Tourism is a unique activity, due to its complex nature which cover
nearly all of the aspects of human's life. Therefore, it is natural
that tourism development shall be viewed from various aspects of life.
Principle, tourism development in Indonesia is development which not
only concern about how to keep capability of nature condition or known
as bio diversity of land, water and air, but also all aspects of life that
need to be conserved, including social culture of human being.
Tourism development is directed to increase tourism to become main sector
which is able to promote economic activity including other related sectors.
It is intended to improve and take advantage various national tourism potentials
which can increase employment opportunities, state's income and foreign
From year to year, the amount of foreign tourist increases more and
more. In 1968 (beginning of Repelita I / Five Year Plan I), the amount
of foreign tourist still reached 86.000 people. This amount has been
increasing steadily reaching an amount of 4.006.3 12 people in 1991 (beginning
of Repelita VI). This figure has even surpassed the expected target
for this year, that is 3.950.000 people. Of the state's foreign currency
earning in 1983 tourism sector ranked the 7th next to oil and natural gas,
wood, rubber, textile and coffee. In 1994, tourism sector become
ranked 3rd next to oil and natural gas, with foreign currency earning as
much as USD 4.785.3 Million. The increased foreign currency earning
is not only due to increased amount of foreign tourism who visited Indonesia,
but also by increased foreign tourist's spending.
In 1995, foreign tourist visit reached an amount of 4.324.229 people.
This amount has surpassed the expected lowest target, that is 4.300.000,
and earned foreign currency as much as USD 5,2 Million. It is expected
that at the end of year 2005 (end of Repelita VII) tourism sector can become
main foreign currency source.
By considering trend of foreign tourist visit development and state's
foreign currency earning for period of 1968-1994 (Repelita I - VI) and
global and regional tourism change, and also analysing tourism resources
owned then at the beginning of 1994 targeted foreign tourist visit and
estimated foreign currency earning that can be reached in 1999 (end of
Repelita VI) that is target of foreign tourist visit is estimated 6 up
to 6,5 Million people with foreign currency earning as much as USD 8,2
up to 8,9 Million.
The exceeded target of foreign currency visits is inseparable from the
development of main aspects, either domestic aspect of foreign aspect,
i.e. marketing, product, accessibility and tourism infrastructure aspects.
In its marketing aspect, Indonesia has better opportunity because of its
image tourism has been improving. In addition to domestic tourism
events which has been better scheduled, Indonesia's tourism has also performed
joint promotion in the frame of bilateral and regional cooperation.
It causes marketing activity and tourism product have become increased
recently. Indonesia's opportunity in tourism's product aspect is
the increase of hotel room as many as 42.500, thereby total foreign tourists
that can be catered is 107.857 rooms. In addition, in line with the
increasing of intensive group who are fried by Garuda Indonesia especially
from Japan, Indonesia's position as "New Convention Destination" in Asia
Pacific is getting better.
Indonesia opportunity in accessibility and infrastructure aspects is
by developing international flight routes to several cities beyond the
four main gates which make up 23 international air gate today. In
addition to that, while developing domestic flight route which promote
local tourism development, amount of cruiser which call at several Indonesia's
port is also increasing. Behind opportunity factor, there are still
some challenging factors which hamper tourism development of Indonesia.
Among the challenges are the growth of new destination such as Cambodia,
Vietnam, Eastern Europe and Taiwan.
Other obstacles are that promotion by government and private enterprises
has not yet been well integrated, beside inadequate market information,
especially in tourism market segment. Although target and realization
of foreign tourism amount in 1995 is still relatively low, but target of
its increase in 1999 will not change much, that is as many as 6,5 million
people. This can be reached optimistically considering that tourism
supporting means owned by Indonesia's Government will consistently develop
opportunity factors, while trying to lessen hampering factors which will
become constraints in determining the target.
PROSPECT OF TOURISM
In its effort of raising the needed development fund, either Rupiah
or foreign currency, Indonesia's government also strives to decrease its
economic dependence to oil and natural gas sector by making tourism sector
to become one of main sources of foreign currency earning and even it is
expected to become the main foreign currency earner in 2005 whilst remains
referring to social cultural and environment aspects to improve Indonesia's
life quality and nation's welfare. It is expected that target of
tourism program for the year of 2005 who will visit Indonesia would be
1 1 million visitors. At that time, Indonesia's tourism industrial
transportation is expected to become main source of foreign currency earning,
employment opportunity opening, and tourism added value increase.
Therefore foreign currency earning from tourism sector is targeted to rise
to at least USD 15 Million or more or less three times than that of 1995.
