According to a 2015 report released by the World Travel and Tourism Council, Indonesia’s travel and tourism industry has generated, directly and indirectly, a total of $80 billion USD or approximately 9.3% of the country’s GDP in 2014. That figure is larger than the GDP impact of the country’s financial services, which is estimated at 6.8% making the Ministry of Tourism’s recent efforts to boost the country’s national tourism brand significantly timely as commodity markets remain depressed. The earmarking of increased funds towards marketing and promotion is a vital first step in raising awareness of Indonesia, while measures to dismantle bureaucracy and incentivise investment in the sector are also underway and already showing results.
Taking notice of the contribution and impact of the tourism and travel industry on the Indonesian economy, the current administration, through the now dedicated Ministry of Tourism, has begun to increase its effort to promote the country’s national tourism brand under the Wonderful Indonesia campaign for the international market, or Pesona Indonesia for the domestic tourism market. While the brand, logo, and slogan of the campaign are not new, having been originally conceived in January 2011, the Ministry of Tourism has now begun to significantly step up its efforts to promote it through aggressive marketing campaigns on a global scale after appointing multinational marketing and advertising firm Ogilvy. Campaigns are running simultaneously in Southeast Asia, the Middle East, China, Hong Kong, Taiwan, Japan, South Korea, India, Australia, New Zealand, Europe, and USA. Advertisements are extending across the full spectrum of traditional and digital media such as on public transport as well as television slots. Mr Arief Yahya, the Minister of Tourism who spearheaded the campaign, said that "Wonderful Indonesia would knock on every door across the world".
Indonesia’s Ministry of Tourism has been granted a 1.2 trillion rupiah (US$ 88 million) budget for marketing and promotion in 2015. Although the budget has quadrupled from the previous year, it still pales in comparison to Malaysia’s ‘Truly Asia’ campaign budget which stands at $300 million USD annually. The budget is also modest considering the grand scale of the task that the Ministry has to undertake, that is to attract 10 million international visitors by the end of 2015 and 20 million international tourists by 2019. That is a 100% increase in 4 years, assuming that the Ministry is able to reach its 2015 target.
With four times the budget of 2014, as of September 2015 the Ministry of Tourism had managed to achieve only a 3.53% increase in the number of visitors compared to the same period of last year. Data released by the Bureau of Statistics (BPS) indicated that year-on-year growth for September, which is the highest boost thus far growing by 9.84% equating to 869,179 visitors in September 2015 as compared to 791,296 visitors in September 2014. From January to September 2015, the total number of international visitors reached 7,191,771. The goal of 10 million international tourist arrivals to Indonesia is therefore on track.
Statistics from 2014 show that Indonesia received a total of 9,435,411 foreign visitors (BPS). This means that the current goal is a 5.98% increase from last year. Previously, the Ministry of Tourism had aimed to attract 12 million visitors, but then revised down the figure to only 10 million international visitors. Many factors were named as causes for the revision, including the global economic slowdown and the eruption of Mt. Raung in late June 2015 that caused flight disruptions to favoured tourist destinations, such as Bali and Lombok throughout the popular summer holiday period of June – August 2015. The Sumatra and Kalimantan forest fire haze throughout June – October 2015 was also named as a factor that discouraged visitors to travel to Indonesia and the environmental fallout of the fires may have also put many tourists off visiting the country over the longer term.
The goal of 20 million international visitors by 2019 may not seem so far-fetched for Indonesia considering that neighboring countries such as Malaysia and Thailand have both reached more than 25 million tourists over the course of 2014. Indonesia might tick all the right boxes, but faces different challenges to its Southeast Asian counterparts in the form of infrastructure as an archipelago (See High Stakes for Indonesia's New Infrastructure Push).
Under the Joko Widodo administration, several measures to initiate deregulation in the business climate have been taken in an attempt to boost the tourism industry and attract investors to Indonesia. September 2015, the month with the highest increase of tourists to Indonesia, coincided with the government waiving its visa requirements also known as CAIT (Clearance Approval for Indonesia Territory) for 90 countries. Tourists from these countries are allowed to stay in Indonesia for up to 30 days without a visa. While a comparatively small gesture, this sends a distinct signal about the government’s attitude towards prioritising Indonesia’s image as being open and welcome to international tourists over nationalist concerns demanding reciprocation for visa free travel.
