It is hard not to miss the impact caused by the novel coronavirus (recently dubbed COVID-19) that originated in Wuhan, China. Though Indonesia, as of Feb 17, has not announced its first official case within the country, the surging prices of masks speaks volumes of mounting fear.

On Wednesday (5/2), the government imposed a travel ban to and from China, as well as curbed certain imports to China. At a time when President Joko Widodo has set a target to attract 10 million Chinese tourists annually to Indonesia, this target looks unlikey to be reached given the mounting death toll from the virus.

The Minister of Transportation, Budi Karya Sumadi, disclosed three tourist destinations, namely Bali, Bintan, and North Sulawesi that were particularly affected by the outbreak.

COVID-19 is beginning to exert its impact on inbound tourists, especially from China.

Asita Bali previously reported thousands of tourists from China cancelled trips to Bali in the wake of the virus break last December. The Lion Air Group, Manado (Area) Manager, Irwan mentioned that direct flights from eight cities in China to Manado will be stopped starting February 2020. Based on the Central Statistics Agency (BPS), as many as 1.9 million Chinese tourists visited the archipelago during January to November last year. This figure accounted for 12.87 percent of the 14.915 million foreign tourists visiting Indonesia in that period. According to a Bergelora article, the nation lost 1.7 million tourists from China. Minister of Tourism and Creative Economy, Wishnutama Kusubandio had previously mentioned of potential foreign exchange losses of US$ 4 billion if Chinese flight routes were closed for a year.


Much like any other businesses in Asia, the COVID-19 also impacted the hospitality industry in Indonesia. As a country that heavily relies on Chinese tourists, the travel ban on Wednesday (5/2) has triggered subsequent trip and hotel booking cancellations to popular destinations such as Batam, Bintan, Bunaken. According to a Jakarta Post article, Indonesian Hotel and Restaurant Association (PHRI) chairman Hariyadi Sukamdani said on Friday (7/2) that more than 40,000 hotel bookings in Bali had been cancelled.

Sukamdani continued, “This coronavirus has overwhelmed us, especially the tourist sector in Bali where more than 40,000 room bookings were cancelled and 20,000 people annulled their visits. Import and export activities, including the export of live fish, has also been disrupted.”

The tightening of import flows came after the World Health Organization (WHO) declared the coronavirus as a Public Health Emergency of International Concern (PHEIC) following a meeting of the agency’s emergency committee on Wednesday (5/2). As a precautionary measure, multiple ministries have taken action, including prohibiting exports such as fish and cargo plans, limited exports of agricultural products, and limiting imports on a number of consumer goods.

The Investment Coordinating Board (BKPM) Minister, Bahlil Lahadalia attended a national seminar (at Wisma Antara, Central Jakarta) on Monday (3/2) to calculate the impact of the COVID-19 on the realization of Chinese investment in Indonesia. According to Lahadalia,  for the next two to three weeks investment realization from China is stable. However, if the epidemic persist for the next two to three months it is likely that a drop in Chinese investment and a growth decline is possible. Lahadalia also mentioned that the nature of its impact has yet to be disclosed.

According to BPS’s 2019 data, Indonesia exported US$25.85 billion in non-oil and gas products to China, or 16.68 percent of all non-oil and gas exports, while it imported US$44.5 billion in non-oil and gas products from China, or nearly 30 percent of the country’s non-oil and gas imports.

Anticipating Negative Sentiments

According to analysts, as stated in a Jakarta Post article, growth is projected to be below the targeted 5.3 percent as a result of significantly reduced Indonesian exports to China. The Center of Reform on Economics (CORE) Director, Mohammad Faisal estimated that the economy would decline to 4.9 percent this year from 5.02 percent last year.

Faisal suggested the country to strengthen domestic investment, adopt import substitution, and diversify export markets and commodities to offset the impact of the fall in exports to China.

“We can also explore other markets outside of the 13 major export destinations,” he said to the press, adding that the nation needs to seek non-traditional markets and fewer non-tariff barriers such as the Middle East, Latin America, and South Asia. Indonesia may receive lower volume export deals from smaller markets but it is a necessary option to buttress economic shocks especially when China and the U.S. are experiencing uncertainties.

Trade Ministry’s Research and Development Head, Dr. Ir. Kasan M.M. said that China’s GDP growth would decline by an estimated one percent due to the outbreak, but more significantly, he emphasized Indonesia’s growth rate could dip 0.23 percentage point to every decline in China’s growth by 1 percentage point. If China’s growth declines to 5 percent then Indonesia might need to adjust the current 5.3 percent target to 4.7.

In anticipation of the negative effects of the coronavirus, a plenary cabinet meeting was also held on Tuesday (11/2) at Bogor Palace, West Java. The meeting discussed the formulation of incentives for tourism industry players to counter the negative impact on the domestic economy. Among the incentives given will be to the hotel industry and airlines.

The incentives are still being reviewed by the Ministry of Finance, the Ministry of Transportation, and the Ministry of Tourism and Creative Economy. The purpose is to offset the impact with domestic tourism and subsidies to airlines.

Vice Chairman of the Indonesian Chamber of Commerce (Kadin) China committee, Haris Chandra said that the government’s move to restrict imports from China was “relevant” to protect its citizens from the coronavirus. However, he also pointed out that the trade, health, industry and other ministries needed to make decisions together and not in isolation. Chandra also said that the government needed to anticipate the potential slowdown with economic policy packages to prevent major layoffs in the sluggish manufacturing sector. “Nobody can predict when the situation will be resolved, but I hope that the turning point [for the economy] will occur in mid-March,” he said at the forum on Tuesday