Safeguards to prevent abuse of tourism voucher scheme

Singapore

WHILE hoteliers and tourist attraction operators prepare to welcome Singaporeans making use of the government's SingapoRediscovers Vouchers, analysts said it will be important to erect safeguards to prevent abuse that dilutes the scheme's targeted support of the industry.

And indeed, the Singapore Tourism Board (STB) confirmed to The Business Times that such safeguards will be built into the scheme before the vouchers are launched at year-end.

Under a S$320 million programme unveiled mid-September, adult citizens each get S$100 in credits for hotel stays and tour and attraction tickets. The scheme runs from December 2020 to June 2021. Vouchers will be distributed through the authenticated SingPass system.

Issuing vouchers in credits carries advantages for policymakers, said Essec Business School Asia Pacific associate dean Jan Ondrus.

"The government can ensure that Singaporeans are spending the credits in the right places", Prof Ondrus said, adding that the vouchers are meant to lift spending on tourism specifically, "not just private consumption".

The credits also have a clear expiry date, which means "there could be some potential savings" if coupons are not fully redeemed.

But the spectre of abuse looms. "Any alternate method of payment, either vouchers or store credit, can potentially be used as an alternate source of money," noted Singapore Management University (SMU) assistant professor of finance Aurobindo Ghosh.

There is also the risk of business owners taking kickbacks for use of the vouchers at their establishments, according to Withers KhattarWong criminal litigation partner Tania Chin.

Ben Ee, managing director of risk advisory and investigations at FTI Consulting, added: "Pressure of generating greater profit margins, especially in today's climate, may increase the risk of business owners colluding with voucher recipients to sell non-existent 'services'. Furthermore, there is the risk of business owners inflating prices for greater profit margin."

Past schemes involving credits have also faced cases of fraud. Abuse of the Productivity and Innovation Credit (PIC) scheme, which ran from 2010 to 2018, saw one man help 83 businesses to submit fraudulent claims for S$2.7 million. Another helped 49 people to make fake claims for more than S$1.1 million. Meanwhile, a syndicate of shell companies bagged S$39.9 million in 2017 by misusing the SkillsFuture Credit scheme. "The bar for the use of the SingapoRediscovers Vouchers is very low" compared with the complexity of claims processes for PIC and SkillsFuture Credits, Ms Chin said.

Subsidy schemes are, of course, always at risk of fraud. And elaborate safeguards may make such schemes inaccessible to the very entities that they aim to benefit. Some might even argue that any cash released into the economy will be helpful in some way.

But economists warned that safeguards are necessary as misuse may stymie the aim of spurring discretionary tourism spending.

While Essec's Prof Ondrus noted that it may not be possible to trade vouchers for cash, "there is a chance that recipients may not use the extra money for tourism activities".

Prof Ghosh of SMU, too, said that funds could end up stashed away or spent on goods and services unrelated to tourism: "The purpose why the vouchers were created in the first place might be defeated, if people decide to exchange the vouchers... The intent of stimulus spending might be lost, in rejuvenating the vulnerable businesses and jobs."

Still, the size of SingapoRediscovers Vouchers is much smaller than (the) PIC or SkillsFuture Credit schemes, "so the sums involved in any fraud could be more limited", Withers KhattarWong's Ms Chin noted.

Prof Ondrus of Essec added that the use of SingPass accounts secures the system. "As long as the scheme is a closed-loop system, there is very little fraud that can happen as every transaction will be traceable."

STB told BT that precautions will be put in place, with details to be released in November.

It is "working with the relevant government agencies on developing the necessary safeguards to address potential fraud and resale", said Karen Ann Leong, chief of The Collaboratory, which houses the STB innovation lab. She did not name the agencies.

Fraud experts proposed tapping data analytics. Stacy Chai, a partner in forensic and integrity services at Ernst & Young, told BT that data analysis could flag "anomalies in the redemption and reimbursement processes".

FTI's Mr Ee cited a "very high number of vouchers redeemed at month-end" or daily levels that exceed the venue's capacity as some potential red flags. Other safeguards may include surprise audits, he added. Ms Chai also suggested disabling used vouchers and having robust whistleblowing channels.

The STB called two open tenders on Sept 16 related to SingapoRediscovers Vouchers. One of them asks for a proposal for redeeming the vouchers, and is for bidders with tendering capacity of up to S$30 million.