Demand for Low- interest Loans, Tax Breaks from Vietnamese Tourism Companies

Published:  10:07 Tuesday - April 17, 2012

Demand for Low- interest Loans, Tax Breaks from Vietnamese Tourism Companies

Because of the decrease in demands for tourism in these difficult times, local tourism agencies want to widen the tax and loans at reduced rates.

These are only two of the many decisions of the Association of Tourism Ho Chi Minh emphasized in order to support the 130 members in the tourism hotels, restaurants and areas to face current problems.

Nguyen Thi Khanh, vice-president of the association, said most members of the society were not as good as in 2011. The reduction of demands for holidays on April 30 and May 1 provides a weak industry outlook in the summer.

"Three years ago, the domestic tourism industry always helped local businesses to offset the drop in outbound tourism sector, but now it is not working because of financial difficulties among buyers," said Khanh.

Meanwhile, there are many complaints from tour operators about higher input cost increasing the price of the package. Price rising brings more difficulties to the tourism industry in attracting customers and also damage the already signed contracts based on much lower wages.

According to Tran The Dung, deputy director of The He Tre Tourism Company, travel demands have decreased, while prices for services are growing steadily and without prior notice. The company continues to pay an additional VND90, 000 for each customer to Thua Thien- Hue during the next vacation to deal with the cost rising issue while getting a small final profit.

"This is a quite grim situation. Demand for April 30 and May 1 holiday in the company fell by 30% from year to year", said Dung.

Sharing the same point of view, Cao Tri Dung, director of Vitours, demonstrated that the cost of transportation has left bad effects on the tourism sector. First of all, the high cost of air tickets have discouraged visitors to travel to remote areas, such as in the central region, he said.

State of the business this year has been even harder than last year, Dung said, adding that his company is likely to catch a small increase of 3.5% or break even or even incur losses.

Only strong financial capacity and brands can help companies to keep their operation, while the majority of members in the industry are small and medium-sized, stated Khanh of the HCMC Tourism Association.

"Some small travel companies have stopped their businesses in the current circumstances, while many others were unable to continue working in order to avoid losses," said Khanh.

* Requests from HCMC have been sent to the government for reducing corporate taxes and benefits in the first half of this year, especially for combat clothing, leather shoes and seafood businesses.

The city also requests funds for lending to businesses to maintain production and business activities, with a lower interest rate than bank loans’, said Nguyen Van Lai, director of HCMC Department of Industry and Trade.

At a conference on the first quarter economic performance of the city last week, Lai spoke that the situation will get worse in the second quarter because of the influence of fuel prices on production costs, while it’s hard for companies to access low-interest loans.

In contrast to February, the main concern was the great drop in material import volumes which machinery and equipment imports fell by 2%, iron and steel production declined by 12.7%, 16.4% reduction in fabric, textiles, leather, clothing and footwear fell by 19.2%, and the paper fell by 7.3%.

The declined import volumes of production materials present that the companies were significantly affected by the difficult access to bank loans, lower consumption and high inventories.

Pham Xuan Hong, vice chairman of Vietnam Textile and Apparel Association (Vitas), told the newspaper that the biggest problem of the local textile industry shrinks export market, which was reduced by 15-20% in the first quarter compared to the same period last year.

Consumers try to cut off their spending, leading to bad situation in domestic demand. Consequently, many small and medium-sized enterprises have closed their business.

Unlike previous years, when the textile companies always faced with labor lack, workers of textile and garment industry are now trying to find new jobs, especially in Binh Duong and Ho Chi Minh.


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