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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 currency earnings.

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.


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 market.

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