Indonesia supports virus-hit tourism industry with subsidies

The Indonesian government has said it would provide at least 10.3 trillion rupiah ($744 million) in subsidies for workers, airlines, hotels, tourists and regional governments in Indonesia’s major tourist destinations to counter the economic slowdown expected as a fallout from the coronavirus outbreak wreaking havoc in China.  

Since February 2, Indonesia has closed its borders to all travelers coming from China, the country where the pneumonia-like disease originated and has so far killed more than 2,600 people.

The Chinese were the second-largest group of foreign tourists visiting Indonesia last year, and the loss of their business could cause local establishments to lose a total of $500 million in tourism revenue per month. 

Regions most vulnerable to such a blow are Chinese travelers’ favorites Bali, North Sulawesi and the Riau Islands. 

On February 25, President Joko Widodo called a meeting with his economic ministers to come up with solutions for the expected downturn in visitor numbers. 

“We all know we’re facing pressures because of the decline in tourist arrivals from China,” Jokowi said.

Economic stimuli and incentives

Coordinating Minister for Economic Affairs Airlangga Hartanto said the government has prepared incentives to counter the decline in foreign tourist arrivals.

“We will also provide [economic] stimuli to maintain people’s purchasing power, which will help minimise the impact of the outbreak on our economy,” Airlangga said. 

The minister said the government decided to draw up a stimulus package with subsidies, tax cuts and accelerated cash-transfer and unemployment benefit programmes in Indonesia’s major tourist destinations.

Airlangga said the programme should be ready to launch in the three provinces next month and would be expanded to cover two million workers nationwide by the end of this year. 

Second, the government will increase the amount of social benefits for low-income families to 200,000 rupiah ($14.30) per family per month, from currently 150,000 rupiah currently. Airlangga said the extra money would be available starting next month until August, costing an additional 4.6 trillion rupiah from the 2020 state budget. 

Third, first-time homebuyers will also get a total of 1.5 trillion rupiah in additional subsidies. Airlangga said the new funding would allow 175,000 more homebuyers to get state-subsidised mortgages this year, from 155,000 people in the initial plan.   

Influencers, discounts and tax cuts

The government will also set aside 99 billion rupiah in subsidies for airlines and travel agencies, allowing them to discount tickets or travel packages for foreign tourists.

Then there will be 103 billion rupiah in extra funding for tourism promotion, 25 billion rupiah for tourism events and 72 billion rupiah for social media influencers to woo back tourists to Indonesia.

“[These are] additional incentives aimed at foreign tourists,” Airlangga said.

Indonesia attracted 18 million foreign tourists last year, missing the 20 million target set by Jokowi at the beginning of his first term.

For domestic tourists, the government will provide a 30 per cent discount on flights to ten tourist destinations in March, April and May.

These prioritised tourist destinations are Lake Toba, Bali, Yogyakarta, Malang, Manado, Mandalika, Labuan Bajo, Bangka Belitung, Batam and Bintan. 

Airlangga said the government would shift 97 billion rupiah currently not earmarked in the government’s special regional transfer account to the above regions as grants. 

On top of that, hotels and restaurants in these ten destinations would not need to pay hotel and restaurant taxes to the local government as the central government has set aside 3.3 trillion rupiah to foot the tax bills, Airlangga said. 

Airlines flying to these destinations could also expect a 20-per cent discount in airport fees from state-owned airport operators Angkasa Pura I and Angkasa Pura II, Airlangga said. The government has made close to 266 billion rupiah available for the airport subsidy, Airlangga said. 

State energy company Pertamina would also cut jet fuel prices in nine destinations for three months starting in March. Airlangga said it would cost Pertamina 267 billion rupiah to provide the discount.  



