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Saudi pilgrim ban hits Indonesian tour operators and airlines

Extension through hajj season in July would be risk for Saudi tourism sector

DUBAI/JAKARTA -- Saudi Arabia's decision last week to ban foreign pilgrims has shocked Asian Muslims in countries such as Indonesia, where it is hitting the bottom line of tour operators and airlines.

Driven by Indonesia's growing piety and an expanding middle class, the number of umrah (pilgrimage) travel agents taking people to Mecca has grown to more than 1,000 from around 450 in 2013. But business for this booming sector has now ground to a halt.

Nusa Travel, a new travel agent based near Jakarta, has been hit by the ban. Last month, it sent about 60 people to Saudi Arabia; this month: none.

"We're lucky because we hadn't made hotel reservations, and airlines said we can reschedule the flights without extra fees," Nusa managing director Amirul Hasan told the Nikkei Asian Review. "We respect the Saudi policy, but hope that they don't apply it indiscriminately. Why don't they do the screening like they do with meningitis? Those infected can't go in, but those who aren't should be allowed to enter."

"I'm optimistic this will be temporary," Hasan added. "I'm sure the ban won't last long; otherwise Saudi hotels and others will suffer as well. We're all waiting."

Airlines in the world's most populous Muslim-majority country has been riding on the pre-virus Islamic tourism boom.

National flag carrier Garuda Indonesia derives 20-30% of its earnings from Mecca-bound travelers, while Indonesia's largest carrier, privately-owned Lion Air, flies five times a day to Saudi Arabia.

Indonesia's transportation minister, Budi Karya Sumadi, said that while it is too early to estimate the financial impact on airlines, the pilgrim ban decision is affecting 13 flights per day from Indonesia.

People flying from 16 Asia countries, including Japan, South Korea and China, have been barred from entering Saudi Arabia.

About 7 million tourists visit the Arab kingdom annually, many on pilgrimages to the holy cities of Mecca and Medina. The umrah is a shorter version of the hajj with fewer rituals, and can be undertaken at any time of year.

Pakistan had the highest number of umrah pilgrims last year at 373,984, followed by Indonesia's 347,424, according to the Saudi Hajj and Umrah Ministry. The pilgrimages contribute $12 billion to Saudi Arabia's economy -- about 20% of non-oil gross domestic product, and 7% overall.

Up to 30% of private sector income in Mecca and Medina is derived from the pilgrimages, according to the Mecca Chamber of Commerce and Industry.

Mohammed Abou Basha, a Saudi-focused economist at investment bank EFG, told Nikkei that damage to the country's economy will be limited if the ban is kept for just one or two months, but warned of a deeper wound should it go on longer.

"As long as the Saudi travel ban is temporary, it is unlikely to have a long-term impact economic impact on Saudi foreign direct investment, tourism or social reform progress," Abou Basha said. "But if the Saudi travel ban extends through to July, which is the Hajj season, this is likely to have a negative economic impact on travel agents, and hotels in Mecca and Medina."

Saudi Arabia's move may be a reaction to the coronavirus outbreak in Iran, which has become the Middle East epicenter for the virus with more than 1,500 case and at least 66 deaths.

The first cases of the virus in Iran can be traced back to the holy city of Qom, where Shiite Muslims gather to pray at the shrines.

Religious cities are a potential hotbed for the coronavirus as they attract millions of worshippers from across the world who gather in close proximity in large crowds.

Saudi Arabia has confirmed only one case -- a man who returned from Iran via Bahrain -- but some critics say the government is not being transparent. Even so, the entry ban is seen as way to mitigate the contagion risk in a country with an aging population and a shortage of medical workers.

"Saudi Arabia is taking drastic steps to protect its citizens," Maryam El Hassan, a doctor from Riyadh Care Hospital, told Nikkei. "I do believe these precautionary measures will limit virus contagion in our country."

However, if the pilgrim ban is extended until the hajj season in July this poses an ethical concern as elderly people may not get another opportunity to fulfill this mandatory religious duty for Muslims.

Saudi Arabia is trying to wean its economy off oil, and is seeking to encourage foreign investment and tourism through steps including economic and social reforms, flexible visa and a more relaxed dress code for female visitors.

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