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An Appeal to Indonesia's Finance Minister

Editorial: The Missing and Most Urgently Needed Incentive in Dealing with the Coronavirus Crisis

The Indonesian Government is busily creating incentives to help fill the vacuum in visitor numbers caused by cancellations and the downturn in bookings to key tourism destinations in Indonesia. Included among the steps currently under consideration are incentives to encourage both domestic and international airlines to urgently connect new flights to Bali, Bintan, and North Sulawesi "bundled special package deals" tailored to the domestic market including domestic flights, accommodation, and local tourist attraction; and, in Bali, the establishment of a new Convention Bureau to stimulate the meeting, incentive, conference, and exhibition (MICE) sector.

These steps, without exception, represent a praiseworthy response to the current crisis. But, only time will tell if such measures are effective in encouraging a higher number of tourists traveling to Bali.  In this present era, with people teetering on the cuspids of both a "fear of flying" and a "fear of congregating in even small numbers" - discounts, and new flights may prove ineffective until the World Health Organization (WHO) declares coronavirus has formally entered a "recovery phase."

Much will, of course, depend on the developing course of the novel coronavirus and how highly contagious the disease becomes.

Fueling concerns over the degree of contagion of novel coronavirus is the late-breaking news of 218 confirmed cases among the 3,500 passengers and crew aboard Carnival Corporations Diamond Princess cruise ship. The ship, anchored off Japan in virtual quarantine, now represents the "largest infection cluster outside China" and may foreshadow the potentially staggering number of infected people that could occur if current efforts fail to limit new cases of novel coronavirus.

While all pray and hope that the disease can be contained, the Indonesian Government's current efforts to stimulate travel will be rendered pointless if the coronavirus escalates into a highly contagious global epidemic.

As the world waits with bated breath to see how the novel coronavirus develops, there is a definite atmosphere of fear slowly descending upon Bali's tourism industry. Cancellations are occurring at an unprecedented rate from China and other overseas markets, while, at the same time, future bookings have largely ceased or slowed to a small trickle. Without exception, hotel managers have been told by owners and management companies to rework their annual budgets and implement cost-saving measures across the board. Accordingly, planned refurbishment programs and new capital expenditures are now on hold; senior management members have been placed on reduced or unpaid leave; and daily workers have been terminated until more prosperous times return.

There are also fears in the broader community that the sudden loss of income by the already-low-income daily workers and laborers employed by hotels and project contractors may trigger social unrest and a rising crime rate.

Balidiscovery.com urges Indonesia's Finance Minister, Sri Mulyani Indrawati, to urgently expand the incentives and compensations being considered for the Indonesian tourism industry to also include a temporary and immediate payroll tax holiday (PPh 21) for hotels, airlines, and the tourism industry as a whole. Such a cut could help prevent or, at least, slow the rate of employment terminations in Indonesia's tourism sector.

Such steps are not unheard of in dealing with a crisis brought on by a wide-ranging health epidemic. In April of 2003 during the SARs epidemic, the Government of Hong Kong introduced an HK$11.8 billion relief package for the tourism and transport sectors that included tax rebates and reduced tax rates. At the same time, the Hong Kong government established an HK$1 billion promotional fund to help kick start its tourism industry.

All concerned are hoping that the Government's steps to create new business for Bali as a means of addressing the current crisis are successful. But, in any case, more immediate relief in the form of payroll tax relief is desperately needed as a quick remedy to the Indonesian tourism industry in order to lessen the potential impact of a widening novel coronavirus epidemic.

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