Indonesia: Eyeing new markets for tourists

Plans to consolidate Indonesian tourism growth from the first quarter include branching out into new areas such as Islamic heritage, sport and health tourism, but critics say it should first improve basic infrastructure and facilities.

Figures released on May 1 showed a yearly increase of 6% in tourist arrivals between January and March, with 2.02m holidaymakers recorded by the National Statistics Bureau (NSB). NSB chief Suryamin told media that in March alone there was a rise of 10.13%, to 725,300 visitors.

In 2012 Indonesian tourism contributed $9.07bn to the country’s foreign exchange earnings, 6.03% higher than the previous year’s $8.55bn. There was also a 5.11% increase in arrivals to 8.04m. Total investment in the industry reached $869.8m, an impressive 210.86% rise over the figure for the year before.

While such growth puts the country on target for its goal of welcoming 9m foreign holiday arrivals in 2013, it is hoping that its sizeable Muslim population and heritage will give it unique selling points in the emerging market of Islamic tourism.

It has targeted markets in the Gulf, with Jakarta having launched a major drive to attract more Saudi tourists with a promotion at the Mall of Arabia in Jeddah.

“This event aims to promote Indonesian destinations for the Kingdom’s residents, both citizens and expatriates,” said Nur Ibrahim, vice-consul at the Indonesian Consulate General, which organised the event in coordination with the Indonesian Ministry of Tourism and Creative Economy (MTCE) and Garuda Indonesia, the flag carrier.

The ministry has identified nine tourism destinations in Indonesia that have the potential to be promoted as sharia tourism destinations: West Sumatera, Riau, Lampung, Banten, Jakarta, West Java, East Java, Makassar and Lombok.

Another innovative promotional campaign involves Indonesia’s plans to become a centre for marathon running in South-east Asia, with thousands expected to visit solely to watch the Jakarta Marathon in October this year.

“We plan to make the Jakarta Marathon an annual event and we expect it can be one of the world’s major marathon events in the next five years,” Rizki Handayani, the special interest tourism director at the MTCE, told The Jakarta Post in May.

Given the country's emerging middle class, it is no surprise that officials are also targeting domestic tourism to make a bigger economic contribution in coming years. Indonesian tourists’ expenditure reached Rp171.5trn ($17.84bn) in 2011, an increase of 9.3% compared to 2011.

“There was a 40m increase in the number of middle-class Indonesians between 2003 and 2010,” Indonesia Investment Coordinating Board chairman, Chatib Basri, said at a conference in May. “People are willing to pay $200 per dish at a food festival with a celebrity chef from France, and they spend thousands of dollars to buy batik products, something that would not have happened five years ago,” he noted.

Rising hotel investment suggests that – whether local or foreign – visitors will have plenty of places to stay. Radisson has signed a cooperation agreement with Panorama Group, a local tourism, transport and hospitality conglomerate, to build 12 hotels in Indonesia over the next three years, while French firm Accor will develop 57 hotels on various islands during the same period. Other major hotel chains committed to future investment include Hilton and Marriott.

However, despite the wave of visitors, ideas and investment, the tourism industry faces major challenges related to poor infrastructure, including a lack of facilities like hotels and restaurants, and concerns about safety and security, particularly in internal air links. In April, a Lion Air jetliner crashed just short of a runway in Bali, landing in the water. No one was injured, but it was a reminder of the darker days of the industry.

It is for these reasons that the tourism ministry says that it is focusing on improving the transport and tourism infrastructure at 16 areas over the next three years. Furthermore, some airlines are adding routes to high-potential source markets. At a tourism conference in Germany in March, Emirsyah Satar, the president of Garuda, announced direct flights from Jakarta to London will begin in late 2013.

By focusing on improving existing facilities while eyeing new markets, Indonesia is showing the competitiveness needed in South-east Asia’s tough tourism market. However, it needs to ensure that infrastructure and human resources keep pace.

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