Ross Taylor on Covid-19’s Impact on Indonesia’s Tourism Industry

Ross B. Taylor AM is the president of the Perth-based Indonesia Institute Inc. Ross was previously a national vice-president of the Australia-Indonesia Business Council, and a Commissioner for the Government of Western Australia in Indonesia. During this time Ross was based at The Australian Embassy in Jakarta. He has owned and operated both large and small businesses in Indonesia, and also is a former senior executive of Wesfarmers Limited in Australia and also Phosphate Resources Ltd, based on Christmas Island, in the Indian Ocean. Ross is an author of three published books, and he and his wife Katherine are very active within the charity sector having acted as mentors for those touched by cancer, for over 26 years. They have two children and one grandchild.
 
Kelsey Clarke CMC '22 interviewed Ross B. Taylor on April 12, 2020.
Photograph and biography courtesy of Mr. Taylor on behalf of Perth-based Indonesia Institute Inc.

How does Covid-19’s impact on the Indonesian tourism industry compare to previous disasters such as the 2002 Bali bombings and 2017 eruption of Mount Agung?

It’s a good opening question. Covid-19 is far more severe for a number of reasons. To put it into context, Indonesia relies very heavily on tourism - about 5 to 10% of the economy is tourism. If you consider it under normal circumstances, around 40,000 tourists per week would come into Indonesia from mainland China alone, from which 20,000 would go straight into Bali. Tourism is really important to Indonesia, and given the fact Bali alone receives just under 5 million tourists a year, President Jokowi has worked very hard to develop the concept he calls “Ten New Bali’s” to try and encourage tourists to go outside of Bali and experience some of the amazing places that you and I would be familiar with. The Indonesian government has poured a lot of money into that strategy, it is not successful yet but it is certainly making good progress. With all that in mind, this crisis comes at a terrible time for them. When you look at the eruption of Mount Agung, of course that severely impacted Bali, but at the same time, it didn’t impact anyone else that was visiting other places in Indonesia. My family and I were in Bali at the time of the eruption, and it was absolutely inconvenient because we were ready to leave, and all of a sudden there was an eruption, so we were sent back to our hotel. But really when you look at that situation, the problem was merely that we had to stay in Bali an extra two days; my five-year-old granddaughter actually didn’t complain. That’s not to downplay the impact, but it just really pales into insignificance compared to what is now being faced. The thing with Mount Agung, and even the 2002 Bali bombings in Kuta, is that you can actually visually see what the problem was. People can witness the horror of it. The problem with Covid-19 is that one, you cannot see it, and two, nobody in the world right now has any clue at all exactly how to deal with it. Tourists and people, just like businesses, don’t like complete uncertainty. I, myself, have still got a holiday booked in June for my family, and my wife keeps telling me to cancel it but I can’t bring myself to do it! And she’s like “what’s wrong with you?” And I think that’s the problem - we don’t know whether we can go there, and we certainly won’t be going there in June, but can we go there in December? Nobody really knows. Tourism is certainly very important to Indonesia, and also if you just look at Bali in its own right, that then becomes an even stickier situation. While tourism accounts for about 10% of the Indonesian economy, in Bali it’s actually 80%. It was 60% of the economy in 2002 when the bombings happened, and now it’s moved to 80%. The Balinese really have put their eggs in one basket. When you think about how the average foreign arrivals have gone from 14,000 per day in Bali to now about 50 or none, because you still have to account for people being born in Indonesia coming back due to the virus or to see family. So in reality, you actually see a complete stop of tourists coming to Bali. If you take 80% of any country’s or any city’s economy, you can work out intuitively for yourself what kind of devastation that will cause. 

About 80% of Bali’s economy is dependent on tourists. What can we expect to see from these tourist hotspots in the coming months? What will be the long-term impacts of Covid-19 on Bali’s tourism industry? 

