Photo for illustrative purposes only. Pilgrims from Medan in Indonesia boarding a Garuda plane for Jeddah on July 22, 2019. Randy Imanuel/Shutterstock

Islamic Lifestyle

Hajj, umrah to cost 30-50% more for Indonesians next season, says industry body

JAKARTA – Hajj and umrah travel next season will rise by 30-50% due to the VAT increase in Saudi Arabia and any additional costs related to health protocols, chairperson of the Indonesia Hajj and Umrah Travel Association (SAPUHI), Syam Resfiadi Sapuhi, told Salaam Gateway.

"There will be higher costs for each component, such as airline ticket, hotel, tent rent in Arafah and Mina, bus transportation, COVID-19 swab test and so on,” said Syam, who is also owner of Patuna Travel.

Saudi Arabia increased its value-added tax from 5% to 15% starting July.

The Kingdom suspended all umrah from February 27 as part of efforts to limit the spread of the novel coronavirus. It also grounded all international flights since March, forcing it to hold a substantially scaled-down hajj of around 1,000 pilgrims already residing in the Kingdom.

Syam expects Saudi Arabia to re-open the pilgrimage season next year, in 2021, and for the industry to recover in 2022. 

The industry leader said he appreciates the tax incentive the Indonesian government recently announced, of 1% VAT discount as stated in the Finance Ministry Regulation Number 92/ 2020. But, he added, the initiative has almost no impact. For instance, for an umrah package priced at 28 million rupiah ($1,917), the discount will yield a reduction of 280,000 rupiah and won’t really make a dent compared to the large increase in VAT imposed by Saudi Arabia.

“Instead of such tax incentives, I think it’s more useful if the government or the Hajj Fund Management Agency (BPKH) refunds the deposit funds for the cancelled hajj and umrah pilgrims to us so we can save it in the Islamic banks because they give a higher investment yield. Lenders give us 2% investment yield per year, compared to BPKH’s 1% per year. At the end of the day, pilgrims will receive more benefit,” he added.

Irfan Setiaputra, CEO of the national carrier Garuda Indonesia told Salaam Gateway the airline will not complicate the process of ticket refunds and flight reschedulings for pilgrims.

He added that Garuda is also waiting for word from Saudi Arabia as no flights can be scheduled without knowing when the Kingdom will lift its ban on umrah and open for international visitors again.

“We only prepare for departure rescheduling, but the certainty of flights is still subject to Saudi policy,” said the Garuda CEO.

Indonesia’s Ministry of Religious Affairs has already started planning for the next hajj season for the Islamic hijri year 1442. The government will prioritize the departures for hajj and umrah pilgrims that were cancelled this year, Oman Fathurahman, a ministry spokesperson told Salaam Gateway.

“We are in the early discussions on steps that need to be prepared once Saudi Arabia reopens for visitors, identifying potential technical problems that might arise and mapping the mitigation,” said Oman.

“We also need to prepare and recalculate the number of pilgrims that should be prioritized for departure once Saudi reopens,” he added.

Oman said that for the limited hajj this year that involves around 1,000 pilgrims, 13 are Indonesians residing in Saudi Arabia. They currently live in several cities including Riyadh, Madinah, Yanbu, Makkah, Jeddah and Al Khobar and are from different professional backgrounds, including nurses and teachers.

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim [email protected])

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