ASEAN business opportunities

According to the latest data released by Indonesia's Central Statistics Bureau, from January to November 2023, Indonesia received 10.4 million international tourists, an increase of 110.86% year-on-year, exceeding the total number of international tourists received in 2022. This figure equates to 173.49 per cent of the lower target and 122.46 per cent of the upper target for attracting foreign tourists in 2023, but still falls short of the 14.7 million arrivals in the same period in 2019. Minister of Tourism and Creative Economy Sandhyaga Uno said that the Indonesian government will continue to vigorously develop quality and sustainable tourism, aiming to attract 9.5 million to 14.3 million international tourists to Indonesia by 2024, while increasing the domestic tourist cap to 1.5 billion.

In the past year, the number of foreign visitors to Indonesia exceeded its target. Uno said that in 2023, the number of international tourists in Indonesia will exceed 11 million, compared with Indonesia's earlier target of 6 million to 8.5 million foreign tourists in 2023.

During the same period, Indonesia's domestic tourist arrivals reached about 749.11 million, up 15% from 2019, but domestic tourist arrivals for the full year are expected to fall short of the expected target of 1.2 billion to 1.4 billion. In November 2023, the number of domestic tourists in Indonesia was 60.33 million, down 3.77% month-on-month and up 12.02% year-on-year. The provinces on the island of Java are both the largest source and the largest destination for domestic tourists. In November 2023, 74.25% of Indonesia's domestic tourists originated from Java, with West Java and East Java provinces being the largest source and destination of domestic tourists respectively.

As one of Indonesia's top tourist destinations, Bali received more domestic and international tourists in 2023 than expected, but still fell short of 2019 levels. According to the Bali Provincial Tourism Authority, by the end of 2023, the number of foreign tourists to Bali was about 5,328,000, while the number of domestic tourists was as high as about 9,877,900, which has also caused debate about "overtourism". Addressing issues such as airport congestion, Uno said that factors such as the concentration of tourists and the lack of tourism regulation have led to the problem of "overtourism", while in fact, the current number of tourists in Bali is still about 30% lower than in 2019.

At present, Indonesia is considering a number of policy initiatives to further accelerate the development of tourism, planning to introduce a new visa-free policy is one of them, Indonesia's Ministry of Tourism and Creative Economy has proposed to achieve visa-free entry policy for 20 countries with the highest number of foreign tourists. On January 7, Uno said that relevant policies are being studied and improved.

In addition, a new tourism law is expected to be promulgated within the year, which will further regulate the development and construction of tourism hardware and software, including tourism villages, tourism education programs, tourism entertainment and culture. Uno said that the government is now stepping up consultations with relevant stakeholders in the hope that the bill can be passed by mid-2024.

At the same time, Indonesia is also accelerating the establishment of a tourism fund. According to the instructions of President Joko Widodo, the Fund aims to support the implementation of tourism promotion activities in Indonesia to support high-quality and sustainable tourism development, including hosting large-scale international events, promoting the national brand or enhancing the national image. Uno said the fund, which will focus on sustainable, quality green tourism and prioritise the islands' cultural strengths, hopes to be operational during the Joko administration's term or by mid-2024. A series of large-scale international events held in Indonesia in recent years have generated huge economic benefits. These include the G20 Bali Summit, the ASEAN Summit and creative economic activities such as sports, music, art and culture. The World Motorcycle Championship held in October 2023 alone has brought more than 8 trillion rupiah to Indonesia's economy.

Uno said that the tourism fund will initially target 1 trillion to 2 trillion rupiah, and will continue to expand in the future. At present, the Government is preparing various options to maintain the funding source of the fund without placing too much pressure on the state finances and burden on tourists, seeking a sustainable balance between the two, thereby helping to improve the quality and sustainability of Indonesia's tourism industry. In the first year of the fund's operation, government finances will provide grants and no related fees will be charged to visitors.

Health tourism will be a new growth point for Indonesian tourism in 2024. The Sanur Special Economic Zone in Bali, Indonesia's first health Special economic zone, will be operational in 2024 and will provide health tourism and rehabilitation services for Indonesian and domestic tourists. Covering an area of 41.26 hectares, the special zone not only boasts the natural beauty of Sanur and Segarayu beaches, but also offers medical facilities with international standards as well as hotels, botanical gardens for ethnic medicine, business centers, conference halls, retail areas for health markets, etc. Uno said the health zone has the potential to generate $5 billion to $6 billion in revenue. About 600,000 to 2 million Indonesians go abroad for medical treatment each year, spending nearly $11 billion on overseas medical treatment. With the completion of the Sanur Special Economic Zone, people will be able to access international standard medical and rehabilitation services in Indonesia without having to travel abroad.

Indonesia has rich tourism resources and its status in the international tourism industry is constantly rising. In 2023, Indonesia rose 12 places to 32nd place in the global Tourism Development Index, higher than Malaysia, Thailand, Vietnam and the Philippines in the region. Indonesia also ranks first in the Global Muslim Travel Index. Tourism in Indonesia not only contributes directly to gross domestic product (GDP), but also has a significant knock-on effect on activities in other economic sectors.

According to the relevant data of the Ministry of Tourism and Creative Economy of Indonesia, as of September 2023, the foreign exchange value of the tourism industry has reached 10.46 billion US dollars. This number is expected to increase further in 2024. At the same time, the contribution of tourism to Indonesia's GDP is also increasing. In 2022, tourism accounted for 3.6% of Indonesia's GDP. Indonesia expects the contribution of tourism to Indonesia's GDP to increase to 4.5% in 2024 from 4.1% in 2023. Currently, Indonesia employs about 22 million people in tourism and 24.3 million people in the creative economy. Uno said that as the two economic sectors continue to intersect, the number of Indonesians who rely on tourism and the creative economy to make a living has reached 38 million.