The Tourism and Creative Economy Ministry plans to start disbursing Rp 3.3 trillion (US$224 million) in relief grants to 101 selected cities and regencies in November, an official has said. The grant is intended to help recover the coronavirus-battered tourist industry. Seventy percent of the grants would be disbursed to individual businesses, while the remaining 30 percent would be given to local administrations, according to the ministry’s crisis management expert, Hengky Manurung. The eligibility of hotels and restaurants would be determined according to the 2019 hotel and restaurant tax (PHPR) data at local administrations, he added.
“The local administrations will need to actively disburse the awarded grants and provide us with the list of recipients to ensure the program’s success,” Hengky said at a virtual discussion on Oct. 23. “We expect the grant disbursements to be finished by November.” Earlier on Oct. 8, the ministry held a virtual event to disseminate information on the tourism grant to officials from the 101 cities and regencies, according to a press statement. The COVID-19 health emergency has devastated the tourist industry through the large-scale social restrictions (PSBB) imposed in several regions, as well as border closures to prevent imported virus infections. The measures have cut an estimated Rp 85 trillion from Indonesia’s tourist revenue as of July, with losses of around Rp 70 trillion recorded by the hotel and restaurant sector, according to data provided by the Indonesian Hotel and Restaurant Association (PHRI).
Tourism minister Wishnutama Kusubandio said on Oct 13 that the grant, sourced from the government’s Rp 695.2 trillion COVID-19 recovery fund, intended to help buoy the tourist industry until December. The 101 grant recipients are located in regions where hotel and restaurant tax accounted for at least 15 percent of the locally generated income (PAD) during the 2019 fiscal year. The grant is also to be disbursed to the government’s top 10 priority tourist destinations and five “super-priority”tourist destinations, such as Toba Lake in North Sumatra and Borobudur Temple in Central Java, as well as branded destinations and regions on the ministry’s calendar of events. The government expects the relief grant to create a multiplier effect, generating Rp 15 trillion to Rp 25 trillion in local revenue. The grant is intended to help the recipients cover operational costs, pay employee wages and procure any necessary equipment for implementing the COVID-19 health protocols. “We expect businesses will [use the grants] for operational purposes and to help them implement the cleanliness, health safety and environmental [CHSE] protocols,” said Hengky. Continuing, he said that the ministry would extend the grant program to 2021 if the industry remained under pressure. “If it proves to have a significant impact, we could propose an extension for next year,” he said.
PHRI secretary-general Maulana Yusran welcomed the ministry’s grant program, saying that the additional funds would help the industry’s micro, small and medium enterprises (MSMEs) that were struggling to obtain bank loans. “The tourist industry has been facing tough circumstances over the last six months, even more so for MSMEs that can barely access funding from banks. Therefore, the grant program has been a lifeline for these small businesses,” said Maulana. He added said that the business travel segment could become the first to rebound, as the economic contraction had hit consumer buying power and in turn, the leisure travel segment. Household spending fell 5.51 percent year-on-year (yoy) in the second quarter as Indonesia’s gross domestic product (GDP) contracted 5.32 percent, according to Statistics Indonesia (BPS).
The latest Bank Indonesia (BI) survey showed that consumer confidence weakened to 83.4 in September, down from 86.9 a month earlier. Any figure below 100 on the consumer confidence index indicates pessimism. Maulana suggested that the government could help generate additional income for the industry by holding meetings and venues at hotels, since “30 to 40 percent of hotel occupancy comes from business tourists”. Hotels in Indonesia recorded the lowest occupancy rate of 12.67 percent in April, compared to 53.9 percent in April 2019, according to the BPS. The hotel occupancy rate improved to 32.93 percent in August, although this was still a far cry from 54.14 percent in August 2019.
