Andy Mulyana et al., Fiscal Policy and Resilience of the Tourism Industry Against the COVID-19 Pandemic (2023)

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A journal article by Andy Mulyana and co-authors from Universitas Terbuka and other Indonesian universities, Fiscal Policy and Resilience of the Tourism Industry Against the COVID-19 Pandemic, published in Jurnal Riset Akuntansi dan Keuangan Indonesia, Vol.8 No.2 September 2023. Using an exploratory descriptive qualitative method with in-depth interviews of tourism business actors in Yogyakarta City and Sleman, Bantul and Magelang Regencies, it analyses the implementation of tax relief for tourism businesses during the pandemic. It finds that the fiscal policy's effect on business resilience suited medium and large businesses better, while micro and small businesses could use only the tax relief. Participants described that relief as transparent and easy to implement.

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“Andy Mulyana et al., Fiscal Policy and Resilience of the Tourism Industry Against the COVID-19 Pandemic (2023).” Original at journals2.ums.ac.id. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/andy-mulyana-et-al-fiscal-policy-and-resilience-of-the-tourism-industr-0643476629/, SHA-256 3713ae61ee917490bbf1c48a1b51cfcef7f20df929074b2cc832356b189172ea.

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JURNAL
Riset Akuntansi dan Keuangan Indonesia
URL : http://journals.ums.ac.id/index.php/reaksi/index

Fiscal Policy and Resilience of the Tourism
Industry Against the COVID-19 Pandemic

Andy Mulyana1, Ni Wayan Marsha ABSTRACT
Satyarini2, Indarti Diah Palupi3, The tourism sector is encountering a global crisis as a
Hilda Oktavana Siregar4, Denny consequence of the COVID-19 pandemic. This article aimed
Yohanna5, Nashirotun Nisa to identify and analyze the implementation and impact of
Nurharjanti6 fiscal policy on the resilience and sustainability of tourism
Tourism, Faculty of Economics and
1
industry businesses in Indonesia amid the COVID-19
Business, Universitas Terbuka pandemic. An exploratory descriptive qualitative method
Tourism, Faculty of Economics and
2
was used in this research through in-depth interviews with
Business, Universitas Terbuka tourism sector business actors in Yogyakarta City, Sleman
3
Universitas Muhammadiyah Regency, Bantul Regency, and Magelang Regency on the
Surakarta implementation of fiscal policy of tax relief for relevant
tourism business during the pandemic. The results of the
Sekolah Vokasi Universitas Gadjah
4
research identified the impact of implementing fiscal policy
Mada
on business resilience in the tourism sector which is more
5
Universitas Andalas befitting for medium and large business categories, while
6
Universitas Muhammadiyah micro and small businesses could only take advantage of
Surakarta fiscal policy in the form of tax relief, which according to
email: mulyana@ecampus.ut.ac. participants is transparent, easy to implement, and does not
id1, wayanmarsha@ecampus.ut.ac. have a detrimental impact on future. This research contributes
id2, idp121@ums.ac.id3, hilda. to theory, practice, and policy by providing an overview of
octavana.s@mail.ugm.ac.id4, the impact of environmental factors on the sustainability
nnn122@ums.ac.id6 of tourism sector businesses, the government's response to
the crisis, the impact of fiscal policy implementation on the
resilience of tourism sector businesses, and input for the
Keywords:
government in making future policy.
pandemic crisis, business
sustainability, fiscal policy, tourism
industry

