Mr. Haryadi Sukamdani is the General Chair of the Indonesian Hotel & Restaurant Association (PHRI) and the Indonesian Employers’ Association (APINDO) who combines a large number of roles, but perhaps is best known in the tourism sector as one the most venerated and admired hotelier families, the Sukamdani family who started the Sahid hotels so many years ago and were trailblazers in tourism. Publisher Alistair Speirs met with him and asked some very current questions.
VIDEO INTERVIEW (PART 1)
AGS: Tourism has taken the biggest hit really of all sectors over this last COVID pandemic, but now we seem to have some traction going in the ministry of tourism with Minister Sadiaga Uno making his first English language announcement that probably Bali will open in June or July, depending on three different conditions to do with the pandemic and preparedness. But they have proposed different sectors, which should be prioritized: nature and culture, wellness, education, medical, tourism, sports, and ecotourism. That seems like a good list for tourism in general. Will it work for the rest of Indonesia because you are represented all over the archipelago and especially in the business centers of Jakarta, Surabaya and other major cities. What do you think of this prioritization?
HS: I think the most important is to open all our tourist destinations like Bali, Batam and Bintan first because they are very dependent on the international tourists. Their capacity, especially like in Bali, do you know, is more than 160,000 rooms there, so it’s really a big capacity that cannot be fulfilled by domestic tourists only. So that is the most important. And yes, Pak Sandy stated about the about the prioritization for the some sectors in tourism, like nature and culture, wellness, education, medical tourism, sports, and ecotourism, I think we already have all those sectors so the question is about whether the support for all the sectors is there.
I think the situation is quite confusing. So the most important thing, as I said, it’s how to open without any delay because you know Bali, as we have seen in October, we have planned to first open 1st of October, and then delayed to December, then December delayed to January then now to June and July. So, I think we should have really proper regulations to open like for example for the requirement for the tourists who have already vaccinated, for example, then they can have more flexibility to enter some parts of the country or cities that are already in the green zones, They can also go to Bali or whatever the destination, like within a month.
So I think this is more important. So the key factors is still to have the date to open. And if you look to another country, like for example, Turkey who never closed the country for tourists. And so far they can manage the cases there. So I think if we can learn from other countries who they are be still open and can control. I think we can do something more strategic to open.
AGS: You mentioned green zones. Green zones are areas of low transmission of the infection which have been declared by the Ministry of Health to be relatively safe. There’s also green corridors between counties, could these facilitate the plan you are proposing?
HS: I think for the green zones, it’s about the places that the population there are free from infection, we can categorize a zone green, if there are no cases there. The green corridors actually connect between green zone and green zone, so that’s called a green corridor. So we can do that and that’s very interesting, like Bali, Batam and Bintan because they are islands. So it’s easier to control. Now it’s depending on how the government can be really confident for the opening because in fact everyone who is coming to Indonesia using an airplane must have a negative PCR test. I think this is the first screen that important for the health protocols to avoid the spreading of the virus.
AGS: Yes, I think absolutely like that, and there a great amount of vaccination going on in the tourism industry, with the front liners that will enable this as well, which is very good. But now let’s talk about the MICE business. Lots of people are talking about business travel coming back, but surely we must expect this to fall when zoom is so easy? You don’t need to come from Hong Kong or New York to do business and its easier to just do what we’re doing right now. Are we going to see a downturn in the whole MICE business because of this? Or are you still optimistic that people will come back on business?
HS: We are still confident we can, we are still optimistic that it will be back because the nature of the human being is a social creature. They cannot be alone, or isolated forever, they have to socialise, so I think this cannot be replaced by long distance communications like zoom. So sooner or later it will be back. And if you are talking about tourism, we are talking about the we are talking about the experience. So the experience cannot replace my zoom here. So I think it’s still on process to fully recovery like in Jakarta for instance even though the social distancing here it’s still on, with the micro social distancing now, but if you look at the number of meetings happening, it’s already starting. Of course the number of the participants is still small, but you see that actually they’re starting. And while in Jakarta its quite strict social distancing, but if you look at the areas surrounding Jakarta, like Bintaro, for instance, meetings are already back.