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The Indonesian government has said it would provide at least 10.3 trillion rupiah ($744 million) in subsidies for workers, airlines, hotels, tourists and regional governments in Indonesia's major tourist destinations to counter the economic slowdown expected as a fallout from the coronavirus outbreak wreaking havoc in China.   Since February 2, Indonesia has closed its borders to all travelers coming from China, the country where the pneumonia-like disease originated and has so far killed more than 2,600 people. The Chinese were the second-largest group of foreign tourists visiting Indonesia last year, and the loss of their business could cause local establishments to lose a total of $500 million in tourism revenue per month. ...

The Indonesian government has said it would provide at least 10.3 trillion rupiah ($744 million) in subsidies for workers, airlines, hotels, tourists and regional governments in Indonesia’s major tourist destinations to counter the economic slowdown expected as a fallout from the coronavirus outbreak wreaking havoc in China.  

Since February 2, Indonesia has closed its borders to all travelers coming from China, the country where the pneumonia-like disease originated and has so far killed more than 2,600 people.

The Chinese were the second-largest group of foreign tourists visiting Indonesia last year, and the loss of their business could cause local establishments to lose a total of $500 million in tourism revenue per month. 

Regions most vulnerable to such a blow are Chinese travelers’ favorites Bali, North Sulawesi and the Riau Islands. 

On February 25, President Joko Widodo called a meeting with his economic ministers to come up with solutions for the expected downturn in visitor numbers. 

“We all know we’re facing pressures because of the decline in tourist arrivals from China,” Jokowi said.

Economic stimuli and incentives

Coordinating Minister for Economic Affairs Airlangga Hartanto said the government has prepared incentives to counter the decline in foreign tourist arrivals.

“We will also provide [economic] stimuli to maintain people’s purchasing power, which will help minimise the impact of the outbreak on our economy,” Airlangga said. 

The minister said the government decided to draw up a stimulus package with subsidies, tax cuts and accelerated cash-transfer and unemployment benefit programmes in Indonesia’s major tourist destinations.

Airlangga said the programme should be ready to launch in the three provinces next month and would be expanded to cover two million workers nationwide by the end of this year. 

Second, the government will increase the amount of social benefits for low-income families to 200,000 rupiah ($14.30) per family per month, from currently 150,000 rupiah currently. Airlangga said the extra money would be available starting next month until August, costing an additional 4.6 trillion rupiah from the 2020 state budget. 

Third, first-time homebuyers will also get a total of 1.5 trillion rupiah in additional subsidies. Airlangga said the new funding would allow 175,000 more homebuyers to get state-subsidised mortgages this year, from 155,000 people in the initial plan.   

Influencers, discounts and tax cuts

The government will also set aside 99 billion rupiah in subsidies for airlines and travel agencies, allowing them to discount tickets or travel packages for foreign tourists.

Then there will be 103 billion rupiah in extra funding for tourism promotion, 25 billion rupiah for tourism events and 72 billion rupiah for social media influencers to woo back tourists to Indonesia.

“[These are] additional incentives aimed at foreign tourists,” Airlangga said.

Indonesia attracted 18 million foreign tourists last year, missing the 20 million target set by Jokowi at the beginning of his first term.

For domestic tourists, the government will provide a 30 per cent discount on flights to ten tourist destinations in March, April and May.

These prioritised tourist destinations are Lake Toba, Bali, Yogyakarta, Malang, Manado, Mandalika, Labuan Bajo, Bangka Belitung, Batam and Bintan. 

Airlangga said the government would shift 97 billion rupiah currently not earmarked in the government’s special regional transfer account to the above regions as grants. 

On top of that, hotels and restaurants in these ten destinations would not need to pay hotel and restaurant taxes to the local government as the central government has set aside 3.3 trillion rupiah to foot the tax bills, Airlangga said. 

Airlines flying to these destinations could also expect a 20-per cent discount in airport fees from state-owned airport operators Angkasa Pura I and Angkasa Pura II, Airlangga said. The government has made close to 266 billion rupiah available for the airport subsidy, Airlangga said. 

State energy company Pertamina would also cut jet fuel prices in nine destinations for three months starting in March. Airlangga said it would cost Pertamina 267 billion rupiah to provide the discount.  



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

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