Destinations Asia

Indonesia’s Improving Economy Sparks 256% Spike in Tourism Investments

Apr 29, 2014 1:30 pm

Skift Take

Although the investments pave the way to greater tourism spend, growth is still concentrated to select cities limiting its positive impact and hurting the country’s greater economic growth.

— Samantha Shankman

Free Report: The Future of Personalized Marketing in Travel

Ananda Yoga  / Flickr

Dusk at the Legian Bali Hotel. Ananda Yoga / Flickr


Investments in tourism in the first quarter of this year increased by 256.43 per cent from year-ago level as improvements in the country’s economy attracted investors, especially in Bali and Lombok, according to the Tourism and Creative Economy Ministry.

Tourism brought US$130.13 million into the country in from January to March, up from $36.51 million in the same period last year, data from the Investment Coordinating Board (BKPM) shows.

“Investors have been more confident about investing in Indonesia because the country’s economy has been improving and has quite a stable outlook,” Lokot Ahmad Enda, the Tourism and Creative Economy Ministry’s director of destination planning and tourism investment, told The Jakarta Post on Monday.

Of the total tourism investment in the first three months, foreign direct investments (FDI) accounted for $117.24 million, while the remaining $12.89 million investment was made by domestic investors.

“Investment in the first quarter has mostly been directed at Bali and Lombok. However, we would like to diversify areas of tourism investments to other parts of the archipelago,” Lokot said.

“This year. we predict that overall tourism investment will increase significantly from last year, especially in the fourth quarter after the inauguration of the new president,” he added.

Investments in general make up about 30 per cent of Indonesia’s economy, but tourism investment only accounts for less than 5 per cent of overall investments infused into Southeast Asia’s largest economy.

Infrastructure bottlenecks are among the impediments of tourism investment, according to the Tourism and Creative Economy Ministry’s director general for destinations Firmansyah Rahim.

“Even if we have many beautiful destinations, investors will be reluctant if we lack decent infrastructure because their money would go to waste if tourists can’t access the hotels,” he said.

The Tourism and Creative Economy Ministry is currently working on increasing accessibility in potential tourist destinations in remote areas together with the National Development Planning Board (Bappenas), the Transportation Ministry and the Public Works Ministry.

International tourist arrivals in the country last year topped 8.8 million, or a 9.5 per cent increase from 8.04 million in the previous year, data from the tourism ministry showed. The agency is aiming to increase the number of inbound tourists to 9.2 million this year, a 6.8 per cent increase.

Indonesian Hotel and Restaurant Association (PHRI) chairwoman Wuryanti Sukamdani said Bali’s southern area — home to popular destinations such as Ubud, Legian, Tanah Lot, Kuta and Denpasar — was experiencing an oversupply of hotels.

“The governor has urged investors to spend their money in other parts of the island,” she said.

“Indonesia has many tourist destinations that barely have hotels. Investors should pay more attention to other areas instead of focusing on Bali.”

The tourism ministry plans to lure investors to other areas in the country that have high tourism potential, such as Anambas (Riau), Medana Bay Marina (West Nusa Tenggara), Samosir (North Sumatra), Wakatobi (Southeast Sulawesi), Bugam Raya (Central Kalimantan), Toba Samosir (North Sumatra), Mekaki Bay (West Nusa Tenggara), Tanjung Ringgit and Eight Islands (West Nusa Tenggara and Sumbawa), Sabang (Aceh), Tanjung Lesung (Banten), Bintan (Riau) and Belitung (Bangka Belitung).

(c)2014 the Asia News Network (Hamburg, Germany). Distributed by MCT Information Services.

Tags: , ,

Next Up

More on Skift

HomeAway Vacation Rentals Get Broader Exposure With Expedia Launch
3 Top Hotel Executives Get Candid About Growth Challenges in Latin America
Holiday Inn Express Turns to Digital and a Comedian to Build Its Brand
Making Business Travel More Personal for Next-Gen Business Travelers