Indonesia to merge Garuda and tourism companies - Tourism Indonesia


Sunday, November 1, 2020

Indonesia to merge Garuda and tourism companies

Source: Wikipedia

The Indonesian government has put together a plan to bring together nine state-run companies, including flag air carrier Garuda Indonesia, low-cost airline Citilink and companies that run major tourism sites, under a holding company, according to a report by Asia.Nikkei

The hope is that this will allow the companies to eliminate unnecessary costs and work together on initiatives such as discount travel packages. The move may also make it easier to direct public funds to Garuda, which fell into the red in the first six months of this year.

The holding company idea has the backing of President Joko Widodo. In addition to the airlines, it will oversee companies operating in the tourism sector, including Hotel Indonesia Natour, which has 14 properties on Bali and elsewhere; companies operating tourist and World Heritage sites, such as Borobudur Temple; and Sarinah, a department store.


Many observers believe the actual purpose of setting up the holding company is to shake up Garuda's management. Indonesia's flag carrier fell into the red in January to June, suffering a net loss of $723.26 million.

The government plans to provide 8.5 trillion rupiah ($578.7 million) in financial assistance to the holding company, but many observers object to a direct infusion of tax money because the government will hold only 60% of the shares. If it were wholly state owned, there would be a clear public purpose in the efficiency drive and make state aid easier to justify. (Asia.Nikkei)


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