Indonesia making efforts to replicate Bali's success in 10 destinations across the nation

Bali is Indonesia’s tourist juggernaut; a tropical island whose unique Hindu culture and natural beauty entranced a generation of artists in the early 20th century and fuelled the development of a tourism industry virtually unmatched in South-east Asia.

The government has long sought to entice visitors beyond Bali, but its initiatives have so far had little success. Some 41% of all visitors to Indonesia went to Bali in 2015, while Bali, the capital Jakarta and Batam, which borders Singapore, together accounted for more than 90% of arrivals.

New Balis 

However, with the government targeting 20m arrivals by 2020 it has adopted a new approach, focusing its attention on 10 destinations that minister of tourism Arief Yahya has called the “new Balis”. The priority sites for development span the archipelago and consist of Lake Toba, Borobudur, Bromo, Thousand Islands, Mandalika, Wakatobi, Morotai, Belitung, Tanjung Lesung and Labuan Bajo.

The plans include revitalising five once-popular destinations (Lake Toba, Borobudur, Bromo, Thousand Islands and Mandalika), and five relatively new areas, including popular diving spots Wakatobi and Morotai. Four of the 10 have also been designated as special economic zones (SEZs), ensuring fiscal and non-fiscal incentives for investors.

Those not designated as SEZs will have dedicated tourism authorities to lead development, according to the Ministry of Tourism. The authority will implement the area’s masterplan, work with government officials at the local, regional and national levels, and award contracts and permits to ensure basic infrastructure is in place, as well as roads, hotels, restaurants and other tourist facilities and attractions. “Tourism authorities are a good idea,” Matt Gebbie, Pacific Asia director at consultancy Horwath HTL, told OBG. “Someone needs to control what gets built.”

Lake Toba 

The most advanced of the 10 is Lake Toba in northern Sumatra, which, at 1700 sq km, is the biggest lake in South-east Asia. The area first began to be developed as a tourist destination in the late 1990s. The legal framework for its tourism authority has already been agreed, and it is expected to become operational by the end of 2016.

The nearest airport to the lake, Silangit, is being upgraded to accommodate larger planes in the hope of bringing in more direct flights and reducing prices. Garuda Indonesia and Sriwijaya Air offer direct flights from Jakarta, while other airlines operate connecting flights from Kuala Namu International Airport, Sumatra’s main aviation hub. Angkasa Pura II, which operates Kuala Namu, signed a cooperation agreement in May 2016 with India’s GVK Airports with the aim of boosting flight traffic, particularly from South Asia. The main road from Kuala Namu to Lake Toba is also set for improvements, reducing the overland journey from four hours to 90 minutes.

Heritage Destination 

Borobudur is another of the priority areas that has mass tourism potential, according to Horwath HTL. The World Heritage-listed Buddhist monument, along with the adjacent ruins of Prambanan, a Hindu temple complex, are one of the most stunning sites in South-east Asia, rivalling Cambodia’s Angkor Wat and Bagan in Myanmar. The 9th century temple was restored with UNESCO’s assistance in the 1970s and is already one of Indonesia’s most popular tourism spots, particularly among local visitors. Foreign travellers tend to visit on day trips from Yogyakarta, which is 40 km away. The government expects around 2m foreign visitors and 5m domestic tourists to visit Borobudur annually by 2019. More than 2m domestic and 250,000-300,000 foreign tourists currently visit the temple each year.

UNESCO has already warned of the pressures from tourism, urging Indonesia to revise the laws and regulations to prevent deterioration of the site. “The approach has to a degree already been compromised by weak developmental regulations,” the agency said in 2007. The single tourism authority that will be established in Borobudur may help the authorities better manage and protect the monument and its surroundings, for which a variety of organisations currently have responsibility – from the Ministry of Education and Culture to the local administration.

The central government has also promised Rp10trn ($730m) to develop new infrastructure for the temple area. It hopes private investors will spend another Rp10trn ($730m) to build international-standard hotels and other tourism-related facilities. Although Borobodur has top-class hotels, including the Amanjiwo, and benefits from its proximity to Yogyakarta, Gebbie believes there is ample potential to develop hotels in the area, especially those that can offer experiences that showcase the region’s cultural heritage, and the beauty of the volcanoes and rice fields that surround the temple.