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INTRODUCTION crippling economic development in the tourism
sector. For international tourists, the policy provided
The tourism industry significantly contributes counter-cyclical stimulus in the form of airline and
to many countries. In Indonesia, this sector is travel agent incentives. For domestic tourists, the
one of the main drives of economic growth and government dispensed subsidies, especially during
development. Data in 2017 show that the tourism the low season, such as incentives of 30% ticket
sector occupied the second largest position in the discounts for 25% of seats per flight from 10 tourism
country’s foreign exchange earnings grossing up destinations which were estimated rather affected
to USD 15.20 billion or IDR 202.13 trillion from by the declining tourism sector. Additionally, the
the target of IDR 200 trillion, a 12% increase from government reduced hotel and restaurant taxes for
2016. In 2018, Indonesia experienced rapid growth 6 months in 10 Indonesian tourist attractions with
in the tourism sector, which was 12.58% compared aid of IDR 3.3 trillion, hence regional governments
to the world average growth of 5.6% and ASEAN of did not take more losses from their regional taxes.
7%. In 2019, the government projected the tourism This research aimed to identify and analyze the
industry to be a leading sector and generate the implementation and impact of fiscal policy on the
largest foreign earnings, reaching USD 20 billion. resilience of the tourism industry. Understanding
In 2020, the tourism sector was assumed to serve of the form, implementation, and impact of fiscal
as the core economy for Indonesia and become the policy is explored through four research questions,
country’s largest foreign earning source. namely:
Government and society’s desire was RQ1: Was there a fiscal policy during the pandem-
annihilated due to COVID-19 which attacked ic in the tourism sector?
globally. The COVID-19 pandemic not only caused RQ2: What is the fiscal policy during a pandemic
a health crisis but also developed into a global in the tourism sector?
financial and economic crisis, and the tourism RQ3: How was the fiscal policy implemented in
industry was the most affected sector. The tourism the tourism sector?
sector is driven by mobility and strong interactions RQ4: Did fiscal policy affect the resilience of the
between individuals, making it a major pandemic- tourism sector?
related economic crisis recipient (Hao, Xiao, &
Chon, 2020). The pandemic resulted in paralysis This research applied an exploratory
in this sector, thereby increasing unemployment descriptive qualitative method through in-
and devastating economic losses for this industry depth interviews with tourism entrepreneurs in
(Verma & Gustafsson, 2020). Yogyakarta City, Sleman Regency, Bantul Regency,
The outbreak of the Coronavirus or COVID-19 and Magelang Regency. The phenomenon observed
stirred the potential of the Indonesian tourism in this research is the implementation of fiscal
sector to lose a big opportunity to earn foreign policies of tax relief established by the government
earnings. This sector was threatened with a loss of for businesses in the tourism sector during the
income of up to US$ 2.8 billion or the equivalent pandemic.
of Rp. 38.2 trillion. Pressure on the tourism sector The research results show that the fiscal policy
could be observed from the decline in the number proposed by the Government for the tourism sector
of tourist visits, both domestic and international. In is more suitable for medium and large business
January-May 2020, the number of foreign tourist classes, while the participants in this research
visits was recorded at 2.9 million. This number fell are micro and small business actors because it
53.36 percent from the same period the previous is according to the choice of research settings.
year, totaling 6.3 million tourists. This trend was Therefore, the only fiscal policy they utilized was
the outcome of the lockdown policy that applied tax relief which according to participants is more
globally. transparent, easy to implement, and does not entail
In the fiscal sector, the government established a detrimental impact in the future.
a budget reallocation policy to deal with the This research contributes to theory, practice,
COVID-19 outbreak in all sectors. The government and policy. First, it provides an overview of how
also issued a fiscal policy package to anticipate environmental factors have a major impact on

