Fri, 23 May 2003

Travel industry seeks financial aid to weather multiple crisis

Fitri Wulandari, The Jakarta Post, Jakarta

The country's travel industry has asked the government for a subsidized credit facility to help travel agencies battle the collapsing tourism business due to the outbreak of Severe Acute Respiratory Syndrome (SARS) and other uncertainties.

Chairwoman of the Association of Indonesian Travel Agents (ASITA) Meity Robot said travel agents needed "emergency soft loans" to make up serious cash-flow deficits for at least six months, to avoid bankruptcy.

"We have never asked the government to provide credit for us even during the economic crisis that began in 1997. But this time (the problem) is too much. The travel industry is on the brink of bankruptcy," Meity told The Jakarta Post on Thursday.

Meity said that due a huge decrease in tourists, both coming and going, travel agents have been forced to close down their outlets, cut salaries, cut operational costs, cut working hours, give long unpaid leave and lay off their workers.

"If this continues, travel agents will not be able to pay their obligations. A further drop in tourism business would follow suit," Meity said in the proposal.

ASITA, at present, has some 2,500 members nationwide.

While saying that ASITA had yet to come up with a sum for the requested credit facility, Meity applauded the stimulus package provided by the Malaysian government to SARS-affected businesses.

The Malaysian government announced on Wednesday a US$1.92 billion stimulus package for SARS-affected industries. It includes a one billion ringgit relief fund, interest rate cuts and tax breaks for the tourist-related companies.

The requested subsidized credit facility is part of a stimulus package proposed by ASITA to five ministers as reported by this paper earlier.

Other measures include reinstating the free visa-on-arrival facility, abolishing value-added taxes and income taxes on tour operators and abolishing the Rp 1 million fiskal, or departure tax, for anybody traveling abroad.

ASITA sent the proposal to the offices of the Coordinating Minister for the Economy, the Coordinating Minister for People's Welfare, the State Minister for Culture and Tourism, the State Minister for State Enterprises and the Ministry of Manpower and Transmigration.

Although Indonesia is not a SARS-infected country, the tourism industry has still had to face the brunt of the outbreak as many regular tourists and businesspeople normally go to and come from countries that have been hit. The impact has been even more severe than the Bali Bombing last year as it has also discouraged people from traveling outside Indonesia.

Reservation system company PT Abacus Indonesia revealed that airline bookings for international flights from Indonesia had dropped by 60 percent during March and April, compared to the same period last year.

The number of foreign arrivals in March was 288,417, or 30 percent lower than same period in 2002.

Meanwhile, President Megawati Soekarnoputri, in a meeting with The Indonesian Hotel and Restaurants Association (PHRI) and ASITA, on Thursday could only suggest that the cash-strapped tourist-related businesses spend more money on an "international campaign to promote Indonesia as a safe travel destination."

PHRI chairwoman Yanti Sukamdani Hardjoprakoso, quoting the President, said travel advisories imposed by several countries to Indonesia were no longer necessary because security had been improving and Indonesia was not a SARS-infected country.

Megawati told the industry players to aggressively promote Indonesia.

According to Yanti, several western European countries such as Germany, the Netherlands and Italy have lifted their travel advisories. The U.K. still has travel advisories in place, but does not advise its citizen against traveling to Indonesia. And Japan has lowered its travel advisories.

Yanti added the hotel occupancy rates had hit rock-bottom. Occupancy rates in Batam have now plunged to around 25 percent, Bali 20 percent to 25 percent and Jakarta 35 percent.