AGS: Absolutely. I’ve just been to Sentul and Puncak and they are doing very well and enjoying their meetings. So perhaps people like to meet, and they’re looking for that quality of experience as well.
HS: Last week Bogor hotels recorded about 80 to 90% occupancy and I’m really surprised that they recovered like that.
AGS: But good to hear. I was in Jogja last week as well. So they’re doing well as well. Not quite as well, but coming on.
HS: Starting good.
AGS: The minister also talked about something which you and I may agree on: quality tourism, rather than quantity. We’ve been talking about this for years, how to get the quality back in tourism, rather than just focusing on the numbers.
HS: It’s really interesting when we are talking about the quality tourism or quantity tourism because in Indonesia, we do both, and I think we do both because it’s depends on the destination. For instance, the Borobudur Temple, when you are talking about the temple, the candi itself , we really cannot allow a mass of people to come to this Buddhist monument because there must be very strict rules for the preservation of ancient and valuable buildings. The same is true for sensitive ecotourism spots like Pulau Komodo where numbers should also be restricted But actually we must do both because we also have the potential for quantity tourism. So when the destination needs quality, of course, we must something for the quality tourism, which means that we must ensure the quality of the of the product itself and also the quality of the visitors. But on the quantity side there are many places that we can optimize for mass tourism, or the quantity tourism.I think we need both.
AGS: I know that the Garuda and the airline people totally agree with you because they need to fill their seats. And certainly many three-star hotels throughout archipelago have be built on the basis of quantity tourism and are going to panic if we only focus on five star visitors. So your combination seems to hit the nail on the head. We are looking at a whole bunch of ideas that the ministry has come up with, and of course PHRI will be at the core, working with the private sector to make this happen. What are your ideas for the return of tourism, these new ideas that you and your hotel owning and managing colleagues are creating to make tourism quickly come back and at the same time hopefully build back better.
HS: I think the important thing is for the vaccination, so if we do the vaccination program really fast, then it can make people more confident to create new activities. So if we can do this and we believe that the Indonesia government is very serious to catch up the vaccination schedule. If we can do this, let’s say on target until June, I think that by the end of this year tourism will be back at least in some cities because now if you look all of Indonesia is suffering, not just only for the resorts, but also for the city destinations too. So I think if we can do this right the end of this year, we’ll see more impact for tourism.
AGS: I think you’re absolutely right. Some cities will rebound very quickly like Jogja, Solo and Semarang, but what about somewhere like Lombok, that seems to be really missing out, to be a bit more of a difficult destination?
HS: Lombok. Yes we are now trying to help them. We have a new cooperation with Air Asia. So we do bundling: their tickets and our hotel rooms with a starting price for the package just Rp.969,000 for three days and two nights. We are doing this for Lombok and for Medan: Jakarta - Lombok, Jakarta-Medan so we will see the impact this has, but we hope that before Ramadan a we can see the result. But yes, but we do programs like this package to support them, because you are right, it’s very challenging because Lombok is so dependent on Bali. A lot more people like a offer as an extension from Bali, so if Bali falls then the effect goes to Lombok, but now we are trying to make more promotion for Lombok with the cheaper air tickets.
AGS: Well, according to the Minister and in discussion with the President, Bali will open in June, if all of the three conditions they set are met. So maybe then we’ll see–finally-the return of tourism.
VIDEO INTERVIEW PART 2
Now let’s move the conversation on to business. What do you think are the most important factors that need to be addressed for the economic recovery of Indonesia? Everyone has so many views on this, but as the head of the Employers Association, representing the people who employ the most workers in the country, what do you think really needs to be done?
HS: Thank you Alistair, I think the most important thing now if we are talking about the economic recovery of course we should settle the pandemic issue first. I think this is the main constraint on the economy, I think not just on Indonesia, but all countries in the world who are also facing this. And especially if we are talking about the, about the settlement of the pandemic, we are talking about how fast the vaccination process can go and how government can handle the social distancing regulations because when the government announced the large-scale this social distancing regulation, it suddenly makes the economy drop. It’s always like this. So I think the most important is to handle those two things.