Natural Assets 

Nature is the attraction at prioritised areas including Bromo, Lake Toba and Labuan Bajo. Bromo, named after the Javan volcano and a two-hour drive from Surabaya, is already well-known and popular with Indonesians. Future development should be fairly straightforward as the basic infrastructure is already in place. Indonesia also plans to step up development at Mandalika, a beach resort in southern Lombok that was first planned in the 1990s. Lombok is already making a name for itself in Muslim-friendly travel and an international airport opened on the island – just 20 minutes from Mandalika – in 2011. According to Tourism Solutions International, quoting Statistics Indonesia (BPS) data, international arrivals rose at a compound annual growth rate of 41% between 2011 and 2015.

Flights 

SilkAir offers direct flights between Lombok and Singapore, and AirAsia connects with Kuala Lumpur. There are more than 10 flights a day from Jakarta, but the Ministry of Tourism (MoT) has been working to convince airlines to open direct routes. In April 2016 it secured a preliminary agreement with Emirates for flights between Lombok and Dubai.

Mandalika already has some accommodation – notably the Novotel Lombok – and has been declared one of the SEZs that will offer incentives and tax-free allowances to investors. The first development agreements have been signed to develop two plots close to the Novotel, with Pullman and Club Med resorts under construction. The state-backed Indonesian Tourism Development Corporation (ITDC) is coordinating the project and plans to open 20 starred hotels in the area, which is known for its white sandy beaches and pristine water, over the next 20 years. The ITDC has also signed an agreement with US firm EBD Bauer to construct a desalination plant that will ensure Mandalika has clean water.

The development of the other priority destinations is likely to take longer, as some of them are remote and have little in the way of existing infrastructure. “No matter how beautiful somewhere is, if there is no infrastructure people can’t get there. Accessibility is important,” Didien Junaedy, chairman of the Indonesian Tourism Industry Board, told OBG.

Transforming potential into a thriving tourism destination is likely to take time, especially in some of the more remote locations that are being prioritised. “We have to be forward-looking,” Budi Tirtawisata, CEO of travel firm Panorama Group, told OBG. “It is not about five or 10 years, it’s going to be 20 years in the future.”

Labuan Bajo 

One of the Lesser Sunda Islands and lying east of Bali, Flores is the home of the komodo dragon, found nowhere else in the world. The island is increasingly popular with foreign tourists, and Labuan Bajo on its western tip has been named one of the 10 priority zones. According to official data, visitors to the Komodo National Park, a World Heritage Site, reached 95,410 (79.9% from overseas) in 2015, nearly three times the number that visited in 2009.

The renovated Komodo Airport opened in late 2015 with the ability to handle 1.5m people a year, up from 150,000. For now, it is serviced only by turbo-prop flights from Bali, but as the number of visitors increases, more connections are expected to become operational. Most tourists still arrive by boat and live on board, creating problems with waste management and the health of the coral where the boats anchor. There are some luxury resorts in the area, but hotel options remain fairly limited.

Sustainable Development 

The authorities will look to international best practice in developing priority areas to preserve fragile environments, and ensure local people benefit from the industry through jobs and entrepreneurial opportunities. “Community involvement in tourism is very important,” Dadang Rizki Ratman, deputy of destination development and tourism industry at the MoT, told OBG. “We want good services and products.”

Environmental pressures are likely to be greatest in the untouched destinations of Morotai in northern Maluku, known for its Second World War wrecks and some of the best diving in the world, and Wakatobi in Sulawesi. Some 80% of the land in Wakatobi has been designated for conservation, and locals are being trained as dive guides. “These are small, delicate ecosystems, which would benefit from high-end, low-volume tourism,” Gebbie told OBG. “Development regulation and destination management must be prioritised to ensure building is done according to code, profits are shared among communities and that the infrastructure is in place to ensure the destinations’ long-term sustainability.”

Domestic Bliss 

The remainder include the Thousand Islands off the coast of Java, Tanjung Lesung, which overlooks Krakatoa (designated as an SEZ) and Tanjung Kelayang (a beach destination in southern Sumatra and also an SEZ), according to the MoT. All are popular with domestic tourists, with Thousand Islands and Tanjung Kelayang popular as weekend getaways and conference destinations – a reminder that foreign travellers are not the only consideration as the country looks to tourism as an economic driver.

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The Report: Indonesia 2017

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