Indonesia is very popular archipelago with thousands of beautiful islands. Hundreds of different ethnic groups live in these islands who speak different languages. This diversity of Indonesian nation makes it very unique and worth visiting the place. The natural beauty of this country is not inferior to its neighboring countries; Singapore and Malaysia but tourism in this country is way less than its neighbors.

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Last year Singapore hosted more than 15 million tourists and Malaysia hosted more than 27 million tourists but Indonesia found it very difficult to even attract 10 million tourists. This archipelago has all tourist attraction including beaches, clubs, luxury hotels, restaurants, hills, mountains, lush green parks, amusement centers, historical places, architectural marvels, and nightlife but still tourism market of this country is not as successful as it should be. 10 million tourists in one year may seem very high for lots of countries in Asia but according to the standards of Indonesia’s neighboring region, these tourists are not enough to boost the economy of the country. There are lots of reason behind this lack of tourism. Here you will find out everything about the tourism sector and travel business in Indonesia. At the end, forecast about the tourism sector is also presented to help out travel agencies, traveling agents, tourist, and traveling managers to plan their activities accordingly.

Current Situation of Tourism in Indonesia

The number of tourists arriving in Indonesia is increasing every year but the increment is not very high. In 2014, 8.8 million people visited this country. In 2015, this number increased to 9.43 million and in 2016 Indonesia managed to host just more than 10 million tourists. The Indonesian government knows the importance of tourism for the economy of the country, therefore, it is making plans to improve this sector by improving the overall infrastructure. Currently, almost 9% of the Indonesia’s total workforce is directly associated with this sector. The percentage is overwhelmingly high which indicates the dependency of this country on this sector. It is estimated that on average one tourist in this country spends almost 1100 USD on a single trip. It is major source of earning for this country. By the end of 2016, tourism was comprising 4% of country’s total GDP. The government wants to increase this percentage to 8% by the end of 2019. This target is undoubtedly over ambitious but it clearly indicates the mindset of government. To achieve this target, the government will need to attract at least 20 million tourists which seem very unlikely right now. There is a need to improve the traveling facilities, ICT services, and residential facilities. When a person plans to visit a country he expects safety, comfort, and pleasure. If a country fails to provide anyone of these facilities, then people hesitate to visit such place.

Government’s official statistics meant a lot especially for traveling agencies because they make their strategies according to those statistics. Last year, Indonesian government changes the definition of tourist and put all foreign visitors in the category of tourists. Due to this reason, Indonesia saw more than ten million tourists. In reality, the number of genuine tourists is less than this number. However, these stats show that lots of people also visit Indonesia for business purposes and these visitors are more than willing to pay good money for the safe and comfortable stay. Most of business travelers travel on the behalf of their company, therefore, don’t compromise on the comfort.

Challenges for Tourists in Indonesia

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Tourism in Indonesia plays an important role in Indonesia economy. But due to some critical reasons, the ratio of tourists is decreasing day by day. The main cause of this reducing percentage is terrorism. These attacks on Indonesia target the foreigners in Indonesia or inhabitants of Indonesia. Foreigners from the United States and Australia are especially in danger. That is the reason western visitors are not able to visit without any fear. Travel warnings by those countries whose people are killed in terrorist attacks have badly damaged the Indonesia’s tourism industry. The investment plans of foreigners are also severely affected.

A car bomb killed two people and 21 injured, on 1 August 2000 in Menteng, Jakarta. This car was outside the residence of Philippines Ambassador. Another bomb exploded on 14 September 2000 in South Jakarta in the basement of Jakarta Stock Exchange. This attack killed 15 and 27 injured. Soekarno-Hatta International airport was also targeted as a bomb exploded at Kentucky Fried Chicken restaurant that injured eleven people. On 31 December 2005, at Jimbaran Beach Resort and Kuta in Bali two suicide bombs exploded that cause the death of 23 people and injury of 100 persons. Last year 14 January 2016, at Starbucks cafe in Central Jakarta by suicide bombing killed 5 men and 24 injured due to gunfire.