And also of course the third thing is about the stimulus, since for more than one year the pandemic has impacted the economy. So many of the companies really have a problem with cash flow. So the stimulus that we can expect is about working capital and also for restructuring. The plan for loan restructuring is not yet issued in any detail ,it’s still just only focus on relaxation of loan repayments, but this does not attack the core of the gap between the revenue and the obligation. So this is I think the most important thing that we can do. Of course, for the demand side we should also push, for example in the tourism sector, we have a plan with the government to subsidize for domestic travelers.
And also we already did with automotive, if you see the news about three weeks or one month ago that the government has already accommodated our proposal to make a 50% discount for the tax for the automotive sales, then you see now the impact is immediate on below 1,300 CC engines. So now if you see now the automotive sectors has become more positive, it’s starting to recover, to fulfill the demand, it’s really responded to the policy and it’s quite positive.
AGS: So you’re looking at it by sector at specific things: the automotive needs specifically - you’re addressing the exact needs of each industry. Behind all of this has been going on this debate for a long time about the so-called OMNIBUS law, which seems to have a lot of people for it, quite a few against it as well. Is that the answer to the economic recovery of the long term strength of the economy? Why are there so many objections to it if it’s good to help with the economy?
HS: So if we are talking about the OMNIBUS law, if you’re talking about the strong objection, I think it’s more from the politicians. if you’re talking about, of the real sectors I think the response is very positive from the domestic and also for the international investors . I don’t ever hear about any objections, I think because the OMNIBUS law is for the job creation, so I think we will see the results later because since the pandemic is still it’s still there,of course we have the problem to make the full implementation because of the situation. But if you see the response now, many of the companies both local and international, already have the commitment to make an expansion, and also to move forward on new investment. So I agree if we say the Omnibus law is really a game changer because in this law actually the obstacles that we are facing before it’s already addressed in this law. So I think the impact we will see in this semester or in the next semester when the investment starts to come in.
AGS: The banks are still hanging on to their expansion of the economy of 4.0 to 4.4% and if that’s correct, and we get over the COVID crisis, we really do have a strong basis for going forward, but we still have to implement this as the actual implementation hasn’t started yet. So that’s the next challenge actually making it work, right?
HS: Yes. So, now we are waiting because now we also seeing the response from the companies who have already started their investment. For example, like for company registration, for the permits, or the land and building permits, something like that. So we are now monitoring, so if we still have the obstacles there, we can take notes and make the coordination with the government to make some amendments, if some difficulties appear.
AGS: Moving on to the digital economy. A lot of people are saying, we’ve got to digitize everything, get all the small and medium enterprises digitized and working online. But when we put all this emphasis on this, is there a danger, since the platform owners are these major non-Indonesian multinationals? In some countries they have become quite unpopular-Australia is has having a bit of a confrontation with one, China has as well. Is there a danger that we’re over-reliant on certain companies who are not in Indonesia? I mean, it’s a question I haven’t heard answered yet but this is something which could emerge?
HS: I think that globalization for the digital players is not just in Indonesia that has the impact from the giant corporations who they are dominating this business, but many other countries all over the world have the same situation. And if you are talking about the e-commerce platforms you can see the players are limited to just certain names who are playing everywhere in the world. So when acountry just only starting with the startup companies then the giants will come and take their stake.
And now I think the most important thing is to make sure the same competition or same playing field between the online and offline competition. I think that’s more important. So now in Indonesia we are facing that problem, and Pak Jokowi is quite angry. He said he wanted a campaign to hate the international products, I think that’s the expression he used to express his frustration at the level of cheap imports. But I think if we can make the regulations to make it the same playing field for the competition, I don’t think we need that statement.
Of course now if you look at the China company platforms, because they’re a source for exports to the world, for the global market, and therefore they have really have a big stock or a big inventory that’s why this is make they’re accommodated, but if can we, if we do about, are we monitoring the regulation and make it same treatment, then it’s ok for us