Tourism on the Rebound

Indonesia

Economic News

22 Jul 2010
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This week, the ministry of tourism announced the re-opening this year of tourism offices in 12 capitals around the world, including in Europe, Asia and the Middle East.



These offices had been closed due to the 1997 financial crisis, which led to a significant decrease in ministry funding.



Since the 2004 election of Susilo Bambang Yudhoyono, who has made economic recovery a central theme of his government, the country's GDP has been rising steadily. This has had a positive impact on the government's spending ability.



A World Bank review of public spending released this month shows that Indonesia's finances are reaching new heights. According to the report, "The reduction in fuel-subsidy spending in 2005, declining debt-service costs and increasing revenues have all resulted in a total of $15bn in additional financial resources - the largest amount since the 1973 oil-boom windfall - being available to the government to finance the development effort."



Part of this revenue will mean an increase in funding for promotional activities by the ministry of tourism. Jero Wacik, the head of the ministry, told the local media this week that "in line with improving the economy, we will reopen those offices this year to back the government's target of 1m additional tourist arrivals annually".



In the past decade, Indonesia has received an annual average of 5m tourists, much less than neighbouring Malaysia and Thailand. This can be attributed, in part, to the country's low budget for promoting tourism. Wacik explained spending, "was up to only $6m, far behind Malaysia, which is spending up to $60m for tourism promotion annually."



The 2006 target of 5.5m tourists was not met as only 4.8m visitors visited the island nation. Even so, according to Wacik, the target for 2007 is 6m tourists, with an expectation that a goal of 8m tourists can be reached by 2009.



Besides funding, another challenge for tourism promotion in Indonesia is security. In recent years, the country has been hit by a string of natural disasters and civil unrest. Terrorist attacks, a tsunami, bird flu outbreaks, earthquakes, sectarian violence and the recent flooding of the capital, Jakarta, have made headlines in the world media. All have contributed to damaging Indonesia's reputation as a tourist destination.



Another effort was the easing of the visa process for visitors. Wacik said, "Indonesia now has visas on arrival for tourists from 52 nationalities." Begun in August 2005, the tourist visa on arrival is now available in each of the country's 13 international airports.



Indonesia has extensive tourism potential, with the number-one destination for tourists being the island of Bali, which attracts visitors from all over the world.



Despite remaining a popular destination, the bombing commonly referred to the 'second Bali bombing' following the attacks in 2002, caused a significant decline in the number of tourists on the island. According to Wacik, prior to the bombings, more than 6,000 tourists a day visited Bali during the peak season. That number dropped to close to 500 after the attack and is now up to around 4,000 tourists per day.

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