Indonesia’s government has confirmed it will allocate Rp 10 trillion (US$745 million) in fiscal stimulus to mitigate the effects of the global COVID-19 outbreak, particularly on the nation’s tourism sector.
According to a recent statement, around Rp 5 trillion of the budget will be pumped into tourism and related businesses, including airlines, hotels and restaurants in ten popular tourism destinations, in an effort to support local business, offer incentives to travellers and give Indonesian tourism an extra boost during these challenging times.
This sector has been hit hard by the current situation, particularly as Chinese visitors represent the second-highest tourist demographic; in 2019, more than 2 million of Indonesia’s 16.1 million international arrivals came from China. In February, the government took the decision to block all arrivals from China, due to the outbreak of novel coronavirus (COVID-19) in Hubei Province. The latest financial stimulus package is designed to counterbalance the shortfall arising from that decision.
The tourism aid package includes airfare discounts of up to 50% and tax exemptions for many hotels and restaurants. These dual measures are intended to support Indonesian businesses through the lean months ahead, while also encouraging international visitors. With an additional Rp 99 billion allocated in subsidies for airlines and travel agencies to discount tickets or travel packages for foreign tourists, the rescue budget is expected to boost consumer spending and reinvigorate Indonesia’s tourism industry.
Analysts estimate that international tourist arrivals in Indonesia could fall by as much as 10% in 2020 if the outbreak continues for more than five months. With that in mind, the latest government support measures come as a welcome relief to those working in the tourism sector.