Tourism Industry of Indonesia; Strong Rebound Seen in 2023, But Still Not Back to Normal
In Indonesian media it was reported that Sandiaga Uno, who is Indonesian Minister of Tourism and Creative Economy, stated that the country managed to collect a total of USD $10.46 billion in foreign exchange earnings from the tourism industry during the first three quarters of 2023.
These earnings were brought into the country by the 8.51 million foreign visitor arrivals that were recorded in the same period. So, it means that – on average – one foreign visitor arrival delivers approximately USD $1,230 in earnings for Indonesia. These lucrative earnings, indeed, explain why the government of Indonesia (or any other country) wants to welcome as many foreign tourists as possible. It generates revenue (including tax revenue), trade, business, employment, and investment.
As is widely known, the COVID-19 crisis (when governments of various countries imposed far-reaching social and business restrictions, including even a temporary ban on incoming/outgoing travel, in an attempt to curb the spread of the COVID-19 virus) did enormous damage to the tourism industry, globally.
First, in Q2-2020 and Q3-2020, it became nearly impossible to opt for international travel as many borders were temporarily closed. Then, in 2021 and 2022, it became required to have received COVID-19 vaccines (and boosters) to travel by airplane (implying a significant part of the global population, perhaps up to 30 percent, could not travel by air as most of them wanted some clearer data regarding the efficacy and safety of these vaccines). Lastly, throughout the COVID-19 crisis, there was a lot of unfounded fearmongering going on in media, which made many people too afraid to travel, particularly to a country like Indonesia where the healthcare system does not have the greatest reputation. Furthermore, in 2021 and 2022 the price of jet fuel became very expensive, causing airlines to raise prices of tickets and thereby making it harder for people to afford an airline ticket, particularly to a destination far away.
So, how did this affect Indonesia? Well, from a total of 16.11 million foreign visitor arrivals in 2019, which was before the start of the COVID-19 crisis (although there already was a decline in Chinese tourists visible in December 2019 because COVID-19 started spreading in China in late-2019), the number of foreign tourist arrivals into Indonesia plummeted to 4.05 million in 2020, and hit rock bottom in 2021 with only 1.56 million foreign visitor arrivals. One can imagine how tough this must have been for all those micro, small and medium sized enterprises that rely on tourism. It is estimated that 23 million Indonesians are dependent on work related to tourism.
Table 1 shows that the start of recovery began in 2022, and continued into 2023. In fact, the recovery goes much faster than Indonesia’s Tourism and Creative Economy Ministry expected. At the start of 2023 this ministry had its target for full-year 2023 foreign tourist arrivals at 7.4 million. However, this target was already achieved by July-August 2023.
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