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Wednesday 19.09.2018 | Name days: Verners, Muntis

Countryside tourism may be threatened by unfair competition

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUCountryside tourism businesses are threatened by unfair competition and growing bureaucracy, as emphasized by Latvian Countryside Tourism Association Lauku ceļotājs after discussing this season’s results at four regional business seminars.

Asnāte Ziemele, president of Lauku ceļotājs, says the season was stable in spice chilly and rainy summer. Modern trends show that companies that do not maintain a high-enough quality standards and do not follow clients’ needs and requests inevitably shut down. High-quality accommodation, catering and other services are in high demand. At the same time, tourism businessmen mention certain threats and trends that have an unhealthy effect on the market and entrepreneurship. These include unfair competition and growing bureaucracy.

Ziemele says countryside tourism businessmen in several of Latvia’s municipalities often report situations when support is lacking and municipal administrations perform acts of underhanded competition by offering tourism services at much lower prices. Such a situation distorts the market and creates serious risk for continued existence of businesses. «Municipalities say that local businessmen either don’t want to or are unable to provide competitive tourism offers. But this argument does not hold water, because a single businessman’s failure cannot be applied to the entire private sector. For example, Sigulda’s ski track is currently managed by the municipality. Because of that, the city competes with its own businesses. There are also similar examples in other counties,» said Ziemele.

According to her, in many cases businessmen brave enough to voice their dissatisfaction or put up demand, such as fixing roads owned by the municipal administration in Latgale, also notice the rise of conditions non-beneficial to their business activities. «Roads do get fixed, but businessmen later receive visits from all kinds of supervisory institutions bent on finding all kinds of problems and violations at their businesses. This makes one wonder about municipalities’ and local supervisory officials’ cooperation in preventing realization of businessmen’s proposed initiatives and requests,» says Ziemele, adding that this results in a clear violation of the ‘Consult first’ principle.

She says that businesses have noticed that the State Revenue Service (SRS) and State Labour Inspectorate often come without warning and always find something to punish businessmen for. For example, SRS visit a businessmen that has only just relocate from a city to Latgale after selling their only piece of real estate and investing all their funds into creating a tourism company in the countryside and applies a EUR 500 fine for relatively small violations in document approval. Also the registered businessman not only has to pay taxes but also invest quite a lot of time to satisfy requirements of at least ten controlling inspections. A small company cannot possibly afford to hire a separate specialist for this purpose.

Businessmen have also noticed an increase in bureaucracy in spite of the official report from state administration. Although the bureaucratic burden had declined briefly during the crisis, it has become more intense than before. Countryside tourism businessmen propose using the example set by Estonia, where many formalities are resolved electronically, which takes up less resources and time.

According to her, Lauku ceļotājs proposes limiting and supervising more strictly businesses founded by municipal administrations in fields in which they would come in direct competition with private businesses. Also the association proposes introducing a requirement for municipalities to search for partners in the private sector and making sure prices of services offered by municipal companies are not lower than prices of services offered by the private sector.

A possible solution for the aforementioned  problem when supervisory services appear out of nowhere includes the enforcement of the ‘Consult first’ principle. Branch offices of different supervisory institutions are advised to cooperate with municipalities in development of new business support plan to include specific benefits, adaptation time or consultancy opportunities when starting out. It is also proposed applying stricter supervision of unregistered businesses.


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