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business sustainability in the tourism industry. will generate a fiscal multiplier (multiplier effect)
Second, it gives an outline of the government’s for national output (Setiawan, 2018). Indonesia
response to the crisis in the tourism sector due has issued various fiscal policies in the form of
to the COVID-19 pandemic. Third, it explains direct assistance to the public in different sectors
the impact of fiscal policy implementation on the actualized in tax incentives based on Law No. 2
business resilience of the tourism sector. Fourth, of 2020, which is also known as tax expenditure.
it proposes input for the government as a policy Tax expenditure is a reduction in tax obligations
maker regarding the response of business actors originating from preferential provisions in the tax
in the tourism industry to the fiscal policies made law including tax exemption, credits, reduction,
by the government. These inputs can be applied preferential rates, and tax deductions (Leachman et
by the government in creating future policies by al., 2011).
overcoming negative impacts and taking advantage Regional autonomy allows greater authority
of the positive impacts of previous policies. to local government in planning its development
and determining regional priority sectors. The
LITERATURE REVIEW authority/affairs distribution among levels
of government, as regulated in Government
Resource Dependence Theory Regulation Number 38 of 2007 on the Distribution
The notion brought by Resource Dependence of Government Affairs between the Government,
Theory is that all organizations critically depend Provincial Regional Governments, and Regency/
on other organizations for vital resources supply Municipal Governments, states that cultural and
and this dependence is often reciprocal (Drees tourism affairs are government affairs assigned
& Heugens, 2013). This theory points out between levels of government.
interorganizational interdependence to explain The division of affairs is assessed based on the
why formally independent organizations engage in criteria of externality, accountability, and efficiency
various types of interorganizational arrangements by considering the amicable relationship between
(Pfeffer & Salancik, 1978). According to Oliver levels of government. According to this division,
(1991), this arrangement will facilitate organizations the tourism sector is a matter of choice for the
overcoming dependency by empowering their local government. To finance this authority, Law
autonomy or freedom to make decisions without Number 28 of 2009 on Local Taxation and Charges
other interference as well as legitimacy or regulates that regional revenue sources are within
conformity with social guidelines (Suchman, 1995). the authority of its local government.
The state’s reliance on the tourism sector Regional governments are authorized to collect
is mutual with this sector’s dependence on the regional taxes and retribution, especially hotel,
government as a regulator. The government’s restaurant, and entertainment taxes. Revenues from
response takes the form of policies in the economic the tourism sector will be able to increase regional
field, both monetary and fiscal, that modify the revenue which eventually increases regional
resilience of the country and the tourism industry. capabilities in improving the development of the
Resilience can be defined as the system’s ability sector while simultaneously doing so to community
to anticipate and recover from shocks and crises welfare, and reducing dependence on transfers
as well as the capacity to change and reach a new from the central government.
normal (Folke et al., 2010; Walker et al., 2004).
During the pandemic, the local government
In a tourism-based economy context, Kim and
established policies, such as an additional allocation
Marcouiller (2015) report that stronger economies
of State Budget to the Ministry of Tourism and
recover more quickly than weaker economies when
Creative Economy of IDR 298.5 billion; Incentives
affected by exogenous shocks.
for airlines, travel agents, and joint promotion
schemes; Domestic ticket discounts that domestic
Fiscal policy
tourists can benefit of; Fostering incentives
Fiscal policy aims to direct the economy in a according to the association’s proposal that the
better direction, characterized by economic growth rate for hotel and restaurant taxes in 10 tourism
and social welfare (welfare economics). Fiscal policy destinations be deducted to zero; Government’s aid

