Tourism minister proposes further tax cuts and additional loans for hard-hit industry – business

Mardika Parama (The Jakarta Post)

Jakarta ●
Thu 23 July 2020

tourism, tax incentive, loan, COVID-19, working capital
To free

Tourism and Creative Economy Minister Wishnutama Kusubandio has proposed full corporate tax exemption for all businesses in the tourism and creative economy sectors, as well as the provision of loan funds additional turnover, to help the industry hit hard during the global health crisis. .

Wishnutama said he is currently in talks with Finance Minister Sri Mulyani Indrawati regarding the proposal. The tourism sector is currently eligible for a 30% reduction on corporate tax to cushion the impact of the COVID-19 pandemic.

“We have proposed an additional tax reduction under Article 25 of the PPh [corporate income tax] from the previous 30 percent to 100 percent. However, it is still being negotiated with the Minister of Finance, ”he said during a discussion held on Wednesday at the Ministry in charge of Maritime Affairs and Investment.

The minister also proposed to increase the limit on state bank working capital loans for tourism enterprises from the current limit of 10 billion rupees (US $ 684,000), adding that the plan was being discussed with the Ministry of Finance and the Association of Detained Banks (Himbara).

The government has guaranteed working capital loans worth Rs.100 trillion for micro, small and medium enterprises (MSMEs) which cover loans with a maximum of Rs10 billion and a term of three years, as part of the COVID-19 relief plan, apart from loan restructuring.

So far, the government’s debt restructuring program for companies affected by the pandemic has led to Rs 124 trillion in restructured bank loans for tourism businesses, while restructured loans from the lending and multi-finance sector amount to 3.1 trillion rupees, according to Wishnutama.

Indonesia’s tourism sector has seen its revenues dry up amid the COVID-19 pandemic, as fears of the disease and the closure of international borders brought the industry to a screeching halt. According to data from the Indonesian Hotel and Restaurant Association (PHRI), the pandemic had wiped out about Rs 85 trillion in Indonesian tourism revenue by mid-July.

Arrivals of foreign visitors to the country fell 86.9% year-on-year in May to 163,646, according to data from Statistics Indonesia (BPS). From January to May, Indonesia registered just 2.9 million visits by foreign tourists, a decrease of 53.56% from the same period last year.

In total, the government has allocated 695.2 trillion rupees as part of its COVID-19 response. This includes 120.61 trillion rupees allocated by the government to provide tax relief for individuals and businesses affected by the pandemic.

Meanwhile, in addition to the financial stimulus, the government is also trying to revive the industry by asking government institutions and agencies to resume business travel and hold meetings in tourist destinations.

The Ministry for the Coordination of Maritime Affairs and Investments issued a letter on July 6 urging the agencies and ministries under its leadership to spend their remaining business travel budget of Rs 4.1 trillion on eight designated July tourist destinations. to November.

The designated destinations are Banyuwangi, East Java; Bali; the temple of Borobudur in central Java; Lake Toba in the north of Sumatra; the Riau Islands; Labuan Bajo in East Nusa Tenggara; Likupang in North Sulawesi; and Mandalika in West Nusa Tenggara.

“Business travel could help boost national economic growth and have a positive impact on regions dependent on tourism,” the letter said.

At the same event, the coordinating minister of maritime affairs and investments, Luhut Pandjaitan, encouraged stakeholders to boost domestic tourism in the third quarter of the year.

“Let’s work together to increase the number of domestic tourists by 70% in the third quarter,” he said.

He acknowledged that so far, more than 180,000 workers in the tourism sector have been affected by the pandemic, while around 2,000 hotels have ceased to operate.

PHRI President Hariyadi Sukamdani previously told lawmakers in a July 14 hearing that the government’s tax incentives were not enough to stop the bleeding.

“Banks will have to expand the debt restructuring program and they will have to provide working capital loans” to save tourism businesses, he said.

Also Read: Pandemic Wipes $ 5.9 Billion From Indonesia Tourism Revenue As Businesses Call For Help

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