March 12, 2024
JAKARTA – The Communications and Information Ministry has given six unregistered foreign online travel agents (OTAs) a deadline of March 13 to comply with Indonesian regulations before the government moves to block local access to their platforms.
The ministry’s written warning issued on Tuesday to the six firms refers to the government’s licensing framework on its censorship powers and digital taxation policies.
“In the event that the six foreign private ESPs [electronic system providers] do not respond to the warning letter, the Communications and Information Ministry can impose administrative sanctions in the form of termination of access to [their platforms],” the ministry stated in a press release published on Wednesday.
The six firms are: Amsterdam-based Booking.com, San Francisco-based Airbnb.com, Singapore-based Agoda.com, Hong Kong-based Klook.com, Germany’s global hotel search company Trivago and Trivago’s US-based parent Expedia Group.
None of the companies responded immediately to a request for comment from The Jakarta Post.
Communications Ministerial Regulation No. 5/2020 requires ESPs, a broad category referring to digital platforms that provide their services in Indonesia, to submit information including company data, the platform’s name and URL, the types of personal data processed and the location of the company’s data management or processing facilities.
The ministry’s move came after the Indonesian Hotel and Restaurant Association (PHRI) called on the government to regulate foreign OTAs over losses incurred to local businesses in the hospitality industry.
The PHRI told the Post on Feb. 28 that many foreign OTAs did not have business licenses or a physical presence in the country, which prevented the government from taxing them according to prevailing laws and regulations.
As a result, local hotels ended up paying taxes on the commissions they paid to the foreign platforms, the association said.
According to an PHRI statement released on Feb. 22, foreign OTAs also offered promotional discounts that put pressure on local hotel rates and cut into their incomes, though it did not provide further details.
The association said it hoped that after the companies had registered in Indonesia as required, the government would follow up by enforcing its policies on taxation and local presence.
The PHRI also revealed that the ministry had initially given the six foreign platforms five working days starting on Feb. 22 to comply with the regulation, but they remained accessible even after the deadline had passed.
Statistics Indonesia (BPS) data show that hotel occupancy in Indonesia reached 51.27 percent in 2023, marking steady recovery after the rate fell to 33.79 percent in 2020 due to COVID-19 restrictions, but still lower than the pre-pandemic rate of 54.81 percent recorded in 2019.
A similar upward trend has been seen in foreign tourist arrivals, which steadily climbed to 11.67 million last year after it plunged to 4.05 million due to COVID-19.
Despite showing strong recovery, the figure is still lower than the 16.10 million foreign tourists that visited the country in 2019.