These incidents have affected visiting interests of foreigners in Indonesia. Fortunately, from 2005 to 2008, no major terrorist attack occurred as a result of this Government of United States lifted its warning against visiting Indonesia. After this 227,000 Australians visited Indonesia in 2006. As a result of this, the tourists’ arrival rate started to rise. 314,000 tourists entered Indonesia following year.

Other than terrorism, some unconducive policies of different regions also affect the tourists’ rate in Indonesia. As restriction against alcohol imposed by Islamist parties and organizations of Indonesia. As a result of this tax rate of alcohol is highest in the world. This increased the rate of alcoholic beverages. This activity is harmful to bar and clubs in Indonesia.  Another unconducive policy is strictness of nightlife as local authority launched a raid on clubs and karaoke. Policy to reduce the use of drugs that is inconvenient for visitors.

Violence due to regional conflicts is also a major cause for fall of tourist rate. The sectarian and separatist conflicts badly affected the roots of the tourism industry in Indonesia. As Papua is still affected by Papuan separatism.

In the World Economic Forum’s Travel and Tourism Competitiveness Report, which “measures the arrangement of variables and approaches that empower the practical advancement of the Travel and Tourism division, which thusly, adds to the improvement and aggressiveness of a nation,” Indonesia hopped from rank 70th in 2013 to 50th in 2015, a noteworthy change. This hop was brought on by Indonesia’s quickly developing number of remote guest landings, national prioritization of the tourism business and interest in foundation (for instance the cell phone arrange now covers most territories of the nation, while air transport framework has been extended). The report expresses that the upper hands of Indonesia are value aggressiveness, rich regular assets (biodiversity), and the nearness of a few legacy locales.

Be that as it may, the report likewise expressed that Indonesia is not putting enough accentuation on natural maintainability (bringing about deforestation and imperiled species, while just an insignificant part of the utilized water is dealt with). The report additionally says wellbeing and security concerns, particularly the business cost of fear based oppression. Another worry is that Indonesia lingers behind Singapore (eleventh), Malaysia (25th) and Thailand (35th) in the positioning of the 2015 Travel and Tourism Competitiveness Report.

The absence of satisfactory foundation in Indonesia is a constant issue, not just on the grounds that its raises coordinations costs steeply along these lines making the speculation atmosphere less alluring additionally in light of the fact that it confines the smoothness of going for sightseers. Framework on Bali is awesome and worthy in Jakarta (aside from the grave activity blockage) however outside Bali and Jakarta a large portion of the nation’s foundation is lacking, especially in the eastern piece of Indonesia where there is a deficiency of airplane terminals, ports, streets and lodgings. The absence of entomb and intra island availability implies that various Indonesian locales that contain enormous visitor potential can’t be come to effectively.

Other than framework, instruction likewise shapes a deterrent. In spite of the fact that on the island of Bali and in addition in the lavish inns of Jakarta most local individuals working in the tourism part are truly conversant in English (and once in a while even other non-Indonesian dialects), in the more remote zones of Indonesia locals experience issues to speak with vacationers. Hence, an attention on the investigation of English would beat this circumstance. This dialect boundary has been explanation behind a segment of Singaporeans to pick Malaysia as their vacation goal rather than Indonesia. Most outside guests that enter Indonesia originate from Singapore, trailed by Malaysia and Australia

