Vietnamese tour companies want low interest loans, tax breaks

To survive the current tough times due to slowing tourism demands, local travel agencies are seeking tax extensions and loans with reduced interest rates.

These are only two among many solutions the HCMC Tourism Association insists on in an attempt to support its 130 members in tourism, hotels and restaurants sectors to cope with the present woes.

Nguyen Thi Khanh, vice chairwoman of the association, said business of most members was not as good as in 2011. Demand for holidays on April 30 and May 1 has declined, foreseeing a dull outlook for the industry in the upcoming summer.

“Three years ago, the domestic tourism sector always helped local firms make up for the decline of the outbound tourism segment but now this fails to work given financial constraints from buyers,” Khanh noted.

Meanwhile, many tour operators complained the increase in input costs pushed up tour package prices. Surging prices make it harder for tourism firms to lure customers and they have also suffered losses with the already-signed contracts based on much lower fees.

According to Tran The Dung, deputy director of The He Tre Tourism Company, tourism demands have slackened while service prices have constantly climbed up without prior notice. His enterprise even must pay an additional VND90,000 for each tour buyer to Thua Thien- Hue during the forthcoming holiday to cover rising fees, enjoying little profit as a result.

“The situation is quite gloomy. Demand for April 30 and May 1 holidays at our company has slid by up to 30% year-on-year,” Dung stressed.

Sharing the same view, Cao Tri Dung, director of Vitours, asserted mounting transport fees have left bad consequences on the tourism sector. Especially, high airfares have discouraged those visitors from traveling to faraway areas like those in the central region, he stated.

This year’s business situation has become even tougher than the previous year, Dung said, adding his company will probably net a meager profit of 3-5% or break even or even incur losses.

Only companies with strong financial capacity and major brands can maintain their operation while the majority of industry players are small and medium enterprises, reckoned Khanh of the HCMC Tourism Association.

“Certain small travel agencies have halted business under the current climate while many others have failed to continue operation to avoid losses,” Khanh cited.

* HCMC has petitioned the Government for corporate tax reductions and exemptions in the first half this year, especially for the struggling apparel, leather-shoe and seafood enterprises.

The city also sought capital for lending to enterprises to serve production and business activities, with a lower interest rate than that of bank loans, said Nguyen Van Lai, director of the HCMC Department of Industry and Trade.

Speaking at a conference on the city’s first-quarter economic performance last week, Lai said the situation will get worse in the second quarter due to the impacts of higher fuel prices on production costs, while few enterprises are able to access low-interest loans.

Unlike February, the major concern in March was the sharp decline in material import volumes, in which machinery and equipment imports dipped 2%, iron and steel slid 12.7%, fabrics dwindled 16.4%, materials for textile-garment and leather-footwear dropped 19.2%, and paper went down 7.3%.

The falling import volumes of production materials show that enterprises are greatly affected by difficult access to bank loans, shrinking consumption and high inventories.

Pham Xuan Hong, vice chairman of the Vietnam Textile and Apparel Association (Vitas), told the Daily that the biggest challenge of the local textile industry is the shrinkage of export markets, which contracted 15-20% in the first quarter over the same period last year.

Domestic demand is not better as consumers are tightening their spending. As a result, numerous small and medium textile firms have shut their businesses.

Unlike in previous years when textile enterprises were always facing labor shortages, workers in the textile and garment industry are now struggling to find jobs, especially in Binh Duong and HCMC.