Indonesia
The tourism sector is a significant part of Indonesia’s economy. In 2019, tourism directly accounted for 5.0% of the country’s GDP. The impacts of COVID-19 saw tourism GDP fall by 56% in 2020 to just 2.2% of the total economy.
Prior to 2020, tourism in Indonesia had been steadily growing, fuelled by an influx of international visitors. In 2019, international arrivals (overnight and same-day) reached 16.1 million visitors. In 2020, Indonesia recorded a 74.8% decline in international arrivals, to 4.0 million, with a total loss of IDR 208 trillion in international tourism expenditure. In 2021, international tourist arrivals further decreased to 1.6 million.
Domestic tourism is a driver of the Indonesian tourism economy. In 2019, domestic tourism accounted for 84% of tourism expenditure in Indonesia. Domestic trips (overnight and same-day) decreased by 27.4%, from 722 million trips in 2019 to 524 million trips in 2020. In 2021, domestic trips increased by 15.0% to 603 million. Approximately two-thirds of domestic trips in Indonesia are overnight. Domestic tourists are expected to be the driving force behind the recovery of the tourism sector in Indonesia.
Indonesia expects a recovery of international arrivals to pre-pandemic levels in 2024 at the earliest.
Tourism is under the responsibility of the Ministry of Tourism and Creative Economy (MoTCE), following the merger in 2019 of the Ministry of Tourism with the Creative Economy Agency.
The merger aims to diversify and support the tourism sector with the creative economy sector. The pandemic has proved that the tourism sector needs diversification as it cannot rely only on physical mobility. Diversification is needed to create a more resilient tourism sector where it will use a variety of tools, including but not limited to digital technology, the internet, and virtual reality.
In formulating policies, the Co-ordinating Ministry for Maritime and Investment has a Deputy of Tourism and Creative Economy who has a duty of co-ordinating and synchronising the formulation, decision-making process, and implementation of the policies of the relevant ministries and agencies related to tourism and creative economy issues, especially with the MoTCE.
The MoTCE regularly co-ordinates with various stakeholders in developing tourism and the creative economy and mitigating the impact of COVID-19. The Ministry is co-ordinating closely with the ministries of Health, Foreign Affairs and Communication and Information. MoTCE also regularly co-ordinates with the Ministry of Public Works and Housing in developing tourism destinations, especially in Indonesia’s priority tourism destinations.
The budget for MoTCE in 2022 increased to IDR 3.8 trillion. The budget was IDR 3.6 trillion in 2020 and IDR 3.45 trillion in 2021. The three main funding sources are government revenue, foreign loans, and non-tax state revenue.
Source: OECD adapted from Ministry of Tourism and Creative Economy, 2022.
The Ministry of Tourism and Creative Economy aims to prepare the tourism sector for an adaptive and sustainable future. The core themes in the coming years are recovery policies, which are set in place for 2022-23 to accelerate the recovery and increase productivity. Growth and acceleration are additional priorities in 2024-25.
In 2022, The Ministry of National Development Planning formulated the Institutional Framework for Tourism Policy Development. The formulation is divided into three broad categories: productivity, inclusiveness, and sustainability. In each category, there are several policy guidelines which MoTCE is to implement:
Productivity: involves increasing productivity through improving the supply chain, reskilling and upskilling resources, expanding the tourism market, supporting effective promotion, and accelerating the development of infrastructure, amenities, and attraction in the five priority tourism destinations. There are also plans to increase digital and creative exports and start-ups.
Inclusiveness: involves the improvement of tourism villages, revitalisation of creative economy infrastructure, and expanding the Enhancement National Products Usage Programme.
Sustainability: involves expanding the Health Protocol implementation and service standard in the tourism and creative economy (see box below) and the expansion of sustainable tourism.
Reskilling and upskilling of tourism businesses and stakeholders will be focused on local communities and MSMEs in marketing, destination management, digital literacy, entrepreneur assistance, and related subjects. Revitalising tourism destinations and infrastructure will be especially during the low season.
Indonesia also provides special assistance to Indonesia’s Tourism Villages to help develop infrastructure and management.
During the pandemic, health and safety became the top priority. In co-ordination with the Ministry of Health, in 2020, the MoTCE launched the Cleanliness, Health, Safety and Environmental Sustainability (CHSE) protocol, training, and certification to prepare for the reopening of the tourism sector post-pandemic. The protocol developed into several handbooks ranging from hotel safety protocol to specific destination models that can be applied to tourism businesses. The CHSE certificate aims to give assurance to visitors regarding the cleanliness, health, safety and environmental sustainability of destination amenities. Working with local certification institutions, the programme has certified almost 12 000 tourism businesses in 34 provinces or 403 cities. The certification will be renewed annually to ensure the tourism businesses’ adherence to the certification.