Red Carpet for Private Investors in Indonesia's Hospitality Sector
Indonesia's Investment Coordinating Board (BKPM) and Tourism Ministry invite private investors to invest in three priority destinations in the country's tourism sector. In total the projects that are on offer require about USD $2.9 billion worth of investment. The projects were offered at the Regional Investment Forum (RIF) in Padang (West Sumatra) that was held between 15-17 October 2017.
The three priority destination investment projects are (1) Toba Lake in north Sumatra, (2) Borobudur in Central Java, and (3) Tanjung Kelayang on Belitung island.
Thomas Lembong, Chairman of BKPM, said the investment projects in these three priority tourist locations are ready to be offered to private investors because all issues surrounding the permitting process, land acquisition and (local) regulations have been checked and will not become an obstacle. Therefore, Lembong is now simply waiting for the right investor to come along.
Around the Toba Lake there are five investment projects on offer with a combined value of USD $2.3 billion, followed by ten projects around the famous Buddhist temple Borobudur with a combined value of USD $562 million, and two hotel projects on Tanjung Kelayang with a combined value of USD $60 million.
Indonesian Tourism Minister Arief Yahya said foreign exchange income from the tourism sector could grow up to IDR 260 trillion (approx. USD $19.2 billion) in the future, which would make this sector the largest contributor to Indonesia's foreign exchange earnings.
To achieve this, it will require investment in (1) tourist attractions, (2) supporting facilities, and (3) accessibility. When these three issues are dealt with, then Indonesia can also become a rival to Singapore, Malaysia and Thailand where each year between 20 and 30 million people go on holiday (while only 12 million foreign visitor arrivals were counted in Indonesia in full-year 2016).
Based on data from BKPM, investment in Indonesia's hospitality industry is rising sharply. While in full-year 2013 a total of USD $602 million was invested in this industry (equivalent to 1.45 percent of total investment in that year), the figure rose to USD $929 million in the first half of 2017 (equivalent to 3.67 percent of total investment in H1-2017). This growth is also important for the opening up of employment opportunities in Indonesia.
Mirza Adityaswara, Senior Deputy Governor of Bank Indonesia, said it is currently the right timing for private investors to invest in Indonesia's hospitality industry as the macroeconomic prospects are conducive and stable, while there has also been detected an improvement in the country's investment climate.
Hariyadi Sukamdani, Chairman of the Indonesian Hotel and Restaurant Association (PHRI), said the three priority destinations - Toba Lake, Borobudur, and Tanjung Kelayang - have good business prospects, especially because these regions are not well developed yet. Therefore, it is the right timing to invest now and become the market leader in that area.