Few industries represent the inexhaustible wealth offered by tourism, a product perceived as a hard-fought right in wealthy societies and whose inception can be credited to human curiosity and globalization – in themselves boundless qualities. Despite occasional shocks, global international tourist arrivals have shown virtually uninterrupted growth over recent decades – from 25 million in 1950 to over a billion in 2013, according to the World Tourism Organization (WTO).
To add to the optimism, young people are some of the main drivers of this growth and seem to augur even better times ahead. In 2013, around a quarter of the $1.088 trillion tourism spending worldwide came from young travelers, who in the past five years have extended their annual travel plans by a week to 58 days, according to a survey by the World Youth Student and Educational (WYSE) Travel Confederation.
The same survey also showed that young travelers are spending less time in major gateway cities and are exploring more remote destinations than previously, while the preference for leisure travel – people sitting on beaches and around the pool at resort hotels – fell from 75% to 47% during that period. Instead, young travelers are increasingly interested in learning languages and experiencing cultural immersion.
Indonesia has a lot to gain from these trends and former Minister for Tourism and Creative Economy Mari Elka Pangestu set the wheels in motion with a strategy she called the 16-7-16 formula. The plan calls for a focus on 16 key markets to attract international tourists; develop seven thematic and special tourism sectors, such as nature-based eco tourism, sports, cruises, culture and heritage; and promote 16 destinations within the country.
Despite such efforts, tourism in Indonesia remains largely stagnant and concentrated on harvesting the fruits of its biggest tourism success story: Bali. The Island of Gods, as it is popularly known, placed the country in the international spotlight in the 1960s when it served as a stopover destination for travelers covering the overland ‘hippy trail’ between Europe and Australia. Now, Bali has grown to establish itself as a world-renowned tourist destination.
Most foreign leisure visitors who came to Indonesia in 2013 visited Bali – at least 3.3 million people. Six million domestic travelers also flocked to the island – twofold growth in only five years. By some estimates, Bali’s tourism industry provides jobs for up to 25% of the island’s population and it supports 50% of the province’s GDP, which has averaged 6% growth in recent years, above the national average of 5%.
Nationwide, however, the total contribution of the travel & tourism (T&T) industry to GDP was 9.2% and represented 5.3% of total investment in the country. Around 2.7% of the country’s total workforce is employed in jobs directly supported by T&T.
Pangestu’s ministry set the ambitious target of boosting the current 8.8 million foreign visitors to 25 million by 2025, a similar number to the figures enjoyed by Thailand and Malaysia today. It planned to do so by empowering more regions across the country to capitalize on global interest in the Asia-Pacific, the fastest-growing region for tourism worldwide. Now, this challenge belongs to her successor, Minister Arief Yahya, who aims to unlock the country’s tourism potential through better marketing.
But getting the word out about destinations beyond Bali is just part of the challenge. Accessibility and services for travelers are severely underdeveloped in most parts of the archipelago. A sudden boost in interest could have undesired consequences for local communities and their infrastructure, as well as disappointing visitors and providing negative word-of-mouth messages about Indonesia.
With the popularity of tourism websites such as tripadvisor, it is all too easy for travelers to write a ‘review’ that slams a destination. Other travelers make decisions on where to go and where to stay based on such reviews and just one damning comment can turn people away. The result is that destinations have to be ready to receive visitors and treat them well.
Two master plans
Two main policy pillars are driving infrastructure development for tourism across the country. The first is Regulation No. 50 issued in 2011 on a Master Plan for National Tourism Development (RIPPARNAS), which identifies 88 potential destinations and 50 major existing destinations to develop before 2025 – a set containing the 16 destinations Pangestu gave immediate priority under her 16-7-16 formula.
Until 2011, T&T strategies were largely decentralized and managed at a provincial or regional level, and the RIPPARNAS aims to combine those efforts into coordinated synergies supervised by the ministry, namely the development of tourism, the improvement of tourism marketing strategies, the improvement of competitiveness in the tourism sector and the establishment of reliable tourism-related institutions.
Switch-Asia, a EU-funded project promoting sustainable policies in Asia, has labeled the vision of this plan as “pro-growth, pro-job, pro-poor and pro-environment,” as it aims to involve local residents in both the development of local tourism industries and the protection of their cultural heritage.
The approach, it says, mirrors Bali’s local development regulations, which also advocate in favor of developing tourism destinations that are “safe, convenient, interesting, accessible and environmentally friendly towards prosperity improvement,” while highlighting a need for cultural preservation through “conservation of nature, environment and resources” – albeit with arguable success.
