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VOA Fees - Money Spinner or Money Loser?

Officials Count the Proceeds After Almost 6 Months of Visa Fees.

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The imposition of a US$ 25 visa fee on arrival for the nationals of 21 countries visiting Indonesia has become something of a cash cow for the state coffers, if not for the tourism industry as a whole.

According to figures released by the National Immigration office, Rp. 144.7 billion (approximately US$ 16.1 million) has been collected during the nearly first 6 months since the fee's introduction on February 1, 2004.

No Impact on Tourism Numbers?

According to an Immigration Department spokesman, the introduction of the fee has had no negative effect on tourism flows to Indonesia, with officials citing the steady increase in total tourist arrivals during the same period.

Immigration statistics quoted in the Indonesian-language newspaper Bisnis Indonesia, report that from February 1 through July 23, 2004, the number of foreign tourists visiting Indonesia totaled 1,998,394 people. From that total 822,505 fell under the visa-free facility granted to selected nations; 385,458 arrived with visa secured at an Indonesian embassy abroad before arriving in the Country; and 385,458 purchased either a 30 day (US$ 25) or 3 day (US$ 10) Visa on Arrival (VOA) upon arrival. The same report says a total of 963 foreign visitors were denied entry to Indonesia during this period.

Statistics Worthy of a Closer Look

Closer scrutiny of the total revenues collected and statistics for tourist arrivals to Bali, however, provide cause to question official assertions that the visa fee has not negatively impacted the tourism industry.

Using the just announced tax revenue total of US$ 16.1 million and dividing that by a factor of average per diem spend per visitor and average length of stay suggests that any tax revenues collected may pale insignificantly in comparison to foreign exchange revenues that have been lost due to the new policy. Using the currently depressed average length of stay approximated at 8 days and an average per diem spend of, say, US$75 means that a loss of only 26,800 tourist arrivals due to the new policy manages to cancel out in foreign exchange losses any tax advantage accrued from the new visa fee.

Moreover, the breakdown of arrival figures for the same five months for Bali presented at [] open the way to an altogether different interpretation of the visa fee's impact than that put forth by immigration officials:

• While overall tourism numbers are making a dramatic improvement in comparison to the post bombing arrival figures of last year, the numbers when compared to a stasis year, such as 2001, show that the strong recovery has been limited to visitors from ASEAN and the Asia-Pacific region.

• In fact, the nearly 100% increase in ASEAN arrivals, when comparing the first six months of 2004 with the same period in 2001, serve to make the reverse argument of the case being presented by immigration officials. ASEAN nationals, who are granted visas on arrival without charge, are logging in the strongest arrival totals for Bali, supporting those saying that a laissez-faire approach to visa granting is the surest way to increase tourism visitor flows.

• Arrivals for February-June for the America's – the citizens of which must pay for their visa's on arrival in Bali, is down 17,334 for the 2004 period when compared to the same period in 2001. Arrivals for Japan, a major producer of tourists for Bali and a group also required to purchase visas at Bali's airport under the new rules, are down 13,022 for the period February to June - 2004 versus 2001. Meanwhile, Europeans, who either must pay for a visa on arrival or apply for one before traveling to Bali, are down a dramatic 58,437 for the period February-June, 2004 versus 2001.

• Therefore, using only Europe, the Americas and Japan as a yardstick, the argument can be made that at least some or all of the resulting shortfall of 88,793 may be due to the visa policy, with some of this total shortfall, undoubtedly, due to those who decided not to travel due to negative travel advisories.

Balancing the Books

Whatever the actual reason for the 88,793 shortfall in travelers from Japan, the Americas and Europe - the 88,793 shotfall extrapolates into a minimum US$ 53.3 million loss in badly needed foreign exchange, a figure 231% more than the US$ 16.1 million secured in tax fees collected at Bali's airport.

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