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or grants to regional governments affected through Sengel et al. (2021) examined the financial
the reduction in regional hotel and restaurant tax policies implemented by 220 countries to support
rates of IDR 5.5 billion; IDR 147 billion Physical the tourism industry during the pandemic using
Special Allocation Fund of State Budget for tourism content analysis based on data published by the
which has not been able to be exploited by the United Nations World Tourism Organization
region; encouraging tourist movement by tourism (UNWTO). The research results suggest that 220
promotion; promoting various activities such as countries supported the tourism industry’s credit
music and sports, and efforts to attract potential in financial and tax deduction in liquidity as well as
MICE (Sugihamretha, 2020) reduced interest rates.
Okafor et al. (2022) analyzed a country’s level
Previous Research of resilience to the COVID-19 shock in moderating
Faulkner (1999) highlights how chaos could the relationship between the size of the tourism
quickly affect the tourism sector because of its industry and the country’s economic policy response
vulnerability to external threats, such as natural using data from 113 countries. The research results
disasters or socioeconomic crises (Espiner et al., imply that countries with a large tourism sector
2017). However, this sector has high resilience and (size) acted more aggressively through economic
an important ability to adapt and recover from stimulus packages to minimize the impact of
unexpected events and disasters (Romagosa, 2020). COVID-19. The impact on the tourism sector was
COVID-19 has resulted in an unprecedented crisis moderated by the country’s resilience to shocks.
in tourism which threatens the sustainability of Researchers analyzed the impact of the
businesses. A resilient attitude from all interrelated pandemic on tourism face in Indonesia. Pambudi
components is pivotal to overcoming uncertainty (2020) probed Indonesian tourism at the end
regarding risks that may arise and are not fully of 2020, and it was estimated by various experts
acknowledged previously by relevant parties (Elmo only reached 4-5 million international tourists.
et al., 2021). It was presumed that the foreign tourist market
The study of the relationship between would return normally in 2021 and be normal
resilience and complexity of the tourism sector in in 2023. The results of the analysis recommend
responding to the pandemic crisis focuses on the that the review of tourism development planning
locus of environmental quality, transportation, emphasize general stimulus, MSMEs (Micro, Small,
destinations, innovation, technology, and business and Medium Enterprises) stimulus, arrangement
organizations (Elmo et al., 2021). Researchers of accommodation packages, transportation
have examined and provided empirical evidence and access, tax stimulus, technical guidance,
about the level of resilience of various countries strengthening tourism diversification, as well
in conquering the crisis due to the pandemic (e.g. as strengthening the demand and supply side
Okafor et al., 2022) and the policies of various of tourism. The government should improve
countries to overcome the impact of the pandemic Pentahelix’s optimal collaboration strategy in
(e.g. Kuscer et al., 2022; Sengel et al., 2021). managing COVID-19, comprising academic,
Kuscer et al. (2022) explored how countries business, government, community/customer, and
would deal with the COVID-19 pandemic and media.
what to expect in the post-pandemic using a Purba et al. (2021) assert that COVID-19 had
crisis management model developed based on a negative and significant impact on tourism in
interviews with 31 tourism organizations. The Indonesia, tested using an air transportation and
research results of Kuscer et al. (2022) help identify hotel accommodation data approach. Government
actions (policies) required to create resilience, spending increased significantly corresponding
emphasize responsibility and state interventions to the National Economic Recovery (NER) and
that can achieve tourism restoration, thus helping policies for handling COVID-19. The research
the state to choose the most compatible way to results also calculated the impact of the pandemic on
face the COVID-19 pandemic, overcome negative the plummeted tourism sector and its implications
influences, and capitalize on the impacts the on GDP which defeated the government due
positive. to the catastrophic event. The tourism sector’s

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contribution to GDP plunged sharply by 16%. This policymakers in the regency/municipal and several
condition shares a similarity with tourism in 2011, tourism entrepreneurs in the Sleman Regency,
on other words, COVID-19 pushed back Indonesia Bantul Regency, Yogyakarta City, and Magelang
for 10 years. Regency. The research was conducted through
The government responded to the decline in four stages; data collection, data reduction, data
the tourism sector due to COVID-19 through the presentation, and conclusion verification (Miles
Ministry of Tourism and Creative Economy by and Huberman (Sugiyono, 2012).
establishing policies to improve and restore the
tourism sector and creative economy. One of the Research Data Source
policies is to increase exports and digitalize the The data source in this research is primary data
marketing of creative economy products which is or data obtained directly from research subjects,
expected to recover national tourism (Utami et al., which are in-depth interviews with People Under
2021) Supervision who manage regency/municipal taxes,
business actors in the tourism sector in regency/
RESEARCH METHODS municipal, and several tourism actors in Sleman
Regency, Bantul Regency, Yogyakarta City, and
Research sites Magelang Regency. To investigate the fiscal policies
This second-year study continues the previous determined by local governments, this research
year’s research. The previous year’s research was also explored secondary data in the form of fiscal
carried out in three different sites in Indonesia, regulations to relieve business actors facing the
namely Lombok (Gili), Lampung (Pringsewu), and crisis due to COVID-19.
Banyumas (Serulingmas). This year, the research
was conducted in 4 regencies/cities, which are Data Collection Instrument and Technique
the Special Region of Yogyakarta and Central Based on the previous research data
Java, namely Bantul Regency, Sleman Regency, sources, the data collection technique is in-
Yogyakarta City, and Magelang Regency. This depth interviews. Interviews are an adequate data
area was selected because it was a crowded tourist collection technique in research carried out using
destination before COVID-19, therefore it is a qualitative approach. Not only can interviews
intriguing to understand the fiscal policy taken by enrich the information needed, but also be used as
the regency/municipal government and its impact a tool to increase the objectivity of research data.
on local business actors. For instance, the objectivity of the researcher’s
perception and interpretation of observation
Research methods results can be confirmed through interview data.
The method used in this research is an However, interviews must be conducted carefully
exploratory descriptive qualitative research so that researchers can differentiate between
method. In this way, it will produce descriptive data correct information and incorrect information,
of written or verbal results from participants and moreover, if the questions relate to the informant’s
behavior observation (Moleong, 2009). This study behavior. Therefore, interviews should be prepared
aimed to describe the state of a phenomenon and systematically and purposefully, that the data
did not test the designed hypothesis but to describe obtained suit the case studied.
a variable, symptom, or situation (Arikunto, 2002). For interviews to be carried out appropriately
The phenomenon in this research is the fiscal and focus on the problems, interviews should use
policy of tax relief for tourism. In-depth interviews the right tools. Among the interview tools used in
were carried out by asking flexible open-ended this research are an interview guide, stationery, and
questions in order to obtain detailed information a tape recorder. Apart from that, in-depth interviews
from informants. The technique for determining greatly helped researchers to acquire accurate
informants uses snowball and aims purposively, and objective information. This is understood as
namely with certain considerations to achieve the researchers could check each informant’s answer
research objectives. The criteria for informants are with other questions from different perspectives