The second pillar used in conjunction with RIPPARNAS is the Master Plan for the Acceleration and Expansion of Indonesian Economic Growth (MP3EI) 2025, which identifies the need for an investment of $14 billion to achieve tourism industry development.
The MP3EI envisions the creation of several transportation corridors in the country across multiple islands, such as Bali – Nusa Tenggara, or is the backbone of projects like the Trans-Sumatra highway. The plan highlights that tourism sites can be developed along these corridors, connecting to existing tourism centers such as Bali.
The Bali – Nusa Tenggara corridor is of particular significance. The MP3EI points to “some common strategies” to increase the number of visits and length of stay of tourists, including tightening security throughout the region, fostering the development of untapped destinations like North Bali and improving facilities and infrastructure for water supply, electricity, transportation and communications.
It also highlights the possibility of using Bali as a “storefront” for tourism in the country, serving as the main gate for excursions to other islands in East Nusa Tenggara, including Lombok and Komodo.
Cautious development
Dr. Nyoman Sukma Arida, a lecturer at the Faculty of Tourism at Udayana University in Bali, has long been a proponent of turning the holiday island into a transit hub for travelers coming to Indonesia. However, he says, infrastructure development in other regions should precede any attempt to redistribute visitor growth.
“There is a large gap between the western part of Indonesia and the east. In the western regions both government and society are ready to receive tourists,” he told Concord Strategic.
He said provinces like West Java, Central Java, Yogyakarta, East Java, West Sumatra and North Sumatra are ready to expand their existing tourism industries. North Sumatra, he states, recently saw the inauguration of Kualanamu International Airport, a state-of-the-art hub connected by train to the city of Medan.
“However, in the eastern region of Indonesia, in areas such as Papua, Maluku and Nusa Tenggara, there are still many problems. The most important is accessibility to the area,” he said, adding that regions such as the far-flung diving paradise of Raja Ampat in West Papua are still not affordable to most pockets. “(From Bali) a trip to West Papua is much more expensive and time-consuming than traveling to Perth in Australia,” Arida said.
Another priority he highlights is human development and the involvement of local communities in fostering tourism growth. “There is no point in the rapid development of tourism if the surrounding communities are still trapped in poverty. If that happens, the tourism will not mean anything. It will only widen the wealth gap that already exists,” he said.
Arida signals eco-tourism, a low-impact and often low-scale alternative to mass tourism, as one sector that needs empowerment. “Tourism is not only a business, there is a deeper mission here, namely cultural contacts, mutual respect and mutual learning between the community and tourists,” he said.
As an example of the failure of tourism in poor areas, the expansion of tourism outside of the relatively affluent enclave of Senggigi in Lombok, West Nusa Tenggara has not been successful. Communities in the south of the island have tended to mob visitors trying to sell them handicrafts or act as guides, making visits to impressive ethnic villages traumatic. Thefts have been common around the Kuta area on the southern coast, again deterring visitors.
One visitor to Kuta in Lombok gave the experience only two stars out of tripadvisor’s five, referring to “the non-stop stream of hawkers who are clearly reliant on tourism for income but do not seem to understand that their awkward and sometimes aggressive sales pitch will often leave them out of luck.” Experiences like this resonate globally.
A Balinese warning
Success also has its costs. Arida’s cautious views on tourism development are rooted in his experience living in Bali, where tourism has had a sometimes negative impact on the livelihoods of the Balinese and the resources of the island.
Many experts have argued that what may have started as cultural tourism in Bali has turned into a tourist culture in which over-exploitation of the island’s attractions alienates locals and could be turning visitors away. This is particularly true of enclaves such as Kuta in Badung regency, where the four Ss of tourism – sun, sea, sand and sex – tend to obliviate anything left of the cultural experience.
“Economic progress as a result of tourism development also raises a lifestyle of consumerism and individualism. In southern Bali, the large flow of migrants from other parts of Indonesia, particularly Java, has created fierce economic competition. The residents feel suffocated in their own land,” Arida says.
That feeling of suffocation is exacerbated by problems like traffic congestion and over-urbanization, suggesting that local development regulations may have fallen short of expectations.
Several groups including Friends of the Earth Indonesia (Walhi) and the Indonesian Tourism Industry Association (GIPI) Bali chapter have urged the local government to enforce a hotel moratorium introduced in 2011 in the regencies of Badung, Gianyar and Denpasar, and to extend its reach to the rest of the island.
