Jakarta. The Indonesian Hotel and Restaurant Association (PHRI) has raised concerns over the government’s decision to slash spending by Rp 306.69 trillion ($18.9 billion) in 2025, warning that reduced budgets for government travel could severely impact the hospitality industry.

“From the hospitality industry’s perspective, the largest revenue share—up to 45–50 percent—comes from government spending. In some regions, this figure is even higher,” PHRI Secretary-General Maulana Yusran said during an online interview with B-Universe Media Holdings recently.

The budget cuts, outlined in Presidential Instruction No. 1 of 2025 on Budget Efficiency in the Implementation of the State Budget (APBN) and Regional Budget (APBD), include a Rp 256.1 trillion reduction in central government spending and Rp 50.5 trillion from transfers to regional governments.

President Prabowo Subianto issued the directive to reallocate resources, with Rp 100 trillion earmarked for his flagship program to provide free nutritious meals for children and expectant mothers.

Maulana said many hotels across Indonesia rely heavily on government activities for revenue, especially in areas where private-sector-driven economic activity is limited. “Government activities provide a stimulus for local economies, particularly in regions with minimal private sector activity. Many areas heavily rely on these activities. Beyond that, the entire ecosystem around these sectors will also feel the impact,” he said.

The tourism sector’s growth creates a ripple effect across related industries, benefiting food and beverage businesses, tourism workers, transportation services, and more. Maulana urged the government to take a more balanced approach to protect regional tourism ecosystems.

“In our view, it’s the overseas travel budget that should be reduced because it doesn’t bring benefits domestically. On the other hand, domestic government activities have a substantial impact. We’re not criticizing other government programs, but we must consider the long-term effects on Indonesia, which relies heavily on MSMEs and an already established industry,” Maulana concluded.

Health Minister Budi Gunadi Sadikin revealed that his ministry faces a budget cut of Rp 19 trillion this year. Similarly, the Public Works Ministry will see its budget reduced by 80 percent, or Rp 81 trillion, while the Finance Ministry is cutting Rp 12.3 trillion. The Elementary and Middle Education Ministry will trim Rp 8.01 trillion, and the Spatial Planning Ministry plans to reduce its budget by Rp 2.3 trillion.