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Inbound Chinese Tourism Market to Be Deregulated?

Government Set to Abandon Special Designation for Agencies Entitled to Handle Visiting PRC Visitors.

(3/28/2005) Labeling current practices limiting which Indonesian agencies are entitled to handle the inbound Chinese market as "semi-monopolistic," Indonesia's Minister of Culture and Tourism has pledged to review those regulations and open the Chinese market to service by all licensed Indonesian tour and travel agents.

As quoted in the Indonesian-language Bisnis Indonesia, Minister said, "We are going to re-evaluate the selection process for travel agents permitted to work with China, so that soon there will be no more limits - any agent can work with Chinese tourists."

The Minister was responding to comments by the Head of the Association of Indonesian Travel Agents (ASITA) for West Java, Yachya Machmoed, who said the earlier security rationales for "specialized" agents were no longer relevant and contributed to the very poor arrival numbers from the Chinese market for Indonesia. Currently, some 28 million Chinese people travel abroad from China every year, but only about 80,000 visit Indonesia.

Limitations Due to Regulations Imposed by Chinese Government

Meanwhile, Thamrin B. Bachri, the Deputy Minister for Capacity Building and International Cooperation from the Ministry of Culture and Tourism, explained that current limits placed on travel agents wishing to work with Chinese tourists are based on pre-existing Chinese regulations.

Countries visited by their citizens must qualify for "approved destination status," and travel agents that enter the Chinese market must fulfill certain criteria including, collaboration with a Chinese travel agent, employment of Mandarin-speaking guides, and cooperation only with certified souvenir shops. "Because the Chinese market is regulated in this way, it means that any changes must be made via government-to-government initiatives, and the travel agents that want to work in that market must have the required permits. Right now 89 travel agents nationally are permitted, and this can hardly be called a monopoly," he added, apparently disagreeing in part with the Minister's assesment.

He also said that his department would be meeting again with the China National Tourism Association, "because there are a lot more travel agents who could qualify to work with the Chinese market."

Regarding requirements that travel agents pay a hefty deposit before being allowed to serve the Chinese market, Thamrin further explained that these deposits represent an internal rule of the ICTC - the national consortium of travel agents for the Chinese market.

Protection That Simply Doesn't Work

Many travel industry experts see the current regulations imposed on travel agents as counter-productive, monopolistic and the source of the abuse and poor service many Chinese travelers complain of when visiting Indonesia.

Although relatively small in number, the inbound PRC market is reportedly rife with "head selling" - a practice in which visiting tourist are "auctioned off" to the highert bidder who then regains his investment by lowering tour quality content and dealing only with those establishments prepared to pay high commissions from all revenues generated by Chinese customers.