Tourism Sector Indonesia Update: US Tourists, Opportunities & Challenges
Indonesia's Tourism Ministry is optimistic it can boost the number of American tourists who visit Indonesia by 25 percent to 375,000 individuals in 2017. Last year a total of 300,000 US citizens visited Indonesia for a holiday, up 11 percent year-on-year (y/y) from US visitor arrivals in the preceding year. Arief Yahya, Indonesian Tourism Minister, said the island of Bali is the favorite tourist destination for American tourists in Indonesia.
This government target should be supported by the opening of a new flight route between the USA and Indonesia. Garuda Indonesia, the national flag carrier (state-controlled yet listed on the Indonesia Stock Exchange), plans to open a route between Los Angeles and Indonesia with a transit in Japan. However, the airline is yet to receive a permit for the transit in the Land of the Rising Sun.
Tourism Minister Yahya also stated that his ministry has several points on the agenda that should help to boost US tourism to Indonesia. These include exhibitions at the New York Times Travel Show, the Los Angeles Travel and Adventure Show, the Seatrade Cruise Global, IMEX America, DEMA Show and the Indonesia Sales Mission in USA. At these occasions Indonesia will promote itself as a great holiday destination. The government will also promote other areas than Bali in order to encourage US tourists to look beyond this famous island.
In 2017 the Indonesian government targets to welcome 15 million foreign tourists. Most foreign tourists who visit Indonesia originate from China, Malaysia, Singapore, and Europe.
In the World Economic Forum's Travel and Tourism Competitiveness Report 2017 Indonesia ranks 42nd, climbing eight places compared to the previous edition, but trailing behind regional peers Singapore (13th), Malaysia (26th) and Thailand (34th). The World Economic Forum notes that Indonesia has made the most of its globally recognized natural resources and cultural resources at very affordable prices.
The Indonesian government has also prioritized the tourism and travel sector as an important driver of economic development, one that should cause the multiplier effect within the economy. Bambang Brodjonegoro, Head of Indonesia's Ministry of National Development Planning (Bappenas), said growth of the tourism sector should lead to rising foreign exchange earnings, more jobs for local workers, and more opportunities for the nation's small and mid-sized enterprises. The Indonesian government will invest about 9 percent of its budget in the tourism sector. Currently, the tourism sector represents about 6 percent of Indonesia's exports.
The World Economic Forum informs that Indonesia has further improved its international openness, becoming the country with the second strongest visa policy. Since 2015 Indonesia gave the visa-free facility to 169 countries. This policy aims at attracting more foreign tourists and thus earn more foreign exchange revenue even though it misses out on about IDR 1 trillion (USD $75 million) in revenues from tourist visas. However, Indonesia said it will review the policy and possibly scrap those nations that sent the fewest visitor to Indonesia.
According to the World Economic Forum report, Indonesia also further expanded the offer and promotion of its natural resources by increasing the size of protected areas and attracting more online interest on natural activities. Still, better protection of the environment remains a key risk factor for the sustained development of the tourism sector in Indonesia. Being home of one of the most bio-diverse habitat in the world, Indonesia must address deforestation, insufficient treatment of waste-waters and augmenting species listed as threatened. Indonesia should also focus on improving its tourism (service) infrastructure; this involves improving the connectivity between regions but also the supply of hotel rooms, which is still low generally.