With the COVID-19 pandemic showing signs of abating, Indonesia is seeking to revive its tourism industry - among which is by offering foreign investors projects worth up to US$1.5 billion.
The global tourism industry was one of the sectors worst affected by COVID-19, and Indonesia鈥檚 tourism industry was not exempted. Data from the Central Statistics Agency (BPS) showed that foreign arrivals to Indonesia dropped by 75% to 4.02 million in 2020 from 16.11 million in 2019. That number decreased further to 1.56 million as of the end of 2021 due to tighter travel restrictions by the Indonesian government following the Delta variant outbreak of the coronavirus in July 2021.
The pandemic was a hard blow for the Indonesian tourism industry. The World Travel & Tourism Industry report highlighted that, prior to the pandemic, Indonesia's tourism industry contributed 5.9% of the country鈥檚 total GDP and employed about 13.1 million people in 2019. That contribution screeched to a halt throughout the pandemic. However, with the COVID-19 pandemic showing signs of slowing down, the government of Indonesia is finally pushing to revive the sector.
One of the efforts to revive the Indonesia tourism industry is the MoU between the Ministry of Investment, also known as the Indonesia Investment Coordinating Agency (BKPM), and the Ministry of Tourism and Creative Economy. The MoU, which details Cooperation for Investing in the Tourism and Creative Economy Sector, is signed online on August 23, 2021. The agreements between the two ministries include the development of tourism destinations and creative economy and its infrastructure, formulating new policies for the creative economy sector, the exchanging of data and information, and increasing the skill level of workers in the tourism industry.
鈥淭hrough this collaboration, rebuilding the tourism infrastructure takes priority. We've formed a small team with the Ministry of Tourism and Creative Economy to determine the priority scale of investment in the tourism areas,鈥� says Minister of Investment Bahlil Lahadalia, as quoted by Kompas.
More recently on Tuesday, March 29, 2022, Minister of Tourism and Creative Economy Sandiaga Uno met with 18 foreign investors to offer sustainable tourism projects worth $1.5 billion. These projects are prioritized toward developing five priority destinations and eight special economic tourism zones. He said the investment was expected to contribute up to 20% to the growth of the national tourism industry and open up jobs for up to 1.5 million people, further targeting up to 5% in contribution to national economic growth from the tourism industry in 2022.
PROSPECTS FOR INDONESIA鈥橲 TOURISM INDUSTRY
Indonesia has one of the highest vaccination coverages in the world, ranking 4th after China, India, and the United States. It is little wonder then that the Indonesian government has relaxed its travel and quarantine regulations considerably. Starting in late March of this year, foreigners entering Indonesia from abroad need no longer to quarantine themselves as long as they have been fully vaccinated and can produce a negative PCR Test Result.
Moreover, the country has reinstated its Visa-on-Arrival policy to foreign tourists entering Indonesia through Ngurah Rai Airport in Bali to 42 select nationalities. This policy is expected to be expanded to cover Soekarno-Hatta Airport in Jakarta Juanda Airport in Surabaya in East Java, Sultan Hasanuddin Airport in Makassar in South Sulawesi, and Sam Ratulangi Airport in Manado in North Sulawesi soon.
The Ministry of Tourism and Creative Economy is expecting a higher revenue and a fresh lift for the tourism industry in 2022 following the momentum of Indonesia as host to major international events such as the G20 Summit, the World Conference on Creative Economy and MotoGP Mandalika 2022. Indeed, one of the government鈥檚 major strategies for the tourism industry this year is to conduct more business, sporting, and cultural events in order to boost visitation rates and increase the proportion of long-haul visitors in the archipelago.
In 2022, Mr. Uno aims to attract 1.8 to 3.6 million international visitors which - while is almost a 90% drop from pre-pandemic times when it was attracting around 16 million foreign tourists a year - is perhaps a realistic goal due to the still on-going COVID-19 pandemic threat while still being higher than the visitation number in 2021 of about 1.5 million foreign visitors. The MotoGP Mandalika 2022, which has already garnered some positive buzz for being regarded as relatively successful, as well as the G20 Summit, will test how well the country can manage in rebooting its tourism industry in the post pandemic-era.