Indonesia's government policy in attaining tourism program in 2005 among
others are In marketing sector. To perform marketing campaign by
picking up foreign tourist directly from their home countries. Even,
Director General of Immigration has issued Immigration Clearance on Board
policy, that is that Immigration checking to be done, either on board the
air plane or on the ship on the way to Indonesia. This policy will
enable foreign tourist or short term visitor who fly by Garuda Airways
from Japan (Tokyo and Osaka), or from Taiwan (Taipei and Kao Hsiung), not
to queue at Immigration counter when arrive at Soekarno-Hatta Airport or
Ngurah Rai Airport of Indonesia. This facility is also applicable
for ship's passengers from Thailand (Phuket), Malaysia (Port Klang, Penang,
Malaka and Langkawi), Papua New Guinea (Port Moresby), Australia (Darwin,
Sidney and Perth) and also The Philippine (Manila and Davao). As
soon as arrive at destination port in Indonesia, They can directly visit
tourism object without having to report for Immigration checking as it
has been done on board the airplane or ship on their way to Indonesia.
Immigration officer who handles Immigration Clearance is Indonesian Immigration
Officer who performs his duties on board.
In sector of tourism product. To determining tourism product in
the Eastern region, Western region and to accelerate tourism's product
development in Indonesia Eastern region. In line with that, efforts
are also taken to increase competitive power of tourism product in global
market through pricing policy. Effort in developing object and tourism attractiveness,
promotion activity and its marketing, either domestic or overseas market
is kept increased organizedly, integratedly, effectively among others by
optimally using regional and global tourism cooperation.
In sector of Human Resources. To prepare skilled and professional
manpower in tourism sector as well as to increase hospitality, comfortability,
service facility at the gate of tourism object and tourism region in Indonesia
Tourism Training and Education has been increasing followed by preparation
of better means and infrastructures for the purpose of increasing ability
to ensure fluency of service and also tourism organizing.
In sector of institution and regulation. Government has stabilized
product and regulation is adjusted with development and challenge which
will be encountered in the future. In sector of infrastructure and
accessibility. To take foreign tourism directly (point to point)
at a competitive cost while assuring comfort and improve public utilities
such as transportation, water supply, electricity and telecommunication.
In sector of investment. To give incentive to push investment
in Indonesia's Eastern region in accordance with the region condition,
in addition to improve investment in Indonesia's Western Region.
In sector of living environment. Indonesia's tourism development
is based on quality and friendly environment. In territory sector:
Priority of tourism destination is adapted to the region's potential in
the field of science and technology and information sector. To increase
information flow through data base circuit, information unit and adequate
'Computer Reservation system'. In sector of supporting facility:
To use and increase supporting facility such as security, health and regularity.
Globalization which is pushed by drastic progress in sector of technology,
especially telecommunication technology have smoothen flow of information
in all of its impact, positive or negative. Opportunity opens through
globalization is that international market becomes open wider to domestic
product especially to the product's competitive values. Challenge
in economic sector is that, in addition to stronger competition in international
market, inter country grouping also tends to increase market protectionism
and discrimination that can hamper domestic product marketing and push
up unfair competition.
Latest survey of World Economic Forum regarding global competition power,
in its report entitled Global Competitiveness Report of 1997 recently placed
Indonesia at rank 15th of World's most competitive country. Within
the circles of the New Big Emerging Market, Indonesia quoted as the most
competitive country. This is a big jump compared to prior position
ranked the 30th. It is admitted that no other country in the world
that can increase it rank as good as Indonesia. Of 53 countries surveyed
in 1997, World Economic Forum concluded that Indonesia's rank has been
improving from year to year, from rank 34th in 1995 to rank 30th in 1996,
then rising again to rank 15th in 1997. Evaluation of competitive
power by World Economic
Forum is based on 8 criteria, they are:
a. Economic openness to international trading and financing system;
b. Role of Government's budget and regulation;
c. Development of financial market;
d. Quality of Infrastructure;
c. Quality of Technology;
f. Quality of business management;
g. Flexibility of main labour market;
h. Quality of Politic and legal institution.
On the 8 factors above, Indonesia with some deregulation policies is
able to create added value and to improve its national welfare. In
actuality, Government is able to decrease high cost economy and increase
efficiency of worker performance of Government Body. Indonesia's
success in increasing its competitive power is because of its consistent
attitude in performing development based on well planned development.
Indonesia's national development is performed steadily in the long term
plan (25 years) and medium term plan (5 years), by effectively utilizing
all of its national resources to realize national development goal.
One of the bases in national planning and development is utility principle,
which means that all of efforts and activities of national development
shall be to give maximum advantage for human's life, to people's welfare,
and develop its individual citizen while giving priority to its culture's
noble value and conservation of living environment's function, within the
framework of sustainable and continued development.
Dominant factor which becomes basic capital of national development
is its wide territory and its strategic position which is located in equator
at cross boundary between two continents and two oceans with its natural
condition having various comparative advantages.
In its implementation, more increasing development needs increasing
cost that can not be fully funded from domestic source. Therefore
overseas fund is needed as complimentary to domestic capital.
