The Indonesian government has put together a plan to merge nine state-run companies, including flag air carrier Garuda Indonesia, low-cost airline Citilink and companies that run major tourism sites. (Photo: Reuters)Jakarta (VNA) – The Indonesian government has put together a plan to merge ninestate-run companies, including flag air carrier Garuda Indonesia, low-costairline Citilink and companies that run major tourism sites.
The move isexpected to allow the companies to eliminate unnecessary costs and worktogether on initiatives such as discount travel packages. It may also make iteasier to direct public funds to Garuda, which fell into the red in the firstsix months of this year.
The idea has thebacking of President Joko Widodo. In addition to the airlines, the new companywill oversee firms operating in the tourism sector.
The goal of theintegration is to create synergies among the state-owned enterprises. Withairlines, airports and tourism companies operating under a holding company, theaim is to eliminate vertical barriers and enable them to offer cheaper travelpackages to travellers.
The size of theholding company should also make it easier to secure financing from banks.There are also hopes that consolidating administrative departments createefficiencies.
The tourism andairline businesses are vital to Indonesia's economy. Widodo has wanted to integratethem for some time. "The headwinds in the travel industry provide a goodopportunity to start integrating and transforming the tourism and aviationsectors," he said at a ministerial meeting on COVID-19 in early August.
Many observersbelieve the actual purpose of setting up the holding company is to shake upGaruda's management. Indonesia's flag carrier fell into the red in January toJune, suffering a net loss of 723.26 million USD.
Indonesia hasmany tourism assets, including Bali, one of the world's top resorts. The industryaccounted for about 5 percent of the country's gross domestic product (GDP) in2019. GDP declined 5.32 percent in this year’s second quarter against a yearearlier as the pandemic took a toll, the first time since 1999 that Indonesia'seconomy has contracted. Widodo hopes tourism will serve as a catalyst for aneconomic recovery./.
VNA