Visa Policies for Tourists

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Indonesia I easing its visa policies to attract more and more people. In 2015, they allowed citizens of 45 countries to enter in any Island of Indonesia without visa. This exemption is only for visit visa. It means if someone want to visit Indonesia for any business, education or employment purpose then he must acquire appropriate visa and permission. Government observed increase in number of tourists from these 45 countries therefore government decided to give visit visa exemption to more countries. In 2016, they give exemption to 124 more countries. Now citizens of 169 countries can visit Indonesia and stay there for maximum 30 days without acquiring any visa. This exemption is expected to increase tourism to great extent. There are some negative aspects of this exemption. First of all, it can make Indonesia slightly instable because criminals can use this exemption as a free pass to escape from their countries. Moreover, every tourist had to pay 35 USD to acquire visit visa of Indonesia and with this exemption policy Indonesia said good bye to 11 million USD that it collects in name of visa fee. These negative aspects are far less than the positive impact of this regulation. It is estimated that every year 450,000 more tourists will enter Indonesia due to this visa free policy. It has been calculated that every tourist spends almost 1100 USD to 1200 USD on his single trip to Indonesia. It means Indonesia will get 45 million USD from these 450,000 tourists every year. This money will not go directly to the government but some portion of this money will go in government’s pocket and certainly it will increase the overall GDP of the country. So this new policy seems very promising and it can give good results if government managed to convince foreigners about the security for foreigners in the country.

How to Enter in Indonesia

Ngurah Rai International airport on Bali is the most used entry for foreigners in Indonesia. This is also known as Denpasar International airport. It is the main airport in Bali, located 13km south of Denpasar. This island is a famous destination for tourists in Indonesia. This is most liked place of Indonesia’s Hindu minority as they depict their culture and art. It is beautiful countryside. This island is home to religious sites such as Cliffside Uluwatu Temple. The island is also known for its yoga and meditation retreats.

Soekarno-Hatta International airport is the second main point of entry. It is located at Benda,  approximately 20km northwest of central Jakarta. The Soekarno-Hatta airport has three terminals. Jakarta is Indonesia’s massive capital. Before traveling to the other parts of Indonesia, tourists stay a couple of days in Jakarta. It is also economic center of Indonesia. Many foreigners use tourist visa that is valid for 30 days to participate in business meetings or events in Jakarta. But this is not allowed by law to do so.

Batam is the third most used port to enter Indonesia. Batam is a small island in Indonesia’s Riau Archipelago in the south China Sea. It is rapidly developed into industrial town and transport hub. Batam is known as the leg of Indonesia-Malaysia-Singapore Growth Triangle. Tourists who want to visit Indonesia after visiting Singapore and Malaysia, usually enter Indonesia through this gate.

Opportunities in Indonesia’s Tourism Industry

Although Bali has been previously the dominant tourist resort in Indonesia, the government’s ‘Wonderful Indonesia’ campaign has shown the country in a new light and hence upped their tourism game. However, it has also revealed the overabundance of still-untapped economic opportunity contained within this vast island archipelago.

Targeting tourism

The campaign (which began in 2011) has transformed Indonesian tourism into a vibrant, lucrative, and rapidly growing industry. Other than the national ‘gems’, like the ancient Borobudur Temple and the Komodo National Park, a host of new destinations are becoming established like Bintan, Maluku, and Lombok.

In Indonesia, tourism is responsible for creating close to 10 million jobs. Given Indonesia’s expanding tourism industry, economic opportunity is in abundant and the investors should be aware. Below are a few opportunities for the business minds to consider:

Equity Financings

Not everyone has the talent, time or energy to run a business and you can help these people out. These set of people although having the capital, but no sense on how to use it. You can show them your business plan and convince them why they should invest in your business and before you know it, you will have a lot of funds coming in from all over the world.

Leasing

Then you have the option of leasing. If you are planning to start an equipment-based business or a business like haulage, taxi services, etc. then you may want to consider leasing some or all of the vehicles or any other equipment you need. This will help you in a way that you will be able to spread your payment over an extended period and live comfortably. With so many people coming from all over the world as a tourist, you shouldn’t question the job’s credibility on paying some bills.

Hotels

The best way to earn in any country is by opening up a hotel and since a lot of expatriates, visitors, and business tourists visit Indonesian regularly, you will be set for life. You can make money by providing accommodation to the visitors or even, by starting an online hotel marketing service where people can book for hotels months before they visit Indonesia.

App Developers

App developers are known to be gathering in good cash these days. You can become a mobile phone app or software on your own. You don’t necessarily have to be a tech expert to develop apps, but you use some help from the experts if you feel like it.

