Tourism Sector Indonesia: Rising Foreign Exchange Earnings
The tourism sector of Indonesia has great potential for rapid growth in the years ahead as the government has been eager to boost growth in this sector by allowing more countries to use the visa-free visit facility and by spending more on infrastructure development to enhance inter- and intra-connectivity (including the development of new airports and harbors). Moreover, Indonesia's tourism sector has plenty of opportunity to expand rapidly because this sector comes from a very low base (for example, compared to regional peers, Indonesia attracts relatively few foreign tourists).
But it is interesting to learn that over the past couple of years, the tourism sector of Indonesia has been playing an increasingly important role in terms of foreign exchange (forex) revenues. While forex revenues generated through Indonesia's traditionally biggest export products - namely oil & gas, coal, crude palm oil, rubber, and clothes - have decreased since 2011, forex revenues generated through tourism in Indonesia have increased over the same time (see table below).
Foreign Exchange Earnings Ranking Indonesia:
| 2011 | 2012 | 2013 | 2014 | 2015 | |
| Oil & Gas |
41.5 | 37.0 | 32.6 | 30.3 | 18.6 |
| Coal | 27.2 | 26.2 | 24.5 | 20.8 | 15.9 |
| Crude Palm Oil | 17.3 | 18.8 | 15.8 | 17.5 | 15.4 |
| Processed Rubber | 14.3 | 10.4 | 9.3 | n.a. | n.a. |
| Tourism | 8.6 | 9.1 | 10.1 | 11.2 | 12.2 |
in billion US dollar
Source: Statistics Indonesia (BPS)
Rising foreign exchange earnings in the tourism sector come on the back of rising foreign visitor arrivals in Indonesia. Although Indonesia may not achieve its foreign visitor arrival target of 12 million people in full-year 2016, the number of foreign tourists in Indonesia will have nearly doubled over the past seven years. Ever since the last big radical Islamic attack (aimed at westerners) in Indonesia (namely the 2009 Ritz-Carlton and Marriott hotel bombings), the number of foreign tourist arrivals has grown quickly in Southeast Asia's largest economy.
The government's decision to allow visa-free access to Indonesia for 169 countries (through Presidential Regulation no.69/2015 on Exemptions of Visit Visa) is also regarded a good move to attract tourists. In fact, those entrepreneurs who are active in Indonesia's tourism industry urge the government to grant this facility to more countries. However, whether this would be enough to achieve the government target of welcoming 20 million foreign visitor arrivals by 2019 is uncertain.
Moreover, the danger of allowing visa-free access to citizens of most countries is that foreigners can easily abuse this facility. While foreigners are only allowed to stay in Indonesia for a maximum of 30 days under this visa-free facility (for example for tourism, visiting a seminar or business meetings), they can violate immigration laws by working illegally in Indonesia and by overstaying in the country. This mostly involves people from African countries.
Below we present the number of foreign visitor arrivals in Indonesia in recent years. Please note that Indonesia's Statistics Agency (BPS) adjusted the definition of foreign visitor arrival per January 2016. This explains the sharp increase in foreign visitor arrivals between 2015 and 2016.
Foreign Tourist Arrivals in Indonesia, 2013-2016:
| Month | Tourist Arrivals 2013 |
Tourist Arrivals 2014 |
Tourist Arrivals 2015 |
Tourist Arrivals 2016 |
| January | 614,328 | 753,079 | 723,039 | 814,303 |
| February | 678,415 | 702,666 | 786,653 | 888,309 |
| March | 725,316 | 765,607 | 789,596 | 915,019 |
| April | 646,117 | 726,332 | 749,882 | 901,095 |
| May | 700,708 | 752,363 | 793,499 | 915,206 |
| June | 789,594 | 851,475 | 815,148 | 857,651 |
| July | 717,784 | 777,210 | 814,233 | 1,032,741 |
| August | 771,009 | 826,821 | 850,542 | 1,031,986 |
| September | 770,878 | 791,296 | 869,179 | 1,006,653 |
| October | 719,900 | 808,767 | 825,818 | 1,040,651 |
| November | 807,422 | 764,461 | 777,976 | 1,002,333 |
| December | 766,966 | 915,334 | 913,828 | |
| Total | 8,802,129 | 9,435,411 | 9,729,350 |
Foreign Tourist Arrivals in Indonesia, 2007-2015:
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Foreign Tourists (in millions) |
5.51 | 6.23 | 6.32 | 7.00 | 7.65 | 8.04 | 8.80 | 9.44 | 9.73 |
Source: Statistics Indonesia (BPS)