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The Warsaw Voice » Law » January 31, 2013
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Law in brief
January 31, 2013   
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Travel More Expensive, But Safer

After some 1,700 Poles were stranded abroad last year when travel agencies were hit by a wave of bankruptcies, the Finance Ministry plans to revise regulations so that customers are better protected. But the tougher rules will mean additional costs for travelers, while new tour operators will find it more difficult to enter the market.

The ministry intends to significantly increase insurance fees for tour operators and introduce an additional insurance fund based on payments made by travel agencies.

Travel agencies are expected to welcome the new regulations despite an increase in business costs.

“Most cases of bankruptcy last year concerned newcomers among tour operators who simply went pear-shaped,” Krzysztof Pi±tek, chairman of the Polish Association of Tourism Organizers, told the Newseria news service. “The existing minimum insurance guarantees are insufficient, hence the Finance Ministry’s proposal for a drastic increase in them to ensure that clients’ money is completely safe.”

Twelve travel agencies filed for bankruptcy last year. Half of them had been in operation for less than two-and-a-half years. Finance Ministry data shows that the bankrupt companies were insured for over zl.28 million.

It cost “only” around zl.7.5 million to bring home the 1,700 customers who were left stranded abroad when travel companies went under, but the agencies still ran short of zl.5.5 million to cover claims and other costs.

To prevent a similar situation in the future, the Finance Ministry, together with the Ministry of Sport and Tourism, wants to increase the minimum amount for which a tour operator commencing business operations must be insured. For tour operators using charter flights, the amount would be 250,000 euros (up from 40,000 euros at the moment), and for those not using charter flights 50,000 euros (up from 7,500 euros). For tour operators offering trips and vacations only in Poland and neighboring countries, the amount would be 7,500 euros (up from 4,500 euros). These amounts would increase as a company’s sales grow. This could pose a barrier for new businesses wanting to enter the market.

“For some, this may be a problem, but the main goal is to improve security for consumers,” said Pi±tek.

However, some of the costs, as in the case of the Tourist Guarantee Fund, would be borne by travel agency customers. According to Deputy Sport and Tourism Minister Katarzyna Sobierajska, the initially proposed amount is zl.15-20 for each person going on a trip. The fund will offer additional protection in case there are not enough funds in the main system to bring tourists back to the country or pay all dues.

New Rules Urged to Prevent Bankruptcies
Reeling from a wave of bankruptcies, construction companies are urging a change in the law to give them more protection while working on public procurement projects.

The Polish Association of Construction Sector Employers (PZPB) says it aims to prevent situations in which companies are not paid for their work on time. Problems of this type have led to the collapse of a swathe of businesses.

The association says that uniform contracts are needed in the building sector to equally distribute rights and obligations between investors and contractors. The organization is working on a standard contract form together with the Association of Engineers, Consultants and Experts. The form will be modeled after that used by the International Federation of Consulting Engineers (FIDIC).

Such a standard form will be drafted early this year, according to the association’s head, Marek Michałowski.

“We hope to be able to persuade the Transport Ministry as well as the Public Procurement Office to recommend such a contract form for use by investors in all projects involving public procurement,” said Michałowski.

The Polish Association of Construction Sector Employers says it wants to ensure that each party is responsible for strictly specified areas during an investment project. Thanks to this, projects will be carried out more smoothly, the organization says.

The association is also urging a change in the role of project managers. In line with the recommendations of the FIDIC, a project manager should be an independent arbiter rather than someone representing the investor and acting on the investor’s orders, the association says. Both parties, the investor and the contractor, should respect the project manager’s decisions.

After the new contract form is ready, it will go to construction sector professionals for consultations, the association says.

According to the PZPB, many businesses in the construction sector hope the European Union’s new budget for 2014-2020 will make it possible to inject new funds into the Polish economy and help Poland’s construction companies overcome their problems.

Meanwhile, a study published by the Warsaw School of Economics shows that business sentiment in the construction sector deteriorated in the final quarter of last year. Almost 60 percent of executives in the sector are pessimistic about the future of the construction market.
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