr Desmond 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 Desmond 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.

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.

Mr Louis Ng asked if the Travel Agents Act and this Bill would include emerging models like Airbnb Experiences, Tripadvisor and Wego. Mr Lim Biow Chuan 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.

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.

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.

Mr Desmond Choo and Mr Ang Hin Kee 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 (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.

Mr Desmond Choo asked how STB is ensuring that the skills of tourist guides are tested. All tourist guides are required to undergo a Mandatory Refresher 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.

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 is 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 Desmond Choo that it would be useful if training can be conducted online and are exploring if this can be implemented.

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

The majority of our travel agents conduct their businesses responsibly and are important players in our tourism ecosystem that connects 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.

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 a rapidly changing tourism industry and reap benefits, as Mr Desmond Choo has also mentioned. Thank you, Mr Speaker, Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Ms Sim Ann.]

Bill considered in Committee; reported without amendment; read a Third time and passed.