Despite ongoing growth in tourist arrivals, hotel occupancy in the island has decreased amid a landscape of mushrooming hotels that put stress on Bali’s resources. According to a 2012 study by the University of the West of England, around 65% of Bali’s water supply goes to tourism infrastructure and its overuse has resulted in the reduction of water quality, reduced water table, land subsidence and salt water intrusion.
Meanwhile, around 55% of the electricity in Bali is consumed by hotels, which risk contributing to power cuts when in 2018 the electricity reserve in the Java-Bali area will reach a dangerous level, according to state power company PT PLN.
Belitung’s aspiration
Strategically located between Singapore and Jakarta, the Bali-sized island of Belitung is one of the destinations prioritized in the RIPPARNAS and it has great hopes for its T&T industry since the bestseller novel ‘The Rainbow Troops’ (Laskar Pelangi) put its name and evocative coastline in the ‘go list’ of local and foreign travelers.
Despite Belitung being scarcely populated, the island is gifted with a good network of inter-district roads and a small domestic airport able to accommodate medium-haul jets. Local tourism operators hope international flights from Singapore can serve the island in the near future, opening its gates to foreign travelers.
In many ways, Belitung is already a step ahead of other aspiring tourism destinations around the archipelago and has successfully attracted several MICE (Meetings, Incentives, Conferences and Exhibitions) events as well as sports events, such as the Sail Belitung 2011 competition and the 300-km cycling Tour D’Belitung in 2012.
However, Herry Suhermanto, a former head of the Bangka Belitung Regional Development Planning Agency (Bappenas), told Concord Strategic that he feels more vertigo than optimism at the prospect of growing visitor arrivals.
“I am actually a little bit afraid. Investors are looking at this island but if the master plan is not considered carefully what will happen is that (Belitung) will become like Banten,” he said, citing widespread private ownership of coastal areas including beaches.
The island’s main attraction is its beaches, a few of which have attracted hotels and restaurants catering to tour groups from cities like Jakarta. “People own the land up to the coastal area, so it is very difficult to ensure nice and beautiful public beaches,” said Suhermanto.
Not surprisingly, property values have shot up, effectively excluding locals from investing in the T&T industry. One beachside 1.5-hectare in the sought-after Tanjung Tinggi area, purchased for Rp270 million four years ago, is now worth Rp7 billion. With such prices, only well-heeled business operators from Jakarta or beyond can operate.
Suhermanto believes that spatial planning is the highest priority in the island’s path to becoming a developed tourism destination and a necessary step to prevent resorts from monopolizing access to beaches or eroding coastal areas.
Resources needed to operate these resorts, he said, are a lesser issue. “Big companies (that own) resorts can develop their own energy sources. Private investment should also cover things like a sewage treatment plant; the government cannot provide that, but resorts and hotels have the funds for that, and they must, because otherwise they can pollute the sea,” he said.
T&T growth must be inclusive, he explained, and investors must work hand-in-hand with local administrations to ensure district by-laws provide investment assurances while protecting residents and the environment.
Suhermanto said the provincial and regional administrations should facilitate current practices rather than design tourism infrastructure without taking those practices into consideration. Small boat operators and fishermen already offer their services to tourists interested in visiting nearby islets while car and motorbike owners are already renting out their vehicles on a regular basis.
“The government needs to provide better management for these small entrepreneurs, maybe form cooperatives, create piers (to anchor boats), waiting rooms… the government has the power to provide land and build that kind of infrastructure,” he said, adding that commitment to a five-year plan could see many of these plans realized, including improved human capital.
Factoring ASEAN
A major development that should not be overlooked is the establishment of the ASEAN Economic Community (AEC) in December 2015, which among other aspects will ease border restrictions, facilitate regional travel for ASEAN member passport-holders and create a free-market for commercial aviation through its Open Skies policy.
The Open Skies policy is of particular relevance to destinations outside the orbit of major airports. The new rules will allow airlines to fly directly to and from other ASEAN countries without the government’s approval, likely increasing flight services into Indonesia’s 29 international airports.
The inclusion of ten domestic airports in the Public Private Partnership (PPP) scheme, such as Belitung’s, could also have a beneficial effect in bringing international visitors to more isolated regions. A PPP would allow airport managers to develop infrastructure required to welcome international routes and benefit from the Open Skies policy.
