Travel firms: save them or let them die?
If one drop of milk is given to every business, all of them will remain alive, but none will be strong enough to compete with the world’s giants, Tran Dinh Thien, a respected economist, has noted.
According to the HCM City Tourism Department, even large travel firms including Vietravel and Saigontourist have predicted big losses, VND1.7-2.2 trillion for Q2. BenThanhTourist estimated a loss of VND250 billion, Fiditour VND259 billion and TNT VND1.2 trillion.
“Covid-19 gives the same opportunities to all tourism firms. The ones that can be flexible and adapt to the new circumstances will exist, while the others will have to leave the market,” said Pham Ha, director of Luxury Travel.
According to the Tourism Advisory Board (TAB), the tourism industry made up 8.8 percent of Vietnam’s GDP in 2019. In the last four years, of every four new jobs created, one was in the tourism sector.
TAB found from its survey in April that 65.7 percent of surveyed firms have to cut more than 50 percent of their staff, and 78 percent have to cut salaries or staff temporarily in an effort to cut operation costs.
|A survey by TAB found that 90 percent of businesses want to borrow money at preferential interest rates. TAB has proposed that the government consider a credit guarantee program through the banking system, worth VND150 trillion, or 25 percent of the 2019 revenue of the tourism industry.|
How to rescue travel firms and revive the tourism industry is a burning question. Should the government save all businesses, or let them struggle to survive on their own?
Thien said the government projects large bailouts, but if they are divided equally to many subjects, each part will be small.
“If giving one drop of milk to every business, all businesses will stay alive. But will there be any business which can be extremely strong to compete with the giants in the world?” Thien said.
Thien believes that it would be better to focus support on the most capable businesses.
Phung Quang Thang, director of Hanoi tourist, said this is why the Vietnam Tourism Association, when launching the tourism demand stimulus program, chose only five travel firms as partners to discuss, build tour products, and set selling prices for the program.
Prior to that, Vietravel CEO Nguyen Quoc Ky proposed to the government a reduction in the corporate income tax for six months or the whole year of 2020, and provide loans at preferential interest rates to help businesses recover when the epidemic ends.
A survey by TAB found that 90 percent of businesses want to borrow money at preferential interest rates. TAB has proposed that the government consider a credit guarantee program through the banking system, worth VND150 trillion, or 25 percent of the 2019 revenue of the tourism industry.
AZA Travel Nguyen Tien Dat said that such support needs to be discussed, approved and implemented soon, because businesses need help urgently.
The Vietnamese and Japanese Governments have agreed to gradually ease travel restrictions between the two countries, the Ministry of Foreign Affairs has announced.
Travel firms have urged the government to conduct negotiations with some countries to obtain bilateral agreements on market reopening soon or at the same time as regional rivals.