Like a Double-Edged Sword, Budget Cuts Urge Performance Improvement

JAKARTA, KOMPAS – The budget cuts for the Ministry of Tourism or Kemenpar will impact various industry partners, such as hotels and travel agencies. However, this budget reduction effort also encourages the government to utilize the available funds as optimally as possible. This is because the existing budget is often wasted.

Like other ministries/agencies (K/L), the Ministry of Tourism is among the institutions experiencing budget cuts. The reduction is more than half of the initial ceiling of IDR 1.49 trillion.

The budget cuts are derived from the Circular Letter of the Minister of Finance (Menkeu) Number S-37/MK.02/20225 concerning Spending Efficiency for Ministries/Agencies. The letter refers to Presidential Instruction (Inpres) Number 1 of 2025. It discusses spending efficiency in the implementation of the State Budget (APBN) and Regional Budget (APBD) in 2025.

Deputy for Industry and Investment at the Ministry of Tourism, Rizki Handayani Mustofa, stated that they are currently evaluating existing regulations. This effort is being carried out while awaiting the latest developments regarding the budget.

At the same event, Deputy for Destination and Infrastructure Development Hariyanto added that the ministry's activities will focus on the main functions. Coordination will be the foundation, not only with ministries/agencies but also with business actors, including industry, business players, and non-governmental organizations.

"So, practically our activities earlier focused on the main functions of regulation and facilities. However, that is precisely the challenge, yes. So, we are also deepening the coordination function, maximizing it well, not only with K/L, but also with strategic partners," said Hariyanto after the monthly press conference of the Ministry of Tourism in Jakarta, Friday (7/2/2025).

When asked about target adjustments, the Ministry of Tourism has not changed them. This policy is still in its early stages, so the existing optimization will be the key.

Responding to this, the CEO of Berbangsa Foundation, a foundation that promotes the empowerment of villages in Indonesia, Vitria Ariani stated that budget cuts will impact the planned activity programs.

This budget cut policy is like a double-edged sword. On the downside, partners, including micro, small, and medium enterprises (MSMEs) who have been working with the government will be reduced, or even eliminated. Official travel that usually drives the economy in the regions, such as hotel utilization, will also be affected.

"From the internal side, there is a concept of creative financing that must be considered. Because, the Ministry of Tourism is usually multi-sectoral, very much moving with the industrial base. They relate to hotel entrepreneurs, travel agents, and so on," said Vitria.

Now is the momentum for the government to maximize existing funds. The government is required to collaborate with other parties in a pentahelix manner. The concept is a form of coordination involving the government, academics, business actors, the community, and the mass media.

"This is a blessing in disguise, we are being reorganized. I do not approve and do not agree, but we are required to be creative and persistent," said Vitria.

The Ministry of Tourism, Vitria continued, needs to start thinking about other financing options without relying on the APBN. The government is urged to minimize spending, but optimize existing collaboration and network relationships.

This budget cut also encourages the government to create creative programs, to condense what exists. It is no longer about quantity, but about quality. Collaboration between ministries can also reduce the sectoral ego of each agency. They are also required to get out of their comfort zone. These efforts have actually been made during the Covid-19 pandemic, when the budget was also greatly cut to tackle the outbreak.

"With the old way of thinking, the government will definitely lower the performance target because the reason is logical. However, this is also a gamble for the K/L that will be seen who is working properly. This is proof and a gamble, (the party) who wants to work, serve the country will be seen," said Vitria.

Budget cuts are regretted by many tourism business players. However, they admit that an unhealthy pattern is formed when relying too much on the government.

Chairman of the Indonesian Tourism Industry Association Hariyadi Sukamdani said that the remaining budget of the Ministry of Tourism of hundreds of billions of rupiah will be used for the ministry's operational costs. Programs related to promotion and coordination to encourage tourism growth will be suppressed, even eliminated.

"Actually, the Ministry of Tourism has always been like an accessory, tier 3. So politically it has never been a priority. With this incident, we assume the government is ignoring tourism," said Hariyadi.

This policy will also have a national impact on tourism. For hotels, for example, the government's market share reaches 40 percent nationally. In addition to accommodation, the cuts will also affect the aviation sector and stimulus for the regions. Local Original Income (PAD) will be eroded because hotel services are one of the largest contributors to regional income.

However, Hariyadi admitted that the government that dominates the hotel market share and other tourism industries is unhealthy. This is also an opportunity for business actors to optimize tourism programs independently. Stakeholders are embraced to create joint tourism packages.

The arrival of foreign tourists will also be boosted. Market segments that have not been worked on will be worked on more seriously. Activities such as weddings, graduations, and corporate parties will continue to be encouraged.

Another opinion was expressed by the Secretary General of the Association of Indonesian Tour and Travel Companies (Asita) Budijanto Ardiansjah. He agreed with the budget cuts, but with the note that the existing funds must be right on target.

Although the budget has been cut, he hopes that tourism business actors will be more involved in various activities. Feeling less noticed by the government, the independence of business actors has been formed so far.

"Without government support, we still run because the kitchen must smoke. Like it or not, we still have to be self-sufficient like now," said Budijanto.

So far, he assessed, the government tends to convey information or invitations to join in various events. However, the invitation is not accompanied by the provision of supporting facilities.

Chairman of the Indonesian Tourism Village Association (Asidewi) Andi Yuwono is concerned about the reduction in promotional activity facilities, human resource training, and supporting infrastructure. The impact is that tourism promotion will be less echoed, so that prospective tourists will not know the latest developments in tourism products.

"This also has an impact on low purchasing power of the community, followed by a sluggish economic cycle. Tourist villages are affected because the economy is also sluggish," said Andi.

He hopes that training and improving the quality of human resources (HR) in tourist villages must continue. Tourism promotions can be carried out more intensively.

Responding to this, Hariyanto stated that improving the quality of human resources takes various forms. These efforts can be done directly and indirectly. Without dampening the spirit of the community in tourist villages, the Ministry of Tourism will continue to accommodate the various trainings needed.

"By utilizing information and communication technology via online, that's what we are developing right now. So for now, we will maximize online training," said Hariyanto.