Officials from AEC member countries have also reiterated plans by the 10-country bloc to create a single-visa area modeled after the European Schengen visa, a document that allows unlimited travel for 90 days between the 26 Schengen member countries.
Such a plan would allow flights to and from smaller airports within ASEAN, enabling non-ASEAN visitors to country-hop between member countries without going through passport controls.
Tuned marketing
The naming of Arief Yahya as Minister for Tourism, which is now a stand-alone ministry, in the cabinet announced by President Joko Widodo in October 2014 caught many by surprise. The former president director of PT Telkom is an outsider to the tourism industry but has a forte in marketing he is keen to apply, particularly through social and digital media.
“We need to look outwards. To do that Indonesia’s tourism needs to be based on international standards. These standards will be centered around four key aspects, namely infrastructure, ICT (information and communication technologies), health and hygiene,” he stated during a hand-over ceremony at the ministry.
Yahya has also announced his intention to change or re-launch the country’s current tourism slogan, ‘Wondeful Indonesia’.
Djohansyah Saleh, head of operations of public relations firm Weber Shandwick Indonesia and a former advisor to the ministry, has told Concord Strategic that the new minister has to consolidate the way Indonesia markets itself as a destination.
“First and foremost, he needs to take control of marketing strategies from provincial and regency leaders,” said Saleh, in reference to tourism branding and campaigns conducted independently by local administrations. “Lastly, ensure that our basic infrastructure is able to cope with the new influx of international tourists to ensure that they do get an overall excellent experience,” he said.
Saleh sees one of the successes of Indonesian tourism marketing as having Bali mentioned as a “go-to destination” among affluent travelers in key markets such as Europe or North America. However, he says, one shortcoming has been the inability to clearly explain or communicate the country’s differentiation with its immediate competitors in the region.
“The 16-7-16 formula was a great start, but it wasn’t sufficient. The involvement of regions and provinces is a must in order to succeed. (The targeted destination provinces) must also create programs to attract tourists,” he said, citing the work of President Joko Widodo during his tenure as mayor of Solo in Central Java.
Widodo raised the city’s international and domestic profile as a tourism destination through an annual carnival celebrating the city’s deep Javanese history, one of the achievements that placed him second runner-up in the 2012 World Mayor Prize.
As for young travelers, Saleh said, one simple way to engage with them is through social media. “The basic infrastructure to cater to this segment is already there, we just need to promote and package it well through digital platforms,” he added.
Risks and assurances
There are a number of security risk factors parallel to tourism growth. While Indonesia has enjoyed political stability in recent years, many areas in the country such as Aceh and Papua are still home to armed groups who have, albeit rarely, targeted foreigners, including the killing of two American mining workers in Papua in 2002 and the kidnapping of a British oil engineer in Aceh in 2013.
Natural disasters, of which Indonesia suffers more than any country in the region, also have the potential to disrupt stability, putting lives at danger and discouraging visitors. Earthquakes, landslides or tsunamis are among the most destructive and plausible disasters affecting tourist destinations which lack preparedness and contingency plans.
Terrorism, which left a bloody footprint in the country after the 2002 and 2005 Bali bombings that killed over 200, is also a permanent threat and while the country has developed a strong counter-terrorism unit, recent developments in the Middle East and perceived Western animosity against Islam have the potential to motivate new attacks.
Health issues such as pandemics and other viral infections also have the potential of discouraging visitors, such as the avian influenza outbreak between 2005 and 2007. In 2005 then deputy tourism minister Sapta Nirwandar noted a decline in foreign visitor arrivals which he blamed on the outbreak.
The World Economic Forum’s 2013 Travel and Tourism Competitiveness Report also ranks Indonesia as a poor performer in infrastructure and environmental sustainability. Underdeveloped infrastructure in the country, especially ground transport and tourism infrastructure ranked 87th and 113th respectively, below most countries in the region.
In addition, Indonesia is not ensuring the environmentally sustainable development of the tourism sector, and was ranked 125th in this category, an area of particular concern given the sector’s dependence on the quality of the natural environment.
The country ranks sixth in the world for its excellent natural resources, with several World Heritage natural sites and a unique level of fauna. It also ranks 38th for rich cultural resources such as 10 World Heritage cultural sites protected by UNESCO and a number of international fairs and exhibitions as well as strong creative industries.
Perhaps one of the best bargaining chips for Indonesia is its price competitiveness, which makes it the ninth most competitive country in the world with competitive hotel prices, low ticket taxes and favorable fuel prices. The future is there to be taken, but it will take work and, most importantly, good planning.