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Data analysis technique to the results of interviews with the Regional
Following the characteristics of the research Apparatus Organization which manages taxes in
design, this research data analysis was performed the regency/city as well as the results of document
using analytical techniques based on a qualitative analysis of regional regulations. Likewise, from
research approach. Principally, the data analysis the results of in-depth interviews with six tourism
techniques are appropriate to the research stages. business participants, none of the participants
At this stage, the research was completed using mentioned that they knew about the fiscal policy
a qualitative approach. Therefore, research data in the tourism sector. Participants revealed that as
analysis techniques at this stage were done business actors in the tourism sector who were very
using qualitative analysis techniques. Miles and significantly affected, they were disappointed with
Huberman (in Sugiyono, 2008: 338) offer two the unwritten policies in their area. The fact is that
qualitative data analysis models, the interactive the Regional Apparatus Organization continues to
analysis model, and the flow analysis model. The emphasize paying taxes as if the pandemic had not
analysis model in the preliminary study stage occurred. Apart from that, their knowledge of fiscal
applied the interactive analysis model. policy was on a national scale and not resulting
from regional regulations. This policy should be
According to Miles and Huberman (in
regulated autonomously in the regions although
Sugiyono, 2008: 338), the interactive analysis
it refers to national regulations but is adapted
model consists of three main components, namely
to regional conditions, which entail different
(1) data display, (2) data reduction, and (3)
variations though both are priority tourist areas.
conclusion. The three components of analysis are
a logical consequence of the fact that the main “In March 2020, restaurant and hotel taxpayers
purpose of data collection is for researchers to draw planned to be exempted from tax until Septem-
conclusions. However, practice-wise, some data can ber 2020, but the pandemic continued, so we
be immediately presented (data display) since it does followed the national incentive policy because
not require interpretation so that conclusions can there were no visitors at that time. After visitors
be drawn. On the other hand, some data cannot be started coming, we paid retribution as per usual
presented directly so no conclusions are suggested. although the turnover had dropped. Entertain-
This type requires a data reduction process so that ment opened in 2022, yet it still hasn’t returned
a researcher can draw appropriate conclusions. to normal unlike before the pandemic” (Partic-
Data from in-depth interviews were coded for ipant 2)
the reduction stage, then a thick description was “Several facilities can be used to deduce tax-
carried out and narrated. es. There is a hotel tax exemption from March
Based on the interactive model, drawing a 2020 to September since Yogyakarta is among
research conclusion is an interaction between the the 10 tax-exempt tourist destinations. How-
three main components of the interactive analysis ever, strict verification from the Regional Gov-
model. This interactive process should be carried ernment disrupts us from taking advantage of
out continuously until a proper or satisfactory incentives. In several months, we still pay hotel
conclusion finally can be derived. The interactive and restaurant taxes even though turnover has
analysis process can be achieved from data dropped drastically” (Participant 3)
collection to conclusions through data presentation “There should be better special incentives in
or data reduction tourism not only in 2020-2021, but currently
we are still starting to get back on our feet and
RESULTS AND DISCUSSION still need to be provided with special incentives
in the tourism sector” (Participant 1)
Fiscal Policy in the Tourism Sector If there is a fiscal policy that specifically
Data collection was carried out in four regional regulates the tourism sector, proper outreach and
governments (Sleman Regency, Bantul Regency, education should be carried out. However, all
Yogyakarta City, and Magelang Regency), all of business participants in this research were not aware
which did not establish fiscal policies specifically of the specific fiscal policies for tourism businesses
for the tourism sector. This statement is according and were even disappointed with the government

