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Jakarta Post

Govt mulls incentives as tourism faces potential $2.8b loss from outbreak

  • Riza Roidila Mufti

    The Jakarta Post

Jakarta   /   Thu, February 13, 2020   /   12:32 pm
Govt mulls incentives as tourism faces potential $2.8b loss from outbreak Transportation Minister Budi Karya Sumadi (left) and Tourism and Creative Economy Minister Wishnutama (second left) speak to the press in Jakarta on Feb. 7, 2020. (JP/Riza Roidila Mufti)

The government is mulling over incentives for the tourism and airline industries to mitigate potential losses of US$2.8 billion from the coronavirus disease outbreak, which has already led to a decline in tourist arrivals.

The tourism, transportation and finance ministries were finalizing the proposed incentives on Wednesday after meeting with industry stakeholders. The ministers expected to submit the proposal to President Joko “Jokowi” Widodo sometime next week. 

The incentives under consideration included reduced tax, lower airport fees and eased slot permits for airlines, as well as travel discounts for issuing in partnership with all travel agents in the country, the ministries announced.

“This is our effort to face the impacts from the coronavirus. It's not easy, but we should do the best we can together," Tourism and Creative Economy Minister Wishnutama said in Jakarta on Wednesday, after a meeting with tourism and airline companies.

Wishnutama said that Indonesia's foreign exchange (forex) income could incur losses of up to $2.8 billion from potential Chinese tourists, assuming a per year average of 2 million tourist arrivals from China as in normal conditions.

Indonesia saw 16.1 million foreign tourist arrivals in 2019, with Chinese arrivals contributing 12 percent of all foreign arrivals.

Statistics Indonesia (BPS) chairman Suhariyanto said that the outbreak would “no doubt reduce foreign arrivals from China to Indonesia this year”, with the agency already recording a 2 percent contraction in foreign arrivals in December 2019.

The Indonesian Hotel and Restaurant Association (PHRI) reported 40,000 room cancellations and 20,000 visitor cancellations in Bali since the rise in infections in early January.

Airlines have temporarily halted dozens of flights per week to and from mainland China in adhering to the government's travel ban on all visitors from China, including all travelers who had been there within 14 days prior to arriving in Indonesia.

“We have listened to the inputs from the airline industry and we have spoken to the hotel and restaurant association, as well as other players in the tourism sector,” said Wishnutama. “The incentives that we are preparing must be comprehensive so we can survive this battle, not only the airline and hotel industries but also other related sectors as a whole.”

Transportation Minister Budi Karya Sumadi said that lower taxes and airport fees, as well as easier permit processing for airport slots and other operating permits were among the possible incentives that the ministry was proposing. 

During its meeting with airline companies, the ministry had urged them to either reroute their China flights to new potential markets or add flights to their busiest routes.

“For example [...], many airlines from Eastern Europe want to fly to Bali, but the problem so far has been the unavailability of slots. So we see opportunities there,” said Budi. Other potential markets were Australia and countries in the Middle East and South Asia like India, Pakistan and Bangladesh, he said.

Wishnutama added that the government was also looking to boost domestic travel to the top three destinations among Chinese tourists, namely Bali, North Sulawesi and the Riau Islands. Discounts could be offered in partnership with online and conventional travel agents, he said.

Garuda Indonesia president director Irfan Setiaputra welcomed the government’s initiative, while urging that incentives be given to new inbound flights.

"We are now trying to mitigate the impact of the [outbreak] by adding [flight] schedules on our existing routes,” said Irfan, adding that opening new routes was also a possibility. “This [outbreak] is absolutely affecting us, because the travel ban to and from China has caused us to lose revenue.”

Flag carrier Garuda Indonesia has halted 40 weekly flights to mainland China, while Lion Air Group, the largest private Indonesian airline company, has halted 30 weekly flights to China.