Indonesia’s tourism industry remains one of the country’s most underexploited natural resources. Despite having the potential to cater to a broad range of tourist tastes from luxury beach holidays seekers to cultural and eco-tourists; tourism numbers have showed limp growth while neighbours have seen numbers soar. Bali remains the jewel in the country’s tourism crown having rebounded after the 2002 Bali nightclub bombings which saw tourism number plummet. However, tourists are not venturing beyond Bali and the country as a whole has failed to build a magnetic brand. The scope for being a major tourism hub is there; the country is home to some of the world’s best diving and cultural heritage sites as well as natural wonders. Yet, there is some way to go in developing human resource capacity and transportation infrastructure that would allow the country to meet its full potential.
Indonesia was ranked 81st out 133 countries in the World Economic Forum Tourism Competitiveness Report for 2009, it has since risen to 74th place in 2011 yet has the scope to be far higher. The country has faced various obstacles in getting its tourism industry going such as the Bali bombings in 2002 followed by bombings in Jakarta in 2005 and 2009 as well as natural disasters. With many Western countries still posting travel warnings for Indonesia, it has been a challenge to get a positive message across. Effectively marketing the country on the global stage has failed to take hold thus far as few are familiar with international representations of the country, such as known brands. Still, the sector has shown resilience in tourism numbers despite these hurdles which is testament to the natural attributes the archipelagic country has. The 2010 revival of the national airline, Garuda, which had previously been grounded for a poor safety record and mismanagement, will play a role in promoting Indonesia’s image in the immediate future while expanding the number of long haul routes.
Indonesia’s main source of tourists comes from the ASEAN, being the fourth largest receiver in the region. Trends have remained relatively unchanged for the past 5 years with Singapore, Malaysia and Japan followed by Australia being the main sources. Numbers of Chinese tourists have been increasing significantly by 19.54% from 2008 to 2009 and numbers to Bali in particular were up by 175% in 2010 from the previous year. India is another emerging tourism source while the United Kingdom remains the main long haul tourism source followed by France and the Netherlands. The main destinations within Indonesia include Bali, which received 2.576 million tourists in 2010 or nearly 37% of total arrivals and maintains strong hotel occupancy rates throughout the year at an average of 59%. This is followed by Jakarta for both business and leisure travel as well as other secondary cities in Java such as Yogjakarta which is the ‘spiritual centre’ of the island. Other popular destinations include Kalimantan, although the majority of the existing tourism numbers are accounted for by business travellers to date.
Hotel Occupancy Rate for Selected Provinces & Cities
International Tourist Arrivals by Region of Origin
Source: Statistics Indonesia (BPS)
Tourism numbers have been growing from 5.51 million in 2007 to 5.3 million in 2009 and 7 million in 2010 according to Statistics Indonesia. These figures have been called into question considering that they count arrivals of foreign residents and business travellers under one single category making reliable figures difficult to come by. That being said, tourism numbers are increasing in line with increased government efforts under the Ministry of Tourism & Culture’s various ‘Visit Indonesia’ campaigns. Yet these numbers pale in comparison to that of Malaysia that received 24.5 million tourists in 2010 as well as Singapore that received 11.6 million during the same period (ASEAN Tourism). The Ministry is aiming to increase tourism numbers to 7.7 million for 2011 under the new ‘Wonderful Indonesia’ campaign, however building up the brand and competing with the likes of Malaysia will require significant investment. Spending on tourism promotion has increased drastically from $15 million USD in 2009 to $47 million in 2010 (State Budget 2010) yet it appears as though the message is still not being received effectively. Indonesia still has to strengthen its internal capacity in terms of infrastructure to start building a strong and identifiable brand.
Appealing to high end tourists that spend more in the way of revenue will be an important priority, besides raising the tourist numbers themselves. The Minister of Tourism and Culture, Jero Wacik has stated his projections of 2011’s 7.7 million tourists that he predicts will bring $8.4 billion USD in revenues. Currently, tourists in Indonesia spend significantly less per day at $129 USD compared to other countries in the region while lengths of stay are also on average shorter at 8.4 days compared to 9.5 for Thailand (Ministry of Tourism, 2010). Boosting foreign exchange income as well as domestic tourism spending will come from developing high end leisure and entertainment facilities alongside well kept heritage sites and transportation infrastructure. Maintenance of cultural heritage sites has been low on the priority list when it comes to funding; while having 7,400 registered sites according to the Ministry of Tourism and Culture only 20% of those are well maintained and funded appropriately. Organisation and presentation of historical information, artefacts and art has a lot to be improved upon, while the cultural vibrancy of the country gives solid foundations on which to start. Improvements in this area will keep more Indonesians in the country for their vacations while attracting more high spending tourists from the USA, Japan, Europe, Russia and the Middle East.
Transport is by far the greatest hurdle for the tourism sector to overcome. As a nation made up of over 17,000 islands, comfortable and convenient air as well as sea transportation is a necessity. Indonesia has long had a poor record when it comes to air safety although this is being gradually repaired with the rise of airlines such as Air Asia and Lion Air as well as Garuda’s revival (see Indonesia’s Commercial Airline Industry). The country’s international airports are also getting an overhaul in order to meet future tourism capacity. Investment projects are being offered to local and international investors under the PPP scheme such as South Banten, Bali and West Kalimantan (see Public Private Partnerships). A high speed rail link from the international airport to Jakarta city centre and a marina in Bali to receive commercial passenger vessels for marine tourism are also being offered under the scheme. The improvement in transportation in infrastructure around the main tourism areas is part of the Bali – Nusa Tenggara economic corridor, as part of the national master plan to 2025. This corridor would see Bali remaining as the tourism hub while offering more direct flights from the island to other tourism clusters in Java and East Indonesia.
Developing human resources in the tourism sector to offer higher standards of service as well as improving language capacity is underway. The Ministry of Tourism and Culture issued Tourism Law No.10/2009 and began a program in 2010 to ensure industry wide certification of tourism professionals. This is to bring Indonesia into line with the ASEAN Common Competency Standards Framework for Tourism Professionals. The goals of the program are to certify 60,000 professionals by 2014. This will give tourists the tools they need to be able to select among the thousands of hotels and tourism facilities around the country. Standardised competency in areas such as water sports, marine tourism and diving will also help in developing these areas where Indonesia has unparalleled advantages to the rest of the region but require stringent safety standards.
The national target of 20 million tourists every year by 2025 seems ambitious in comparison to the numbers of 2010. However, it is achievable with improvements in the main areas of transportation, leisure facilities and human resources which will all contribute to building Indonesia’s global image that has long been subject to misconceptions. The country has plenty to offer to differentiate itself from other countries in the region such as having the world’s longest coast line giving rise to marine and eco tourism that is as yet unexploited. The inherent cultural diversity of the population coupled with a natural disposition for hospitality are fundamentals that are bound to bring in increasingly greater numbers of tourists from every part of the world in the future.
Global Business Guide Indonesia - 2012
Contribution to GDP: 4% (Direct, 2011)
Number Employed: 8.9 million (Direct & Indirect)
Number of Foreign Tourists: 7.65 million (2011)
Domestic Tourists: 121 million (2011)
Competitiveness Score: 74/139 (WEF, 2012)
Regional Rank: 13/26 (WED, 2011)