President Joko Widodo Visit Lake Toba - Photo by President Office

JAKARTA (TheInsiderStories) –  As the government looks to diversify the nation’s economy and reduce dependence on natural resources like coal and palm oil, increased tourism offers a logical and immediate solution.

President Joko Widodo’s administration had laid out an ambitious plan for tourism, aiming to attract 20 million foreign tourists by 2019. Last year, foreign tourist visits reached 11.5 million.

To achieve that goal, the government has instituted two key programs. First is the visa-free policy for foreign tourists, expanded to cover 84 countries. Second is to offer tourists new destinations outside the hugely popular but very crowded Bali.

Fortunately, Indonesia is blessed with beautiful landscape as tourist destinations, much of which is often overlooked due to poor infrastructure. Therefore, the government has launched development projects in 10 new destinations dubbed as “the new Bali.”

Indonesia Minister of Tourism Arief Yahya said so far Indonesia’s revenue from tourism sector only supported three destinations, namely Bali, Jakarta, and Riau Islands. These three destinations contributed at least 90 percent of the number of foreign tourists coming to Indonesia, first Bali (40 percent), followed by Jakarta (30 percent) and Riau Islands (20 percent).

He said Indonesia needs up to US$20 billion from public or private investment to develop sufficient infrastructure and attractions in these new destinations.

Indonesia’s Investment Coordinating Board (BKPM) has offered 17 tourism projects to investors to support the development of three out of 10 of these so-called “new Balis”, namely, Lake Toba in North Sumatra, Borobudur Temple in Central Java and Tanjung Kelayang in Bangka Belitung.

The projects are worth a total of $2.9 billion, which includes the construction of hotels, golf courses and basic infrastructure.

He added that $2.3 billion was needed for five projects to support the Lake Toba destination, $562 million for 10 projects to support the Borobudur destination and the remaining funds to construct two hotels to support Tanjung Kelayang.

The former investment manager stressed that improving tourism destination potential is not only about investment. It takes work together to support improvements in the sector, such as transportation, adequate airports, immigration issues, until urban conditions are set. All must provide comfort for foreign tourists.

“It should be integrated and comprehensive,” said Lembong.

Although there are still various regulations that hamper the growth of investment in the tourism sector, the investment figures are rising. Indonesian tourism has an annual growth of 35 to 40 percent, compared to an average national investment growth of between 12 and 14 percent.

According BKPM data, 2013 investment in tourism contributed 1.45 percent to total national investment, while in the first half of 2017, it reached 3.67 percent of total investment, or $929 million in value.

Yahya said a visit by 20 million foreign tourists in 2019 would translate to a contribution of Rp260 trillion (around $19.26 billon) to Indonesia’s foreign exchange reserves, which would top the amount from the palm oil industry, currently the largest contributor in Indonesia.

“Tourism could be the DNA for our economy and in 2019 the tourism sector is set to become the largest foreign exchange reserves contributor,” he said.

US$1: Rp13,500

Writing by Elisa Valenta, Email: elisa.valenta@theinsiderstories.com

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