Internet Service Providers

Another business idea for you to evaluate is becoming an ISP provider. The fast and reliable internet in Indonesia is as important as it is in other parts of the world and seeing how much internet is being used, you could make a ton load of money.

Dress Making

Now is your chance to have your own clothing line. If that is too much, start small by just making local Indonesian dresses like Kaftans which you can sell to the locals and people from other parts of the world.

The administration’s ‘Superb Indonesia’ crusade (which started in 2011) has changed Indonesian tourism into a lively, lucrative, and quickly developing industry. Close by national “jewels” like the antiquated Borobudur Temple, the jumpers’ sanctuary of Raja Ampat, and the Komodo National Park, a large group of new goals are getting to be distinctly settled – among them Bintan, Maluku, and Lombok.

Tourism Industry

Tourism is in charge of making near 10 million employments, and a year ago the legislature apportioned a further Rp.1.3 trillion (US$98.4 million) to advance tourism. That year it contributed 9.6% of aggregate GDP – behind Indonesia’s top workers of oil, gas, coal, and palm oil.

Pastor of Tourism Arief Yahya reported that in 2019, tourism would be Indonesia’s greatest remote trade worker. At that point, he needs tourism’s commitment to national GDP to have multiplied, getting US$24 billion every year.

20 million tourists

The target to achieve 20 million visitors by 2019 is similarly aspiring. The current year’s objective is 12 million; the aggregate a year ago was 9.73 million. To bolster these objectives, the Asian Development Bank consented to loan Indonesia US$10 billion throughout the following five years.

Business travellers 

Business tourism falls behind recreation tourism: in 2014, add up to business travellers (3.16 million) were a large portion of that of relaxation visitors (6.27 million). Occasions like the 39th PATA (Pacific Asia Travel Association) Travel Mart, as of late facilitated in Greater Jakarta, mirror the potential for business tourism. That occasion pulled in 1358 representatives from 63 nations, and the tourism service must work with organizations to convey more occasions like this to Indonesia later on.

Business tourism could encourage the extension of the cordiality ventures, especially high-class lodgings and eateries (and different scenes appropriate for meetings and displays). The legislature as of late adjusted its ‘Negative Investment List’ with the end goal that outside financial specialists have more prominent access to (and responsibility for) organizations – incorporating into the tourism and neighborliness enterprises. Considerable money infusions ought to help financial development, making more employments and encouraging more imaginative endeavor, to guarantee Indonesia remains all-inclusive focused.

Go outside of Bali stays testing, and the framework need a critical patch up. The administration has reacted to this expanded request by declaring arrangements to grow current airplane terminals and develop new ones. This is a fundamental technique: after the redesign of Labuan Bajo air terminal, Komodo Island, home of the imperiled Komodo mythical beast, can oblige 1.5 million sightseers every year (prior to, the number was 150,000).

Forecast for Indonesian Tourism Sector

With expanding quantities of remote guest entries (both vacationers and outside businesspeople) in blend with +5 percent GDP development and venture development, there is developing interest for inns, townhouse inns (which join components of lofts and inns), and additionally meetings and display scenes. In the event that the administration focus of inviting 20 million outside guests by 2020 is without a doubt accomplished then there is a lot of requirement for interest in the nation’s cordiality industry. In addition, the ASEAN Economic Community (AEC), which will see its introduction to the world toward the finish of 2015, suggests escalating exchange relations in the ASEAN locale (bringing about more interest for lodging housing and so on).

Be that as it may, Bali and Jakarta have as of now observed a substantial inundation of interest as of late (particularly in the upper end of the market) prompting to extreme supply. Financial specialists who need to build up inns in these areas (and in addition existing inns) need to concoct unique and innovative new ideas to wind up market pioneers.

We are a marketing agency based on Shanghai, French and Hongkong. We are professional in Chinese market to help expat companies and individuals promote their business in China.

Further Reading:

The Chinese Outbound Tourism Market

 

How a travel agency ‘kick started’ the Chinese travel trend in Indonesia