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“The 10 new Bali” project in Indonesia: What is it, and why will it shape the future of Southeast Asia’s tourism industry?

President Joko Widodo and his ministers have spent time seeking overseas investment to fund the project known as the Ten New Bali project. The project, announced in February 2016, is a government initiative to develop ten new tourist hubs across the country.

According to 2016 statistics, the vast majority of foreign tourists spend their time in Indonesia on Bali (49%) and Java (30%). Those two islands together account for just 7.6 per cent of Indonesia’s total land mass. Attracting visitors to other areas will be essential to plans aimed at expanding the Indonesian tourism industry. According to the Ministry of Tourism, the tourist destinations chosen for development are already known as tourist attractions, but would greatly benefit from better access and more amenities.
One of the locations selected, Lake Toba, is a good example. Lake Toba is well known among tourists travelling to Indonesia but has lacked easy access. Before a new international airport was built in Silangit, to get to Parapat near Lake Toba, most tourists had to catch a domestic flight to Medan (over two hours from Jakarta), then head to the lake via bus or car, which took another four to six hours. With the new airport, however, travel times will be reduced to only two hours. That will significantly increase the prospects for tourism in the Lake Toba area. The government hopes to see the first international flights to the new airport sometime this year.

 

10 new Bali project
The 10 new Bali project

 

The chosen locations of the Ten New Bali project are: Lake Toba (North Sumatra), Tanjung Lesung (Banten), The Thousand Islands (Jakarta), Tanjung Kelayang Beach (Bangka Belitung Islands), Borobudur Temple (Central Java), Mount Bromo (East Java), Mandalika (West Nusa Tenggara), Labuan Bajo (East Nusa Tenggara), Wakatobi (South Sulawesi), and Morotai Island (North Maluku). The three priority locations that will be focused on first are Mandalika, Borobudur Temple and Lake Toba.
In developing those locations, the government hopes to expand tourism as an economic behemoth, without devaluing existing tourist destinations. It is highly unlikely that Indonesia could accommodate twenty million tourists in 2019 without diverting some of those tourists to locations other than Bali. That would have the added benefit of creating local jobs in the new tourist areas.

Comparing the number of foreign and local tourists within a given province during 2016, as shown in Figure 2, shows that the vast majority of foreign tourists stayed in Bali, while Indonesian tourists mostly confined themselves to Jakarta, Central Java and East Java. The figures are somewhat generalised, however, as they look at the number of tourists staying in the entire province, rather than the specific locale of the tourist attraction that the government wishes to develop. Still, the stark contrast between the numbers shown in Figure 2 indicates that the popularity of tourist destinations within these provinces differs significantly.
It is likely that the government sees an opportunity to replicate the success of Bali elsewhere. In their current state, however, most of the destinations earmarked for the Ten New Bali project do not have the capacity to handle a major influx of tourists, nor do they have easy access in the first place. It raises the question of whether the government is being too ambitious in its plans, especially when taking into account the previously-mentioned lack of funding for the associated infrastructure projects.

 

10 new Bali project Lombok
Lombok Island – Torok Bay | © Invest Islands

Target Markets

If the Indonesian tourism industry is to achieve the targets that have been set for it, Jokowi will need to concentrate on the Chinese market. As seen in Figure 3, Chinese visitor numbers have just overtaken those from Singapore, Malaysia and Australia, the three source markets that have traditionally dominated the Indonesian tourism industry. Over the past ten years, tourist numbers from China have grown by 428%, a growth rate only topped by Bangladeshi tourists, who still only account for 0.34% of all inbound visitors. If current trends continue, Chinese visitors could make up 20 per cent of all inbound tourists by 2019, up from 14 per cent in 2016.
While the growth in the number of Chinese tourists is strong, the Indonesian Government also has an opportunity to entice them to spend more. On average, a Chinese tourist spends approximately $1,383 per visit, compared to the average of $1,423. In developing strategies to increase tourist spending, however, it is worth considering that shopping no longer appears to be the primary motive for travel among Chinese tourists.
While Chinese tourists make up the bulk of inbound arrivals in the Indonesian tourism industry, some attention should be focused on promoting halal tourism. Halal tourist services are differentiated from standard services by adherence to Muslim laws and customs, such as alcohol- and pork-free hotels and restaurants and separated swimming areas or prayer rooms for men and women. That can be difficult to offer due to a lack of international standards and the fact that many Islamic customs and laws can be interpreted differently among different Muslim communities. It is, however, an emerging market that could hold great potential for the Indonesian tourism industry.

 

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Indonesian moroGP Circuit in Lombok
Kuta Mandalika project map | invest islands

 

Tourists from the Middle East, for instance, spend approximately $2,284 per visit, far more than the average tourist, but only around 200,000 nationals from that region choose to holiday in Indonesia annually. Halal tourism is a relatively new concept in Indonesia, with the soft launch of a halal tourism programme taking place in 2012 and regulations for Sharia-compliant hotels being introduced in 2014. In an annual report produced by Thomson Reuters, Indonesia is ranked as the fourth-best developed Islamic economy for Muslim travel, behind Malaysia, the United Arab Emirates and Turkey. As the report says:
Indonesia moves into the top ten straight to the fourth place, realising its potential as a top destination for Muslim [travellers], aided by substantial efforts to develop Halal Tourism in the country, reflected in a high ecosystem score, as well as a substantial increase in media discussion on halal tourism.
Promoting halal tourism should not be confined to Middle Eastern countries alone. South Asian countries, such as India, Pakistan and Bangladesh, are all in relatively close proximity to Indonesia. In 2016, approximately 500,000 tourists from the South Asian region visited Indonesia.

 

10 new Bali project muslim target
Halal business target

 

Given the popularity of Bali for Australian holidaymakers, Australia may be seen more as a solid, reliable market, rather than a priority for the Indonesian tourism industry. Even so, it still holds great significance in the overall bilateral relationship. In a previous Strategic Analysis Paper, tourism was identified as the most important aspect of the Australia-Indonesia economic relationship, from the perspective of Jakarta.
That still holds true when using the updated estimates in Figure 4, which show tourism to be the largest source of revenue for Jakarta when looking at the top three Indonesian goods and services exports to Australia. Additionally, tourism has generally proven to be a more reliable source of income when other exports have slowed due to decreasing demand or falling prices. That may, however, say more about the lack of diversity in the economic relationship than the strength of the Australian tourism market.

 

 


Article source: http://www.futuredirections.org.au/publication/indonesian-tourism-industry-bright-future-opportunities-australia/

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