Indonesian Tourism Is Undergoing a Ground-Breaking Transformation
Updated: Jul 8, 2022
The COVID-19 pandemic has wreaked havoc on the travel and tourism industry globally. And Indonesia is no exception, having suffered a drop of 75 % in foreign arrivals - from 16.11 million in 2019 to just 4.02 million in 2020.
Given that the tourism economy in Indonesia – during the pre-pandemic period – was making an increasing contribution to overall Gross Domestic Product (4.7 % in 2019) and providing significant employment opportunities (c. 13 million formal sector jobs in 2019), this has had a profound impact both on the industry and across the entire economy.
Foreign exchange earnings for Indonesia have decreased significantly due to reduced tourist volumes since March 2020. In FY 2020 foreign exchange earnings in the tourism sector only reached USD 3.2 billion, down sharply from USD 16.9 billion in the preceding year.
Moreover a reduction in operating income from adjacent market categories - such as the hospitality sector, public transportation, and the souvenir craft industry - has led to the downsizing of many businesses together with the associated reduction in overall employment levels and the consequent loss of government tax revenues.
We first examined the prospects for the Indonesian tourism sector in the period between 2017 and 2018 prior to the pandemic. At this time WCA was collaborating with the Ministry of Tourism and Creative Economy (Kemenparekraf) in order to promote the development of the ‘Top 10’ tourism destinations in Indonesia through private investment funding.
In this Wellington Snapshot, we examine the current strategic programs being implemented by the Ministry in order to revitalize the tourism sector, under the leadership of Bpk. Sandiaga Salahuddin Uno.
These include the following initiatives:
Managing the dynamics of tourist supply and demand, particularly for the ‘Island of the Gods’ (Bali) – with an emphasis on inbound and outbound transportation schedules, hotel and restaurant capacity, and access to popular leisure and recreational facilities.
Partnering with the Micro, Small, and Medium Enterprises (MSME) sector in order to diversify the array of offerings available to visitors - such as sports tourism, MICE (Meetings, Incentives, Conferences, Exhibitions) events, and health and wellness programs.
Accelerating the development of several important tourism areas across Indonesia – with a primary focus on the promotion of 5 x ‘Super Priority’ destinations in Indonesia, namely Lake Toba (North Sumatra), Borobudur (Central Java), Mandalika (West Nusa Tenggara), Labuan Bajo (East Nusa Tenggara), and Likupang (North Sulawesi).
Our close working relationship with the Ministry of Tourism and Creative Economy enables us to engage with you in examining any aspect of the sector.
Please feel free to open up a dialog with us via the following channel.