Exit tax hike hits ailing travel agencies

JAKARTA (JP): A 300 percent rise in departure taxes to begin tomorrow will pose another crushing blow to the country's battered travel industry as the measure will undoubtedly cause a further plunge in the number of travelers going overseas.

Some travel agencies in Jakarta told The Jakarta Post the higher departure taxes imposed on residents leaving the country might drive them to the brink of collapse.

The head of the Jakarta branch of the Association of Indonesian Tour and Travel Agencies (Asita), Meity Robot, said the higher taxes would further debilitate the country's travel industry, which last month alone saw more than a 70 percent drop in outbound customers.

The government announced Monday a 300 percent departure tax increase to Rp 1 million imposed on residents leaving the country by airplane in an unprecedented move to discourage overseas travel.

Based on Government Regulation No. 17/1998, the departure tax imposed on residents leaving the country via seaports will increase by 150 percent to Rp 500,000 from Rp 200,000.

Residents departing by land will have to pay Rp 200,000, compared to a previous Rp 50,000 tax.

Meity, who is also a director of Iwata Tour and Travel Agency, said the higher exit taxes would not only discourage overseas travel but could also result in a further fall in foreign visitors.

The sharp drop in the country's outbound travelers might force foreign airlines to suspend their Indonesian flights due to a sluggish demand for their seats, she said, adding that such flight suspensions would consequently result in a fall in the number of foreign visitors.

"Before the departure tax increase, many foreign and local airlines saw a severe decrease in the number of their passengers, forcing them to cut their services to Jakarta," she said.

She said about 80 percent of the association's 500 members of the Jakarta branch had temporarily scaled down their operations to cut costs.

The sharp fall in outbound customers is due to the 80 percent fall in the rupiah's value against the American dollar.

Meity added that the number of travelers in the December/January period, traditionally a peak season for the travel business, had dropped sharply.

Sri Mulyono Herlambang, chairman of Asita's central executive board, also expressed great concern, saying that more tour operators might soon go bankrupt.

"The rupiah's turbulence and the economic crisis have already driven 50 percent of Asita's members into bankruptcy and more may fold up shortly after this second blow," Herlambang said.

He said the drastic rise in the exit tax would also affect ASEAN tourism cooperation and even Indonesia's tourist promotion efforts overseas.

Benny Rungkat, secretary-general of the Indonesian National Air Carriers, said domestic airlines should restructure their international routes as a result of the skyrocketing exit tax.

"This measure is rubbing salt into the wound because national airline companies have already been hurt badly by the steep depreciation of the rupiah against the dollar," Rungkat added.

Risnawati Saddak, a manager of Satriavi Tours and Travel, shared Meity's view saying the higher exit taxes would slowly kill most travel agencies.

She told the Post the measure could cause a drop in the number of the outbound travelers by over 90 percent.

Linda Budiono of Travindo Tours and Travel said she was surprised by the size of the rise.

"My agency has received a large number of cancellations from tour groups and individuals since the monetary crisis began. During the last peak season, we only had 15 outbound travelers," she said. (gis/vin)