The short and mid-term impacts are already happening now and are very severe. Only this morning I was talking to the young man who is our family’s driver when we go to Bali, he has a wife and three children. At the moment, he has no income whatsoever and no access to social welfare. A lovely lady named Riska Andianti is our blog designer at the Indonesia Institute and she does all our web page maintenance from Bali, and we had to send her some money because she cannot even buy enough food and her business has collapsed. These are just two people - when I talk to my colleagues at the Panama hotel which is a beautiful beach resort in Legian, they probably have had to let about 50% of their staff go. The other 50% are now on half pay, which means instead of $300 dollars a month it's $150 dollars. On top of that, these staff rely so much on tips, so they have essentially lost ¾ of their pay. Indonesia also does not have any welfare systems, so the impact is so severe and it goes way beyond the hotels because of what’s happening to the taxi drivers, the places that offer wellness packages and massages, the little souvenir stores - the tourism economy just has such far reaching aspects for the whole of the Balinese economy. In the short and medium term, it is very severe indeed, and it will really depend on how long this goes for as to just how severe those economic consequences will be. What worries me most is the current environment  Indonesia is in. It’s really hard to see any hope of a normal Bali for at least 12 months, and when people ask me what that will mean for the Balinese people, my answer is I really don’t know. What I think we will start to see is some form of social upheaval, which is not desirable. Kerobokan prison, which is a prison designed for 350 people, just north of Legian, has about 16,000 inmates, and since in Indonesia you can have a mobile phone in prison, there have been rumors that people are preparing weapons for a mass riot. We cannot verify that, but it is quite disturbing what is happening here. It is a particularly dangerous time beyond the health crisis because the downturn of the economy is also causing social disruption. We don’t have any statistics at the moment, but one does think that as this progresses, the crime rates will spike considerably, because people have nothing. Those particularly vulnerable would be Chinese people in Villa’s and Bules (Westerners), because they will be seen as having money. The tourist promotion board will be working very hard to ensure that those ethnic groups that are visitors to Bali are protected. If Bali was perceived as a place where it is dangerous as a result of Covid-19, that would be the worst nightmare possible. Even my wife is saying to me that she doesn't feel comfortable taking our granddaughter back to Bali even in December, as she really wants to wait and see how the situation plays out because it may just be too dangerous. In the general community, there will be this real hesitation not only to wait for Covid-19 to settle down, but also to wait to see what the risk factors are for tourists being out on the streets because of the economy. 

Chinese tourists make up the majority of tourists that visit Bali, second only to Australians. Furthermore, the Bali authorities were quite lenient in allowing Chinese tourists to extend their visas and stay in Bali when the virus first broke out in Wuhan.  How does Indonesia’s dependence on Chinese tourists affect the post-coronavirus recovery?

That’s a very good question, and it actually goes way beyond Bali, too. If you look at the whole Indonesian economy, it is highly dependent on the Chinese. China puts a huge amount of money into Indonesia in infrastructure and medical supplies; it has extensive relationships through ethnic Chinese in Indonesia, who really play a key part in the economy. Over in the US, we have Donald Trump telling China that Covid-19 is a China-caused disease, and that is whizzing around the Indonesian social media network, which is one of the biggest in the world. Indonesia is #3 in the world on Instagram, #4 on Facebook, and #2 on Twitter.  In Java, rumor and suspicion are a part of everyday life, and when I lived in Indonesia as an Australian, I was amazed by the extent of the rumor mill. There is anti-Chinese sentiment, which I think is fair to say does bubble under the surface anytime regardless of Covid-19. All of this fake news goes around, and it builds, and it’s worrying that if Covid-19 gets worse, it will not take much to change the whole mindset of a population from “how do we protect ourselves?” to “who do we blame for this?” It actually does not take much to spark, and all of a sudden, you’ve gone from absolute harmony to a very serious situation. Now, I’m not saying that is going to happen, but I think your question is really important. What the President and the political parties are now trying to manage is this huge dependency on China on one hand, but on the other hand a growing resentment and heightened suspicion against the Chinese. That is very complex in terms of trying to manage all that. Like Australia, Indonesia cannot be enemies with China. And through all this, you’ve still got the Chinese being far more active in the South China Sea. Diplomatically, it is a very complex situation, and I think countries like Australia would be very naive to assume that is just a problem between Indonesia and China. When you look at the map, Indonesia really acts like Australia’ shield to the South China Sea. All Australian ships go through Indonesian borders, and Australia needs Indonesia as our first line of defense. 

It was recently announced that Indonesian president Jowoki is unwilling to ban Mudik (Pulang Kampung) in May. How bad will the consequences be for Indonesia’s Covid-19 be if migrant workers are allowed to return to the villages at the end of Idul Fitri? Should the government be doing more to ban this domestic travel?

