TRAVEL AGENTS (AMENDMENT) BILL

Order for Second Reading read.

The Minister for Trade and Industry (Mr S. Dhanabalan): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Before I describe the contents of the Bill, Sir, let me brief Members on the background to this Bill.

The Travel Agents Act (Chapter 334) came into effect on 1st December 1976. It empowers the Singapore Tourist Promotion Board (STPB) to license and regulate all travel agent activities. The Compensation Fund was also established under the Act which I will discuss in a moment.

In the last 17 years, the licensing requirement has helped weed out the shakier travel agents in the industry. The number of default cases has also reduced significantly.

The Compensation Fund, which I mentioned earlier, was established under the Act and is funded by a one-off contribution of $1,500 each by all licensed travel agents. The Fund is administered by a Compensation Fund Committee under the STPB and is used to compensate travellers in the event of fraud or loss. The Fund, as it currently stands, is not sustainable as the contributions to the Fund are not determined on an actuarial basis, and bear no relationship to the associated risk exposure. It is merely $1,500 from each licensee. So an occasional large claim could wipe out the whole Fund. For the Fund to act as an insurance scheme, contributions would have to be much higher than the existing one-off payment of $1,500 per licensed travel agent. This is not desirable, as it would amount to a levy on the travel industry to provide protection for the travelling public.

Besides, it is not the Government's role to provide insurance to buyers of goods and services against defaults by the sellers. Government does not take on such a role for other consumer or business groups, and should not do so for tourists.

A better safeguard is to have sufficient conditions in the licensing requirements to minimise defaults. This is what STPB has done. Travel agents, for example, are now required to have a minimum capital investment and to provide STPB with additional financial security in the event of poor financial performance. Such additional security will be, for example, a bank guarantee. They are also required to submit audited accounts on an annual basis to STPB, which has the power to revoke an agent's licence on grounds of financial insolvency and/or professional misconduct. These requirements, as I mentioned earlier, have weeded out the shakier travel agents in the industry.

With these safeguards, it has thus been decided that the Compensation Fund be dissolved.

Under the existing Act, STPB can revoke the licences of travel agents for breach of the Act or Regulations, but there is no power to suspend the licences or compound minor offences. Revocation is a severe penalty for minor offences. The result is that minor offences are not effectively dealt with. In practice, therefore, revocation is rarely carried out, and such revocation prosecutions also involve long drawn-out court proceedings. Revocation will also inconvenience existing customers as the affected travel agent must cease business. Power to suspend licences and compound minor offences will ensure better enforcement of the Act and Regulations without inconveniencing consumers. Suspension of a licence only prevents solicitation of new business during the suspension period, but allows current business to continue.

To enhance STPB's ability to effectively implement the Travel Agents Act, STPB should be empowered to suspend licences of travel agents and to compound offences committed by travel agents for minor breaches of the Act or Regulations, and this is what this Bill now provides.

I will now elaborate on the provisions of the Bill. Clause 5 of the Bill provides for the dissolution of the Compensation Fund. Clause 8(1) and (2) provides for the transfer of the balance of the Fund to a special account under the Singapore Tourist Promotion Board. This balance, which now stands approximately at $1.3 million, will be used for consumer education, marketing and promoting activities to assist travel agents, and projects to raise service standards among the local travel agents.

Transitional provisions are provided under clause 8(3) and (4) to enable STPB to hear and decide on claims arising prior to the operational date of this Bill.

Clauses 3 and 4 provide for the power to suspend licences, while the power to compound offences is in clause 6. Grounds for suspension will be gazetted in the Travel Agents Regulations after the Bill has been enacted. Revenue collected from the compounding of offences will go into the Tourist Promotion Fund established under the Tourist Promotion Board Act.

Mr Speaker, Sir, the proposed amendments will dissolve the Compensation Fund and enhance STPB's capabilities to implement the Travel Agents Act effectively by empowering it to compound offences and suspend licences for minor offences.

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. - [Mr S. Dhanabalan].

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