Indonesia's fuel price hike affects tourism sector after rising inflation

Indonesia's inflation at the end of August reached 4.6% year on year, slightly lower than the previous month's 4.9%, and both figures exceeded the central bank's target range from around 2 to 4%

Higher costs are expected to hit Indonesia's tourism sector after the government raised the price of subsidised fuel by about 30 per cent earlier this month.

Tourism operators in the archipelago are now racking their brains under the circumstances.

I Gede Nyoman Sangka, who runs his own travel agency on the resort island of Bali for more than five years, is currently working to improve the operational efficiency of his business.

"Just like any businesses out there, we are also being put in difficult situations after the hiked fuel prices," he told Xinhua news agency.

The fuel price hike came shortly after the rising inflation.

Indonesia's inflation at the end of August reached 4.6 per cent year on year, slightly lower than the previous month's 4.9 per cent, and both figures exceeded the central bank's target range from around 2 to 4 per cent.

In a meeting with provincial government heads this week, President Joko Widodo asked them to allocate 2 per cent of their budget to controlling transportation costs and suppressing inflation, particularly for micro, small, and medium-sized enterprises and informal workers.

Bali, one of the world's most famous tourist destinations, is still striving to revive its tourism sector impacted by the Covid-19 pandemic in the past more than two years.

The government has expressed its optimism about achieving an overall target of 3.6 million foreign visitor arrivals this year, although the Southeast Asian country is still grappling with other problems, such as the outbreak of foot and mouth disease among animals and the menace of monkeypox to public health.

Sangka expressed hope that authorities would design a special policy to help boost tourism in Bali.

"Tickets to fly to Bali should be subsidized. Cheaper tickets will bring more visitors and increase the hotel occupancy rate. This is important," he said, adding that the authorities should also temporarily suspend the hotel and restaurant taxes.

Meanwhile, the Tourism and Creative Economy Ministry has said that it is preparing strategies to manage the significant impact of the rising fuel prices on the tourism and creative economy sectors.

Earlier this week, Tourism and Creative Economy Minister Sandiaga Uno said his ministry will provide technical guidelines and assistance particularly for small and medium-sized tourism businesses to manage operating costs in more effective ways.

It will also manage special interest tourism activities which have the potential to reduce fuel consumption directly or indirectly, and encourage businesses in the tourism and creative economy sectors to start transitioning to renewable energy.

According to the Minister, the number of visitors from middle-income groups and the upper class to tourist destinations in Indonesia is currently increasing.

"Tourism has become a basic need. It's for healing. A need for refreshment is sometimes needed," Uno said.

--IANS

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