It’s a really important question, and in fact, Mudik has already started. As you know, something like 65% of the Indonesian population’s workforce is part of the informal workforce; they live day-to-day. With what is happening now in Indonesia, just in the tourism industry alone, there is a tremendous amount of people in Java that are out of work. A lot of them have to go home. These people do not have a month's salary in the bank, they can only afford rent for a few days. These are the people who are now getting on trains and buses to head back to the Kampung (village). A form of Mudik is definitely already underway right now as all of these unemployed people are going back to the village. And when they go back to the villages, they might be carrying with them Covid-19 unwittingly, which leads to the next problem. What Jokowi has obviously been very worried about is that when Idul Fitri comes, this migration could continue and get worse. It is something like up to 80 million that move at the end of Ramahdan, which is phenomenal. He has been very worried to do something as drastic as to stop the Idul Fitri celebrations, it could be seen as very anti-Muslim. He has a bit of relief, because a number of the big religious organizations, such as Ahmadiyya, have come out and said that it is not really wise for people to go back to the villages on the 23rd of May. There is some hope there, however, one problem they face is how do you tell the informal workforce, “you need social distancing,” if they live in a slum in Jakarta. Secondly, how do you tell people to stay put in Jakarta, when they cannot afford to live there anymore and have no choice but to go home. In fairness to President Jokowi, this is really complicated. As we’ve said to Australians, Americans, and Canadians, Indonesia is a country with 250 million people and 100 million of those people living under $2 a day, 70,000 islands and thousands of entry points in terms of border control, and it is heading into the most important time of the year for Muslims. How do you manage all that? It is enormously complicated. So I am a little bit careful criticizing the President too much because the situation is unprecedented. And adding to all that is the issues surrounding suspicion of the Chinese, and it adds up to an enormously complicated situation. 

While there has been an unprecedented decline in international tourist arrivals in Indonesia since Covid-19, statistics have shown that many locals are fleeing Java to seek refuge in Bali. Could these domestic tourist arrivals help keep areas of Indonesia dependent on tourism afloat? Should the Indonesian government be trying to ban this domestic travel? 

Yes, and the Indonesian government has already moved to do that now. One week ago, the governor of Bali, and in conjunction with the President’s office, stopped domestic travel, particularly to Bali. If you don’t have a Bali ID, you cannot come in by ferry, you cannot come in across from Lombok, and you cannot fly in. Even three weeks ago, we were looking at the statistics by the Bali tourism board, and we were seeing international tourism arrivals falling 30, 60, to 90%. It was only a couple of weeks ago I was looking at the figures from the tourism board, and to my surprise realized that domestic arrivals are actually going up about 40%! What was happening here? I thought, that can’t be right. It turns out that people were coming in very strongly from other parts of Indonesia seeking refuge in Bali. That just sent alarm bells ringing everywhere because what are they bringing with them? Domestic arrivals, ironically for all the wrong reasons, were extremely strong in the last few weeks, to a point where the government thought, “This is so catastrophic. Stop.” The Indonesian government actually did not publicize it very much, because I have had a lot of Indonesians contacting me asking, “Are you sure the government has enacted these border controls? We have heard nothing.” Yet, when they tried to cross and get on a ferry to Bali without a Bali ID, they were turned back. 

As Indonesia has faced multiple setbacks to their tourism industry in the past, are they better prepared for Covid-19? Does the Indonesian government have the necessary infrastructure and resources in place to help alleviate the suffering of local businesses and communities disproportionately impacted by the collapse of Indonesia’s tourist industry?

