Interview: Arief Yahya
What is Indonesia’s standing in global tourism?
ARIEF YAHYA: Currently, Indonesia’s travel and tourism sector contributes $82.4bn – or 9.6% – of total GDP. Although this is high, it is still lower than regional competitors such as Thailand (20%) and Malaysia (16%). Regarding foreign exchange revenues, Indonesia ranked 9th in 2014, with $11.17bn, again behind Thailand and Malaysia, which had $38.44bn and $21.82bn, respectively. Nevertheless, this only shows the opportunities Indonesia has against regional competitors.
According to projections, tourism will be the biggest contributor of foreign exchange in Indonesia by 2020. The Travel and Tourism Competitiveness Index (TTCI) currently ranks Indonesia 50th. Although this is still below our main regional competitors, Indonesia has shown great improvement since 2013, when it was ranked 70th. Tourism in Indonesia is showing steady growth, coming in at 10.3%, compared to ASEAN’s growth of 5.1% and worldwide growth of 4.4%.
Now, in order to continue promoting Indonesia, it is important to have a strong brand to build up our reputation and advertise and sell our destination. We are really banking on the implementation of our tourism marketing strategy in order to help us reach the target of 20m visitors in 2019. We are aiming to increase our presence through the brand “Wonderful Indonesia” in outdoor media, printed media and TV advertisements, as well as our participation in international fairs, exhibitions, sales missions and festivals.
How is Indonesia’s tourism sector seeking to overcome its current challenges?
YAHYA: There are two main challenges for tourism in Indonesia in general. The first is a lack of international openness due to excessive and restrictive regulations regarding national entry. In order to change this, the country has been removing visa requirements. Today there are 169 countries on Indonesia’s visa-free list, which is one of the highest numbers in the world.
The second is related to direct airline flights. Indonesia currently has one of the lowest direct flight ratios in the region, but we are working on improving this. We also need to continue promoting our products and destinations through digital channels, and using the numerous digital tools that increase the reach of our hotels. The government’s current priority sectors include infrastructure, maritime, energy, food and tourism. One of the president’s eight directives includes ensuring the progress of 10 national tourism destinations; we call this project “Creating 10 New Balis”. By 2019, we expect tourism to contribute 15% of the total GDP, account for IDR240trn ($17.52bn) of foreign exchange, create 13m jobs, entertain 20m foreign tourist arrivals and 275m domestic tourists, and jump to 30th place in the TTCI.
What action is Indonesia taking to promote investment in the tourism sector?
YAHYA: Indonesia’s strategy to increase tourism investment has been successful. In 2014 foreign direct investment (FDI) and domestic direct investment (DDI) in tourism accounted for a combined $684.89m, while in 2015 this reached $1.05bn. Since 2013, FDI decreased from 76.74% to 69.82%, while DDI increased from 23.26% to 30.18%. Five sectors receiving FDI account for 97% of the total; these are: star hotels (65.07%), other short-term accommodation providers (16.57%), management consultation (7.62%), restaurant and moving food providers (6.28%) and tourism areas (1.75%). Similarly, the top five provinces receiving FDI in tourism – Bali, DKI Jakarta, Riau Islands, West Java and East Java – account for 88% of the total. In terms of DDI, the first five sectors receive 99% of the total, and the top five provinces account for 72% of the total. To increase tourism investment, Indonesia is focused on improving infrastructure and facilities, amenities, tourism development and the ongoing restoration of key strategic destinations.
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