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Indonesia's foreign tourist tax may hurt businesses, industry groups warn

Jakarta Post - April 14, 2023

Deni Ghifari, Jakarta – The government is considering a tax for foreign tourists after controversial incidents made their rounds on social media, but industry associations warn that businesses may suffer as a result.

Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan called for the new levy to be imposed soon.

"Don't ever sell Indonesia short. We need to show them [foreign tourists] that we are a nation that greatly upholds cultural values, tradition and rules," he posted to Instagram on April 3.

Tourism and Creative Economy Minister Sandiaga Uno told reporters on Monday that the planned tax plan was "currently being studied" to determine the amount and whether it was the right step to take.

"We expect the study to wrap up in the coming weeks so we can discuss and decide [the matter]," he said.

Both ministers mentioned that the new "foreign tourist tax" could be used to develop and market the country's tourist destinations. Sandiaga added that the extra income could also be used for environmental conservation.

Industry representatives say, however, that the tax could negatively affect tourism and related sectors, including the micro, small and medium enterprise (MSME) sector.

Edy Misero, secretary-general of the Indonesian MSMEs Association (Akumindo), told The Jakarta Post on Tuesday that its members were concerned that such a tax would impact foreign arrivals.

The policy "needs to be considered carefully. It must not result in [foreign tourists] canceling their plans to visit Indonesia. We MSMEs strongly object to [the proposed tax] if that turns out to be the case", he said.

Edy acknowledged that taxes were a source of state income and that imposing taxes was generally fair for that purpose. But when it came to tourism, he cautioned that the government needed to be mindful about Indonesia's positioning in light of global market demand.

He noted that some countries were a must-visit and could therefore afford to tax foreign visitors. "But in Indonesia's case, are we needed by the tourists, or is it rather us who are chasing them to come?"

Maulana "Alan" Yusran, secretary-general of the Indonesian Hotel and Restaurant Association (PHRI) concurred, saying now was not the right time to impose such a tax, given that the tourist industry was still recovering from the COVID-19 pandemic.

"In my opinion, don't burden travelers with other things [like a tourist tax]. Foreign tourists coming to Indonesia per se is already foreign exchange earnings for the country," Alan said. He elaborated that each tourist also contributed indirectly to tax revenues, as they paid taxes through the hotels where they stayed and the restaurants where they ate.

He also took issue with Luhut's broader views on tourism in the country, saying that the idea to transition from mass tourism to what the minister called "quality tourism" was not very realistic and based on a misconception.

"Indonesia's tourism products are mass tourism products, [we can't] transition directly to quality tourism," Alan told the Post on Wednesday.

Alan added that Indonesia was not yet ready to mainstream high-end tourism, which required "high-end" facilities, while MSMEs were the backbone of regional economies across the country.

"Our tourist destinations are diversified. Wherever [visitors go], there are non-star-rated hotels to five-star hotels," he said, and that it was wrong to assume that tourists who did not stay at expensive hotels contributed less.

In his Instagram post, Luhut specifically referred to a viral video of a shirtless foreign tourist riding a motorcycle without a helmet and getting into a heated argument with police officers in Bali.

According to online media outlet Coconuts Bali, the man in the video clip is 45-year-old Bryan Ronald William, a sexual empowerment coach from the United States.

Notwithstanding his apparent traffic violation, William challenges the police in the video clip, accusing them of being after his money. "You want money," he says in the clip.

William adds that he had seen the police not enforcing the same policy for Balinese people riding without a helmet on the same street. "But [because I'm an] expat, you want money."

Asked about that incident, the PHRI's Alan noted that "we should not judge a big group" by the behavior of a few individuals.

Source: https://asianews.network/93526-2