Indonesia Eyes Merger of State-Run Firms in Tourism, Aviation as Economy Slumps

JAKARTA, KOMPAS.com – Indonesian President Joko Widodo plans to merge state-owned enterprises in the tourism and aviation sectors as the government continues to assess the extent of the country’s economic slump in the wake of the Covid-19 pandemic.

“Indonesia’s tourist and airline sectors are among the industries hardest hit by the economic slowdown,” said the president, who cited a Statistics Indonesia [BPS] report that showed the Indonesian economy contracting 5.32 percent year on year in the second quarter of 2020.

Also read: Indonesia's Economy Contracts 5.32 Percent, Says Central Statistics Agency

“The number of foreign tourist arrivals dropped by 81 percent to about 482,000 people in the second quarter, or 87 percent year on year because of the Covid-19 pandemic,” he said during a limited cabinet meeting on August 6.

President Jokowi also called for a reassessment of these industries.

“The slowdown in tourism is a good reason to overhaul [the tourist and airline sectors]. This includes reviewing flight routes or determining proper airport hubs,” he said.

“Indonesia currently has 30 international airports, but 90 percent of all airline traffic actually go through Soekarno-Hatta in Jakarta, Ngurah Rai in Bali, Juanda in East Java, and Kualanamu in North Sumatra. In short, do we really need that many international level airports?”

ANTARA FOTO/FIKRI YUSUF The first domestic tourists to enter Bali after months of the coronavirus lockdown gets a lavish welcome at the resort islands Ngurah Rai airport on 31 July, 2020

Also read: Stimulus Package to Jolt Indonesia's Economy in Q3: Senior Minister Airlangga Hartarto

The President noted that the airports, and four others, have the potential to be air travel hubs and superhubs.

Statistics Indonesia showed that the country’s economic contraction is more severe than the government, Bank Indonesia or the market expected, as GDP fell by 5.32 percent instead of the latter’s estimates of between 4.3 and 4.8 percent.