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which did not address this sector which was 5. Pioneer Industry
advertised to be a national priority. Based on the 6. Export-oriented, and/or
expressions of Participant 1, needs were not only 7. Research, development, and innovation-ori-
incentives when the pandemic occurred, but when ented activities
the business restarted, business actors required
incentives that would ease them during reopening. Investors in industries that meet these
Fiscal policy is an adjustment policy in criteria are entitled to fiscal incentives. The specific
government expenditure and revenues to improve meaning of fiscal policy in the tourism sector is
economic conditions. In other words, fiscal policy indeed nonexistent, but the business actors who
is an economic policy in order to bring economic participated in this research are still able to survive
conditions in a better direction by alternating and operate without any obstacles. This suggests
government revenues and expenditures (Rahayu, that special fiscal policies in the tourism sector are
2014). According to Ibrahim (2013), fiscal policy is not a factor in the survival of tourism businesses
government policy related to regulating economic in Sleman Regency, Bantul Regency, Yogyakarta
performance through government revenue and City, and Magelang Regency through an in-depth
expenditure mechanisms. interview approach conducted.
According to Nopirin (1987), the instruments Principally, fiscal policy aims to influence
in fiscal policy are government revenues and the total amount of public expenditure, economic
expenditures which are closely related to taxes. growth, total public production, the number of
1. State expenditure/expenditure (G = govern- job opportunities and unemployment, general
ment expenditure) price levels, and inflation, as well as stabilizing
2. T = taxes the economy by controlling interest rates and the
amount of money in circulation. The objectives of
Fiscal policy is deemed as one of the most fiscal policy according to John F. Due are:
important macroeconomic policies in the context 1. To increase national production (GDP) and
of: economic growth or improve economic con-
1. Minimizing fluctuations in the business cycle ditions.
2. Maintaining sustainable economic growth, 2. To expand employment opportunities, reduce
high employment opportunities unemployment or create opportunities (re-
3. Liberating from high or volatile inflation ducing unemployment), and maintain general
price stability.
Fiscal policy theory states that this policy is 3. To stabilize the prices of goods in general, es-
important to maintain economic growth. Fiscal pecially to overcome inflation.
policies that focus on specific sectors do not include
the tourism sector. Such fiscal policy is stipulated This research focuses on the first target, and
in Presidential Regulation Number 49 of 2021 on it obtained that without specific policies in the
Amendments to Presidential Decree Number 10 on tourism sector, business actors could operate. If
the Investment Business Sector. These changes were explained using business behavior theory, especially
made to limit the implementation of investment in MSMEs, innovation is an important factor in
as well as control and supervision of beverages maintaining a business.
containing alcohol. However, the list of priority “I don’t know about tourism specifically, but all
business fields still refers to Presidential Decree I know is tax incentives during the pandemic.
Number 10 of 2021. Referring to Article 4 Section 1 If there were one, in my opinion, there would
of Presidential Decree Number 10 of 2021, priority be no special need for tourism because every-
business fields are business those that meet the one during the pandemic was hit economically.
criteria below: We were still able to innovate and continue to
1. National strategic programs/projects sell food for take away, frozen and not a dine-in
2. Capital intensity ones, even though turnover was down, at least
3. Labor intensity the company was still maintaining the number
4. Advance technology of existing employees” (Participant 5)

