Tourism Subsidies Amid Difficult Economy

Tourism Subsidies Amid Difficult Economy – Providing tourism subsidies for tickets and hotels, especially towards national priority tourist destinations, when economic conditions are quite alarming is an unwise and ethical choice. The increasingly obvious global economic slowdown and the stagnation of the domestic economy that is spurred by the spread of the corona virus are actually very logical reasons for the government to prepare strategic intervention measures, not highly technical sectoral reactions.

Tourism Subsidies

First, the priority of tourism subsidies for people who are excess money to have fun in priority tourist areas at a time when the level of household consumption of 40 percent of the lower middle class is chaotic is certainly an unfair and sensitive option. The most strategic step is to find the right intervention policy to maintain purchasing power so that the growth of the first quarter of this year does not continue the trend of the fourth quarter of last year which fell below 5 percent due to falling household consumption levels from the bottom 40 percent. Moreover, the contribution of household consumption is not less than 56 percent on national economic growth.

Tourism Subsidies Amid Difficult Economy

Of course it is understood that there is good intentions of the government to keep the tourism sector not seriously stressed by the corona issue. Indeed, the average growth of foreign tourist arrivals in five years (2014-2018) had reached 14 percent per year. This figure is always proud of being higher than the average growth of visits in the 2009-2013 period which was only 9 percent per year. According to the Central Statistics Agency, foreign tourist arrivals in 2009 were 6.32 million people. That is, the figure only increased to 8.8 million people at the end of 2013.

In fact, in the last three years, the declining trend of foreign tourist arrivals is very real. This is clearly seen from the growth in 2019 with only 1.88 percent remaining. So, the problem is more caused by national tourism strategic steps whose performance is less significant than the corona issue.

Unfortunately, the change of the minister of tourism is not accompanied by a change of figure who is completely new to the new tourism paradigm as well. The palace is still very confident of several national tourism strategies, which have proven over the past three years to be toothless in presenting numbers of foreign tourist arrivals in line with expectations.

On the other hand, some national policies some time ago clearly ejected the purchasing power of the lower middle class. Call it an increase in prices of goods and services regulated by the government, such as an increase in the contribution of the National Health Insurance-Indonesia Healthy Card, trimming diesel subsidies, and an increase in cigarette excise tax by 23 percent. Everything has the potential to thicken the cost of living and reduce public consumption. Though consumption accounts for around 56 percent of the national gross domestic product. That is, if there is a shock to the purchasing power of the people, half the economic wheels will be hampered. Moreover, in March 2019, although poverty data decreased by 0.15 percent compared to September 2018, in fact there was an increase in the number of almost poor and vulnerable poor people by 3.9 percent, or now reaching 66.7 million people (BPS, 2019).

This group is most at risk if not maintained its purchasing power. When there is a shock to income, the bottom 40 percent of the population will fall into the pit of poverty. So, from an ethical and justice perspective, household consumption, especially for the bottom 40 percent of the population, is far more important to safeguard and be given a variety of incentives, including various forms of subsidies, than to compensate them with various justifications to be transferred to the upper middle-income pockets. Jadi Bandar Ceme

What also needs to be considered wisely is whether the remaining steps to reduce airplane ticket prices on the one hand and stimulate the tourism sector on the other hand are only subsidy options, injection of funds from the state budget and revenue, as well as indirectly to cover Garuda’s rescue measures. quickly as one of the third parties who will participate in executing the half trillion rupiah subsidy fund? The issue of expensive flight tickets is not Garuda’s fault, but because of the national macroeconomic conditions that are no longer friendly to the aviation business. Almost all airline business calculations are based on dollars, while the majority of business lines are struggling to make money. The risk is, when the dollar touches the rupiah a little, the aviation business will fluctuate.

This means that flight ticket subsidies will not change the constantly depressed aviation business landscape. The subsidy is not needed strategically by airlines, especially Garuda, because it will not reduce ticket prices in the long run. He only avoided Garuda losing money when hundreds of thousands of his chairs were sold cheaply. So, it is clear that the tourism subsidy or stimulus worth Rp. 500 billion is a policy that is based on the morality of the Pancasila economy and is also strategically far from a strategic economy.