That’s probably the most important central question looking forward into the longer term. What this crisis has really identified is that Indonesia was completely unprepared for an event such as this. They were completely unprepared, so much so, you see the health minister saying in those early days, “we need to go to the churches and the mosques now and we all need to pray!” And all the other officials just went, “Oh my god, please don’t say that.” It is predicted by the way that Indonesia has been moving up that by 2045, they will be in the G7. As Indonesia makes that progress, and I don’t have the figures but if you look at how much Indonesia’s GDP is spent on health, it is among the lowest in the world in percentage of GDP. Another thing to mention as well is that I have done several studies on smoking in Indonesia, which is still very prolific. Around 61 million people in Indonesia still have some sort of health issue related directly to smoking. They are very vulnerable to Covid-19. Quite frankly, the government cannot even start to think what would happen to those 61 million people when they get into contact with Covid-19. This could move Indonesia into the area of a complete catastrophe. I just hope and pray that it won’t have too big of an impact, but there are certainly a lot of vulnerable people in Indonesia. Apart from the smokers, Indonesia still has very large numbers of elderly people in the Kampungs (villages) living in very close quarters. And in a society with an informal working economy with no choice but to go back home to the villages anyway, I would say the situation is perilous in Indonesia at the moment. That also brings us to the figures Indonesia is releasing. How accurate are they? The number of tests has really jumped. It used to be only about 3,000 tests, but now it is about 12,000 tests that they have done. Notwithstanding that, all those 12,000 tests as of yesterday, came back positive for 4,200, which is about a third of everyone tested. That’s not to say that a third of the Indonesian population will get it, but that very high number of positive results is concerning. And when you look at the figures, Indonesia is approaching a 500 person death rate. If you look at the reports from the cemeteries board in Jakarta, they have reported in March an unexplained increase in deaths and burials of 40%, compared to the same time in March last year and the previous month. This unidentifiable 40% increase has probably something to do with Covid-19, which is really frightening. As Indonesia is transitioning, it needs to spend so much more on infrastructure such as hospitals and programs that can transition people out of the smoking-related industry because it is costing the country so much. From an academic point of view, another question to ask is how does Indonesia even fund these services without ruining their economy? And the truth of the matter is, unlike most Western economies, Indonesia’s tax rate is extremely low and far too small. We have a situation where something like the top 10 wealthiest people in Indonesia have the same amount of money as the bottom 160 million. Every country, Australia is no different, have their rich and have their poor, but this is dramatic. And in that top 10, 9 out of 10 are ethnic Chinese. At some stage, Indonesia needs to really have a major reform of their tax system whereby there is a far greater contribution to the power of the purse, which in turn, will allow the government to spend more. Jokowi has been trying to do this, by getting this 100 million people in poverty out and providing hope for the younger generation. Before Covid-19, we were seeing that hope especially in the younger people because of social media. The younger generations in Indonesia have expectations now, which is why there is so much pressure in the universities. Young people in Indonesia have expectations and aspirations, what they don’t want is to go through this whole process of secondary education and come out the other side with no job. Even without Covid-19,  this will lead to major social unrest in Indonesia because you have got 95 million people under 35. They all want things for the future, and if the government cannot ensure that, that government and society will be in trouble. When you add Covid-19 to that, that just really highlights how dangerous this situation is. Your question is really important because it gets to the heart of how Indonesia can build from their 20 years of progress since 1998, to lift Indonesia into a truly progressive and holistic great nation where people have opportunities and dreams. They are not going to be able to do that until they have a massive reform of the tax system and a more equitable distribution of wealth. 

This is a counterfactual follow-up question, because obviously it has not happened, but do you think Covid-19 will be the necessary push that Indonesia needs to reform its tax system and welfare programs, or would it be too optimistic to hope that so much reformation can happen due to a single crisis? 

It’s a really good question, and something that professor Tim Lindsey would be more qualified to answer. All I can say is that I really hope it will be a catalyst, but having said that the forces of old “New Order” as Jokowi found out brutally are so amazingly powerful in Indonesia. If you look at Jokowi’s ministry, I mean he’s got some very smart people. Don’t let anyone tell me that Sri Mulyani, for example, doesn’t know what she’s doing. Jokowi definitely has people that do understand the issue, the problem is whether they can push through and get these reforms done. Perhaps Covid-19 will be the catalyst that will lead the Indonesian government to address this issue, but any policy moving forward is tremendously complicated because there are vested interests interwoven and a network of big corporations and very influential wealthy people. Australia should also be doing a lot more to support that process because it's in Australia’s interests, and the interests of all other Western countries. All I can really say is that I hope Covid-19 will convince the powerful elite in Indonesia of how important reform is needed in health and education to ensure a more egalitarian society emerges. 

The tourism industry is facing tremendous losses globally. How can the Indonesian government recover its reputation and regain people’s trust to travel to Indonesia after the pandemic?

It’s really going to be all about perception. When I was young, governments could just control what they wanted the population to know, but you cannot really do that anymore because of social media. The biggest challenge for the Indonesian government is to ensure that not only do they deal with this pandemic, which is probably going to take at least 12 months, but then that there is a reassurance to the world that Bali is back in business and safe both from a health perspective and a crime rate perspective. I have got great admiration for the Balinese governor Wayan Koster, the Bali tourist board, and the general provincial management of Bali. They are quite strategic, and I have great hope that Bali can recover as quickly as possible. From Bali, Indonesia then needs to start building links to those other places and start developing the infrastructure that is needed to get diversification of tourism away from Bali. This was Jokowi’s plan all along anyways, but when you got so much of your tourist industry wrapped up in one little island, and that little island has so much of its economy wrapped up into one industry, it doesn’t take much to end up with a real big problem, and that’s what we’ve got what now.

END NOTE:

Ross Taylor also sent me along an informative article written by his close friend Professor Tim Lindsey and his colleague Tim Mann. If you’re interested in reading more on the Covid-19 situation in Indonesia, it is definitely worth a read. https://ourindonesiatoday.com/indonesia-was-in-denial-over-coronavirus-now-it-may-be-facing-a-looming-disaster/

Kelsey Clarke CMC '22 Student Journalist

Gesundheitsministerium Osttimors / Public domain

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