In addition, another major piece of deregulation was announced early in August 2015 to relax Indonesia’s cabotage principle. Foreign cruise ships are now allowed to embark and disembark passengers at five major domestic ports; namely Tanjung Priok in Jakarta; Tanjung Perak in Surabaya, East Java; Belawan in Medan, North Sumatra; Makassar in South Sulawesi; and Benoa in Bali. After clearance at these ports, cruise ships are then allowed to transit at any domestic ports in Indonesia, big or small, to embark and disembark passengers. This will also mean that cruise ships can collect passengers, local or international, to join the cruise at any of the ports. This measure, coupled with the visa-free policy, is a major leap for Indonesia’s tourism industry, particularly within maritime tourism in which the country arguably holds the most potential (See Riding the Maritime Tourism Wave in Indonesia). Previously, foreign-flagged cruise ships were only allowed to dock at Benoa, Bali after which passengers disembarking from foreign-flagged cruise ships could only continue their journey aboard Indonesian-flagged passenger ships.
As of September 2015, 106,653 tourists have arrived in Indonesia on 61 cruise ships while 993 yachts (up from 750 in 2014) brought a total of 10,876 tourists (Ministry of Tourism). The Minister has cited marine tourism as being a major focal point for Indonesia’s tourism industry accounting for 35% of the targeted development of the industry by 2019. Within the context of Indonesia’s marine infrastructure push, this brings about opportunities for investors in developing ports capable of receiving cruise ships and feeder vessels across the country’s numerous picturesque islands (See Indonesia's Maritime Ambitions Require Massive Upgrade of Seaports).
In late October 2015, Lombok received two awards for being the World's Best Halal Honeymoon Destination and World's Best Halal Tourism Destination at the World Halal Travel Summit & Exhibition 2015 in Abu Dhabi. This award will be a major boost to promote Indonesia as a Halal travel destination, particularly in Islamic countries. In 2014 visitors from Islamic countries such as Malaysia, Brunei, and the Middle East reached 1.7 million, with the bulk of the visitors coming from Malaysia. Earlier in April, two short films for tourism promotion won awards at an international film festival. Awards like these serve as useful marketing tools but should detract from the monumental challenges that Indonesia’s tourism industry is subject to.
Indonesia is faced with the major task of addressing the lack of supporting infrastructure as well as safety and security concerns. The 2015 Travel and Tourism Competitiveness Index has ranked Indonesia in 50th place, a major leap from last year when Indonesia was ranked 70th, yet still short of where a country with Indonesia’s wealth of tourism potential should be. Infrastructure, such as mobile phone coverage and air travel has seen significant improvements. Other factors that have contributed to the leap include price competitiveness whereby the decline of rupiah actually serves as a boost to enable tourists’ dollars to stretch even further. The report also suggested some key areas for improvement, such as ground transport infrastructure improvement. A contradiction was also highlighted by the report; Indonesia with its vast natural resources and biodiversity has been viewed as poor at managing environmental sustainability and water treatment in addition to safety and security. Indonesia was ranked very low for health and hygiene at 109th place below India, Bangladesh, and Lao PDR.
The revamped Wonderful Indonesia campaign is a good start for Indonesia to begin making headway in building a national tourism brand with global as well as local appeal. The real impact will take some years to come into fruition, therefore the country needs to ensure that it maintains a consistent message backed up by real improvements in areas such as infrastructure and safety which are factors that are crucial in the field of marine tourism. Without concrete developments to generate positive feedback among the international tourism community, Wonderful Indonesia will be confined to an advertising slogan and relegate Indonesia to a destination on tourists’ wish lists only.
Global Business Guide Indonesia - 2016
Indonesia’s creative economy provides a unique selling point for the country as it seeks to carve out a position in Asia’s highly competitive tourism market. This section looks at the government’s new initiative to combine the development of the tourism industry with the creative economy.
Contribution to GDP: 4.23% (2015)
Number Employed in the Sector: 12.16 million (2015)
Monthly Average of Foreign Tourists: 799,552 (Jan-Nov 2015)
Domestic Tourism: 255.5 million trips (estimated, 2015)
Competitiveness Score: 50/141 (WEF, 2015)
Regional Rank: 11/23 in Asia-Pacific, 4/9 in Southeast Asia (WEF, 2015)
Most Popular Locations: Bali, Jakarta, Yogjakarta, Bandung, Batam, Medan.