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The code was carried out by the research team returned. Therefore, the tourism industry was
about fiscal policy in the tourism sector and the greatly in need of help from the government in
findings obtained that there was no fiscal policy order to survive and get through this time.
and business actors were not aware of it. They only The tourism sector incentives have several
understood the tax incentives issued by the central types of assistance provided to tourism industry
government dispensed to all business sectors, players. The first is assistance of funds (grants).
and some participants took advantage of them. Providing stimulus funds from the government
International fiscal policies are considered more to the tourism sector has been implemented since
transparent and easier to access. This is different 2020. In 2020, the grant provided by tourism was
from incentives, in which taxes are managed by the 70% of the 2020 NER absorption for the hotel and
local government. restaurant sector. In the same year, grants in 2021
“I took advantage of tax incentives during the NER reached 3.3 trillion rupiah.
pandemic that apply nationally, such as reduc- The second assistance is interest subsidies.
tions in PPh 25 and PPh 21 DTP (Income Tax This subsidy assistance is provided to MSMEs
Incentives borne by the government) as well as (Micro Small and Medium Enterprises) in the
reductions in corporate income tax rates. It was tourism and hospitality sector by providing cheap
more well-disseminated than regional tax in- credit facilities. The interest rate relief provided by
centives. Apart from that, I feel that the regional the government reaches minus 6% which applies
government didn’t really care about the current to MSMEs and medium-sized entrepreneurs. The
pandemic conditions. Still, it chose to pursue the capital system calculation is planned to be between
regional tax rates handsomely. In fact, they also IDR 10 – 75 billion, a 3-to-5-year term with a
knew that economic conditions were declining. reduced interest rate of 6%.
Often, there was no clear line regarding region-
The third assistance is credit restructuring.
al regulations, it was difficult to get definite in-
To date, credit restructuring that has been issued
formation. So, I chose not to take tax incentives
for tourism and the creative economy has reached
that will cause problems in the future because
IDR 124 trillion. This has also been approved
they are not clear” (Participant 3)
by the Financial Services Authority regarding
restructuring bank loans. Besides, the government
Forms of Fiscal Policy in the Tourism Sector
has also provided multi-finance credit restructuring
The results of in-depth interviews with and leasing to tourism. The assistance that has been
the Regional Apparatus Organization in three provided to date has totaled IDR 3.1 trillion. For
regencies and one municipality as well as document other aspects, tourism actors would also be given
analysis of existing regulations, the fiscal policy for the convenience of applying for bailouts from the
the tourism sector was implemented in hotel and Association of State-Owned Banks (Himpunan
restaurant tax exemptions in the period March - Bank Milik Negara abbreviated as Himbara). Loans
September 2020. This policy was issued prior to that may be applied for bailouts are those under 10
the first confirmed positive patient in Indonesia billion. The final financial assistance is incentive
announced. After a patient was confirmed positive assistance for areas included in tourist villages.
for COVID-19 on 15 March 2020, all fiscal policies Business actors in the tourism and culinary sectors
were general for all businesses except the health may apply for financial assistance of a maximum of
sector and applied nationally. 200 million rupiah.
Tourism sector stimulus or incentives were The fourth assistance is People’s Business
one form of assistance from the government to Credit (Kredit Usaha Rakyat, abbreviated as KUR)
tourism industry players so they could survive for tourism. KUR for tourism has been helping
the situation. As we know, to prevent the spread since August 2018. This program was established
of the Coronavirus, it was necessary to limit visits as an effort to strengthen capital while expanding
on a scale. Meanwhile, the tourism sector relied access to financing for MSME players in the tourism
heavily on income from visitors and service users. sector. Tourism MSMEs may propose for credit with
The beginning of the year was the low season as a low interest of 7% per year. The amount is divided
well because the holiday season ended and visitors into 2, for micro KUR the amount reaches IDR 25

