Boosting Indonesia’s Tourism Sector

Government looks forward to massive investment and dramatic growth – but it’s a long road

By Karmila Bain
Friday, October 28, 2016

The government has big plans for tourism in Indonesia. But for the tourism sector to be a major contributor to the economy, large investments are needed to accelerate the process. That was the key highlight of the Trade, Tourism and Investment Forum 2016, hosted by the Ministry of Trade at 31st Trade Expo event.

In attendance were Minister of Trade Enggartiasto Lukita, Chairman of the Indonesia Investment Coordinating Board (BKPM) Thomas Lembong, the Deputy for Tourism Destination and Tourism Industry Development at the Ministry of Tourism Dadang Rizki Ratman, and the Chairman of the Indonesia Chamber of Commerce and Industry (KADIN) Rosan Roeslani, with each calling on investors to get involved Indonesia’s tourism industry.

The event discussed how Indonesia’s natural beauty, unique blend of cultures and status as the world’s fourth largest country are among the many reasons why businesses should invest in the tourism sector.

“[Even] without promotion, the beauty of Indonesia is already there, people notice it,” said the tourism ministry’s Dadang.

But to reach a wider – and more lucrative – audience of travelers, Indonesian tourism needs significant improvement. One area crying out for development is infrastructure investment in transportation so that visitors can reach tourism spots more easily.

BKPM’s Lembong suggested civil society engage with the government in the process by focusing on supporting infrastructure, paying attention to little things such as waste and sewage management and even trash bins. Those things should be a concern not only to the government but also to citizens, he said.

“It is not just about how much funding we need, but it is all about mental awareness,” he said.

New Balis

The tourism ministry’s Wonderful Indonesia branding also has begun promoting what it calls the “10 New Balis,” divided into two categories.

First, National Strategic Tourism Zones: Toba Lake (North Sumatera), Thousand Islands (DKI Jakarta), Borobudur (Central Java), Bromo Tengger Semeru (East Java), Labuan Bajo (East Nusa Tenggara) and Wakatobi (South East Sulawesi).

Second, Tourism Special Economic Zones: Cape Kelayang (Bangka Belitung), Cape Lesung (Banten), Mandalika (West Nusa Tenggara) and Morotoi (North Maluku).

The government has placed special emphasis on those areas, setting aggressive investment goals and pledging to ramp up tourism arrivals dramatically. The ministry’s projections call for $20 billion in new investment in the priority destinations by 2019 – half of it from public coffers and half from private investment. The same projections call for 10 million tourist arrivals in those areas by 2019.

It is difficult to know if the projections are realistic but they certainly are ambitious. Lake Toba, for example, had just over 10,000 visitor in 2013, according to the ministry; by 2019, that figure is supposed to be one million. Even an established destination like Borobudur is supposed to swell nearly ten-fold over 2013 and reach two million visitors by 2019.

Indonesia’s performance in the World Economic Forum’s Tourism Competitiveness Index has improved, jumping from No. 74 in 2013, to No. 50 for 2015 but there is still a long way to go to match the top 20 performances of Thailand, Malaysia and Singapore. The ministry believes the performance can continue to improve and by 2019 it aims to provide an additional 120,000 hotel rooms, 15,000 restaurants, 100 international recreation parks, 100 diving operators, 100 marinas and 100 tourism special economic zones.

In addition, to attract domestic and international tourists, as well as boost investment, the tourism ministry is collaborating with local hotels to sell local products and promote Indonesian merchandise.

However, development of the sector is not without its challenges. One issue mentioned by Kadin chairman Rosan Roeslani was corruption, followed by bureaucratic inefficiency and lack of quality infrastructure. He also highlighted complex local government bureaucracies as an obstacle.

To tackle these issues, he said, KADIN and the Ministry of Trade have together initiated an online licensing service to support tourism as a top investment priority and to reduce bribery, extortion and bureaucratic red tape.


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