Indonesian government considered to give an incentives to the tourism sector to curb coronavirus effect, said the head of state at the limited meeting at his office today (02/17) - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Indonesian government considered to give an incentives to the tourism sector to curb coronavirus effect, said the head of state at the limited meeting at his office today (02/17). As known, the epidemic has hit global economy especially in tourism and trade sectors.

“We might give an incentive or discount for foreign and local tourists around 30 percent of the real target. But we haven’t decided yet. Which destinations also we will be decided later,” said President Joko Widodo when opening the meeting.

He also mentioned, the government considerer to give the stimulus to the travel agent with the same rate. He hope the decision will be take in place in the next three months.

Other way, said president, the government wants to raises the tourism competitiveness of the nation. As reported by Travel and Tourism Index, Indonesian ranked among other countries has rose to 40th from 42nd in 2017. But the ranked still behind the neighboring countries, such as Singapore at 17th, Malaysia at 29th, and Thailand 31.

“We have competitiveness compared to other countries such as price, policy priorities, natural attractiveness, cultural openness, and business visits. But we are still weak in the five pillars such as sustainable environment, health, infrastructure availability, security and technology readiness,” said Widodo.

According to Moody’s Investors Services, coronavirus outbreak has diminished optimism about prospects of an incipient stabilization of global growth this year. With the virus continuing to spread, its still too early to make a final assessment of the impact on China (A1 stable) and the global economy.

“We have revised our global GDP growth forecast down, and we now expect G-20 economies to collectively grow 2.4 percent in 2020, a softer rate than last year, followed by a pickup to 2.8 percent in 2021,” said the agency today.

In addition, “We have reduced our growth forecast for China to 5.2 percent in 2020 and maintain our expectation of 5.7 percent growth in 2021. We have also lowered our real GDP growth forecast for Australia (Aaa stable), Korea (Aa2 stable) and Japan (A1 stable) on account of the coronavirus.”

Moody’s also reduced the growth projections for India (Baa2 negative), Mexico (A3 negative) and South Africa (Baa3 negative), a reflection of domestic challenges in those countries rather than external factors.

“Our baseline assumes the outbreak will cause disruption in Q1 economic activity. Under our baseline forecast, the spread of the coronavirus will be contained by the end of Q1, allowing for resumption of normal economic activity in Q2,” it said.

At present, said the rated, Chinese economy is by far the worst affected. However, the rest of the world also has exposure as a result of a hit to global tourism in the first half of this year and short-term disruptions to supply chains.

The effects on the global economy could compound if the rate of infection does not abate and the death toll continues to rise, because supply chain disruptions in manufacturing would become more acute the longer it takes to restore normalcy.

Pause in United States (US) – China trade tensions does not materially change our assessment of global growth prospects. The Phase One trade deal reduces risk of near-term escalation of the trade battle between the US (Aaa stable) and China, but uncertainty has not gone away.

The adverse economic consequences of the coronavirus will make it even more challenging for China to meet its import commitments under the agreement. Moreover, US tariffs on $370 billion of imports from China remain in place, while US tariffs on steel and aluminum are also still in effect. Trade risks stemming from other disputes also remain elevated.

For example, the US threat of 25 percent tariffs on auto and auto parts imports, which would primarily affect large auto-producing countries such as Germany (Aaa stable) and Japan, remains on the table. And 2020 being a US presidential election year, uncertainty over US trade policy will likely stay elevated.

Earlier, coordinating Minister for maritime affairs, Luhut Binsar Panjaitan targeted the foreign exchange revenues from tourism sector could reached $28.5 billion in 2024. The number of foreign tourists itselfd is targeted at 25 million to 30 million in 2024 with the priority of Lake Toba in North Sumatera, Borobudur and Joglosemar in Central Java, Mandalika in Lombok, Labuan Bajo in West Nusa Tenggara, Bali, Jakarta, Banyuwangi and Bromo in West Java.

Encouraging the tourism sector itself is a way to overcome the problem of the current account deficit, in addition to other policies pursued by the government, namely the use of 20 percent biodiesel mixture (B20), increased exports in the mining sector, and optimization of domestic industries.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com