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million per debtor, while for small KUR is between However, this was not the case with local taxes
IDR 25 – 500 million. Some conditions must be which tourism business actors perceived as very
fulfilled to be able to be eligible, namely part of a burdensome because there were no special policies.
productive and viable MSME for the following six If one is eager to increase or at least maintain
months. Credit assistance can be accessed through economic growth, the policies must be easy to
channeling banks (BRI, BNI, Mandiri). Through implement and well-disseminated, followed by
the facilitation of KUR, it is expected that tourism long-term impacts from the use of these facilities,
actors will have “higher class” so that the welfare of so that the policies hit the target.
the general public increases in the tourism sector
as well. Impact of Fiscal Policy on the Tourism Sector
The results of data collection carried out in
Implementation of Fiscal Policy in the Tourism
three regencies and one municipality show the
Sector
reason why tourism sector business actors survive
Fiscal policy is a national design to support the and continue to operate today is innovation, and
tourism sector. This policy, which aims to increase obviously leave out the advantage of existing fiscal
economic growth, is challenging to implement. The measures. Even during a pandemic, these business
results of data collection show that participants did actors considered continuing to operate regardless
not utilize special facilities in the tourism sector. The of all limitations. Even though business actors take
lack of outreach and explanation of the positive and advantage of fiscal policies, this does not bring an
long-term impacts of the policy was not delivered, impact on the resilience of their businesses.
so that business actors in the tourism sector did
When observing the design of the tourism
not realize and felt disappointed instead with
sector’s fiscal policy, it is more acceptable for
the government. Moreover, many of the policies
medium-scale businesses, not small and micro
designed were in the credit area, whereas not all
businesses. Meanwhile, the research object yielded
business actors used capital from bank loans. Also,
respondents’ data in Yogyakarta and Central Java
errors in debt management such as restructuring
provinces which are notably dominated by MSMEs,
might result in bankruptcy if a comprehensive
thus business actors as participants had not taken
analysis is not carried out. Other than that, the
advantage since it did not suit their needs.
bank also did not facilitate for the tourism sector to
access this policy. The main indicator according to the existing
code is that tourism business actors could survive
“We didn’t take advantage of specific incentives
due to innovation, and they emphasized that it was
from regional governments, but national incen-
not because they took advantage of fiscal policy
tives and it was very easy because they were ac-
because four participants were not aware of it and
cessed online via DJP online. Easy, effective, and
two participants did not take advantage of fiscal
very helpful” (Participant 2)
policy as well as tax relief.
“ MSMEs tax really helped me, the method is
easy, but it was only difficult at the beginning, CONCLUSION
then I got used to the format and it’s easy be-
cause it’s online” (Participant 4)
The fiscal policy created by the Government
“Currently, even though we are in the recovery for the tourism sector is more suitable for medium
phase, there is still no change in the payment and large business classes. Meanwhile, the
process, entrepreneurs are still being demanded participants in this research are micro and small
to pay even though conditions remain difficult, businesses because it is following the research
and the Regional Government assumes turn- location. The fiscal policy they took advantage of
over according to its own calculations without was tax relief which according to participants is
using real-time data” (Participant 1) more transparent, easy to implement, and will not
The results obtained from data collection and have a detrimental impact in the future. An easy
coding show that fiscal policies related to reducing and online reporting system is an important factor
central taxes helped taxpayers in its implementation. for business actors to access existing incentives.

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Further, innovation is essential for tourism sector The limitations of this research are the
businesses, so that business sustainability is more selection of participants who are less varied in
fundamental and is established independently by their knowledge of fiscal policy and variations
the founder. in the scale of the business they own. Also, the
Fiscal policy should follow the initial locations that only take place in the Yogyakarta and
objectives created and be socialized well so that Central Java areas make the business characteristics
it aims proper target. When fiscal policy becomes homogeneous. Future research should study more
a disappointment for society, the policy will not heterogeneous participants in terms of scale,
function well and will result in national economic business characteristics, and location.
failure.

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