Pandemic Erases $5.9b of Indonesia’s Tourism Revenue as Businesses Seek Help

Tourism and Creative Economy Minister Wishnutama Kusubandio (center) and Indonesian Hotel and Restaurant Association chairman Hariyadi Sukamdani (left) listen to a food-serving presentation by hospitality expert Alexander Nayoan at the JS Luwansa Hotel in South Jakarta on July 8. (JP/Dhoni Setiawan) – The COVID-19 pandemic has wiped out around Rp 85 trillion (US$5.87 billion) of Indonesia’s tourism revenue so far this year, forcing business associations to call on the government to provide a greater stimulus for the virus-battered industry.

The hotel and restaurant industry has lost nearly Rp 70 trillion in revenue as leisure travel has come to a complete halt, while aviation and tour operators have lost Rp 15 trillion in revenue, according to data from the Indonesian Hotel and Restaurant Association (PHRI) as quoted from 14/7/2020.

“More than 95 percent of workers in the tourist sector are being furloughed without pay,” PHRI chairman Hariyadi Sukamdani told lawmakers during a hearing on Tuesday, adding that 2,000 hotels and 8,000 restaurants closed during the first three months of the outbreak, which started in March in Indonesia.

Hariyadi told lawmakers that the government’s tax incentives were not an effective measure to stop the bleeding, adding that many workers in the tourist sector could not access the government’s pre-employment card program, resulting in a further blow to the industry.

“Banks will need to extend the debt-restructuring program and they will need to provide working capital loans” to rescue businesses in the tourist sector, he went on to say.

Indonesia’s foreign visitor arrivals plunged 86.9 percent year-on-year (yoy) in May to 163,646, according to Statistics Indonesia (BPS) data. From January to May, Indonesia recorded just 2.9 million foreign tourist visits, a 53.56 percent drop from the same period last year.

Tourism has been one of the sectors hardest hit by the coronavirus outbreak as countries around the world imposed travel restrictions while Indonesia implemented a partial lockdown to curb the spread of the virus, leaving tourist destinations empty since March.

The government has allocated Rp 695.2 trillion from the state budget as a stimulus to strengthen the healthcare system and bolster the economy amid the coronavirus pandemic. However, business associations and economists have openly criticized the slow stimulus disbursement, which they say will risk recovery in Southeast Asia’s biggest economy.

The tourist sector was being abandoned by the government as the stimulus aimed at rescuing businesses had not yet arrived after three months of pandemic, Indonesian Chamber of Commerce and Industry (Kadin) vice chairman for tourism Kosmian Pudjiadi said.

“We have yet to receive direct help until now from the government,” Kosmian told lawmakers during the same hearing, adding that tourism-related businesses would go bankrupt by the end of year if the government and banks were unable to provide the much-needed cash injections.

The government, he went on to say, will need to provide cash injections to businesses and stimulate consumer demand for businesses to survive throughout the pandemic, which he expects will only fully recover to pre-pandemic levels by 2023.

“The government can, for example, increase domestic business trips to save the tourist sector,” Kosmian said.

The Health Ministry has issued health protocols for businesses and public facilities, such as hotels, restaurants and shopping malls, as the government gears up to reopen tourist destinations during the so-called new normal period.

Destinations in the resort island of Bali, Semarang in Central Java and Medan in North Sumatra, for instance, have started to reopen for local visitors despite a rising number of confirmed COVID-19 cases.

“We must demonstrate our confidence to domestic and international consumers that health protocols here have been implemented seriously and in detail so that we can soon restore the tourist sector, which has been affected the most by COVID-19,” Tourism and Creative Economy Minister Wishnutama Kusubandio said earlier this month.

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