The Jakarta Post
The government decided on Tuesday to set aside more than Rp 10 trillion (US$745 million) in contingency funds for fiscal stimulus to cope with the impact of the COVID-19 outbreak, even at the risk of increasing the budget deficit to as high as 2.5 percent of gross domestic product from 1.7 percent, as targeted in the 2020 Budget Law. This is in addition to an earlier policy of front-loading the 2020 budget in the first half.
More than half of the contingency budget would be allocated for tourism and its related businesses such as airlines, hotels and restaurants in 10 major destination areas, while the rest would be spent on interest rebates for public housing and bigger sums of basic staple aid for 15.2 million beneficiaries.
The decision to pour so much taxpayer money into tourism is necessary as this sector has been the hardest hit by the epidemic, which was first detected in China, the second-largest source of Indonesia’s foreign tourists, contributing more than 2 million of the 16.1 million tourist arrivals last year.
Analysts estimate tourist arrivals could fall by as much as 10 percent this year if the outbreak lasts more than five months. Revenue losses for the 10 regional economies would be quite significant because, according to the Tourism Ministry, spending by foreign tourists averaged $1,700 per visit. Therefore, a significant portion of the financial support has also been allocated for domestic tourists for the next three to four months, notably through airfare discounts of up to 50 percent and exemptions of hotel and restaurant taxes.
Naturally, foreign tourists and domestic travelers would need extra patience given the health screening at all ports of entry. Indonesia, however, would retain the trust of aspiring visitors who delay plans to travel here, only if it remains transparent about developments regarding the epidemic. Though confirmed infections have not been found in this country, we are constantly reminded to not be complacent, given our vast territory and population.
Attempts to conceal relevant information would further turn off would-be travelers. This would include expectations of a clear government response to alleged concerns in the diplomatic community about Indonesia’s handling of the new coronavirus, as the Sydney Morning Herald reported Wednesday.
The tourist sector, with its extensive multiplier impact, does play a significant role in the economies of the 10 major destination areas in North Sulawesi, Java, Sumatra, Nusa Tenggara and Riau Islands. Tourism hardly needs imported input, thereby boosting foreign demand for local goods and services.
Indeed as a nature- and culture-based industry, tourism should be among the most suitable businesses to develop given it is labor intensive, from hotels, transportation and handicrafts to cultural shows.
But we still must work harder to improve services to tourists, notably high spenders from the United States, Europe, the Middle East and China. Good hospitality can overcome deficits in infrastructure but not the other way around. Most travelers are willing to tolerate minor infrastructure deficiencies but expect excellent service in return. Under the shadow of the virus outbreak, this includes assurance that we care about everyone’s well-being.