The role of domestic capital and foreign capital fund are pushed to
stimulate economic growth and distribution, increase society's active role
in economic activity, and expand business and employment opportunities.
More attractive business and investment incentives are continuously developed
among other by providing adequate economic means and infrastructures, supportive
rules and regulations and simplifying investment procedures as well as
issuing right macro economic policy.
Economic and political stability and attractive business climate has
push in capital investment. If in 1967 - 1968, there were only 26
domestic investment projects agreed with investment value of Rp. 37,0 Billion,
then in 1993 - 1994 there has agreed 645 projects with investment value
of Rp. 38.147,9 Billion. Meanwhile, overseas capital is also increasing
drastically in amount and agreed investment value.
Monetary depreciation which is shaking the world recently, in fact do
not affect domestic (PNMN) and foreign capital investment (PMA) investors'
interest toward Indonesia. It is caused by the long and medium term
of investment, and investor's confidence on Indonesia's future economic
prospect. It is proved that up to end of October 1997, new agreed
project value, either for domestic capital investment or foreign capital
investment surpassed previous year figure.
Capital Investment Coordinating Board (BKPM) disclosed that until end
of October 1997, domestic investment (PMDN) agreement reached Rp. 105 Trillion
whilst in 1995 it only reached a figure of Rp. 99 trillion. Likewise,
foreign capital investment (PMA) has reached an amount of USD 29,1 Billion.
For same period, total investment in Indonesia has surpassed last year's
figure. Even in 1997 the figure is expected to increase more before
reaching end of this year. This fact proved that investment interest
in Indonesia does not decrease; on the contrary it increases. Monetary
depression which causes currency crisis does not makes confidence crisis
in sector of investment, especially in Indonesia. Generally, investors
think that fundamentally Indonesia's economic still open and has attractive
prospect in the future. Average economic growth of Indonesia still
reaches a rate of 7 % per annum with GNP of US$ 1000 per annum.
The blessing that can be taken from this post monetary depression is
a conclusion that the most profitable investment at present is export oriented
investment, as its opportunity is increasing. Even though, production
cost Rupiah will rise, however its selling price in USD has high value.
Furniture export potential from Central Java, or tourism supporting handicraft
from Bali for instance, have a big opportunity as overseas investor are
still interested in them. So is the opportunity in agroindustry sector.
Indonesia up builds small and medium scale industries including home
industry and other traditional industries, so they can become self standing
and more efficient business. And therefore it is expected to increase
people's income, and offer employment opportunity and increase their role
in preparing goods and services and components, either for domestic or
overseas market. Development of small and medium scale industries
are given incentives either in capital, permit or its marketing: In addition
to their involvement with big scale industries are also increased by establishing
a mutual benefit cooperation through partnership pattern.
Development trend of handicraft export in Bali for instance, describes
a good prospect for craftsmen of tourism supporting small industries.
During the last two or three years recently, the craftsmen prestige has
raised as they have established relationship as exporters when they begin
to get in touch with cross continent business. Their business relation
pattern generally is same, began when foreign tourist visit Indonesia and
interested in building business with them. With foreign tourist's
purchase order, export opportunity opens for craftsmen which before only
acting as supplier for big art shop.
Actually the so called foreign tourist herein, can not be said as pure
tourist because they do business trading even though not in a big value.
Generally, they are tourist with short time visit who comes to Indonesia
by using Free Short Visit Visa facility (BVKS) or Business Visit Visa (VKU).
Seen from Immigration view, holder of BVKS facility or VKU facility to
perform trading transaction is not acting against the law. In addition
to sales - purchase transaction they are also permitted to do field visit
to negotiate merchandise which will traded in export - import business.
There are other Immigration facilities given to them to perform business
activity, but not to work (read: Visa and Immigration Permit, Chapter Ille).
In addition to Immigration factor, Indonesia's infrastructure has been
enough available to support business and tourism activities. For
instance, transportation infrastructure with smooth roads connecting up
to countryside is available, the success in electricity program in 1990s
has also contributed to market mechanism to reach its target.
However, the challenging points faced in those efrort are funding obstacle,
human resources and technology which is still traditional in nature.
Being small entrepreneur they are, when faced with big order are, not able
to meet it. Therefore investor's role to process primary commodity
using high technology in order to increase it added value is highly needed.
That sector require more foreign investment because of their wider marketing
reach as well as bigger capital financing and technology mastery.
In developing production techniques, it applies progressive manufacturing
production plan in order to ensure continued and focused technologic transformation.
More advanced Production technical development of goods and services in
abroad needs to be followed, studied and understood by effort of adjustment,
skill improvement and work achievement.
Government keeps pushing on production technology mastery in developing
industry including engineering and design capabilities in order to ensure
goods and service of better quality and capable to compete in overseas