Tourism Minister Arief Yahya: Interview, : Interview – Asia 2017

Tourism Minister Arief Yahya: Interview, : Interview – Asia 2017

Interview: Arief Yahya

What is Indonesia’s position in the global tourism industry?

Arif Yahya: Currently, Indonesia’s tourism industry contributes US$82.4 billion, or 9.6% of GDP. While this is high, it is still lower than regional competitors such as Thailand (20%) and Malaysia (16%). In terms of foreign exchange earnings, Indonesia ranked 9th in 2014 at US$11.17 billion, again behind Thailand and Malaysia at US$38.44 billion and US$21.82 billion respectively. However, this only shows that Indonesia has a chance against regional rivals.

It is predicted that by 2020, the tourism industry will become Indonesia’s largest foreign exchange contributor. The Tourism Competitiveness Index (TTCI) currently ranks Indonesia 50th. While this is still lower than our main regional competitors, Indonesia has come a long way since ranking 70th in 2013. Indonesia’s tourism industry grew steadily at 10.3 percent, compared with ASEAN’s 5.1 percent and global growth of 4.4 percent.

Now, to continue promoting Indonesia, it is important to have a strong brand to build our reputation and advertise and sell our destination. We rely heavily on the implementation of our tourism marketing strategy to help us achieve our goal of 20 million visitors in 2019. Our goal is to increase our presence in outdoor media, print media and TV commercials through the “Wonderful Indonesia” brand as well as our participation in international trade fairs, exhibitions, sales missions and festivals.

How does Indonesia’s tourism industry seek to overcome current challenges?

Yahya: Overall, tourism in Indonesia faces two main challenges. The first is insufficient international openness due to excessive and restrictive regulations on national access. In an effort to change that, the country has been removing visa requirements. Today, Indonesia has 169 countries on its visa-free list, one of the largest in the world.

The second has to do with direct flights. Indonesia currently has one of the lowest direct flight rates in the region, but we are working hard to improve this. We also need to continue to promote our products and destinations through digital channels and use numerous digital tools to expand our hotel’s reach. The government’s current priorities include infrastructure, maritime, energy, food and tourism. One of the President’s Eight Directives includes securing the progress of 10 national tourist destinations; we call this project “Creating 10 New Balis”. By 2019, we expect tourism to contribute 15 percent of total GDP, contribute 24 billion rupiah (US$17.52 billion) in foreign exchange, create 13 million jobs, receive 20 million foreign tourists and 275 million domestic tourists, and Jumped to 30th place in TTCI.

What is Indonesia doing to promote investment in tourism?

Yahya: Indonesia’s strategy to increase investment in tourism has been successful. In 2014, foreign direct investment (FDI) and domestic direct investment (DDI) in tourism totaled US$684.89 million, while in 2015 this figure reached US$1.05 billion. Since 2013, FDI has dropped from 76.74% to 69.82%, and DDI has risen from 23.26% to 30.18%. The five sectors receiving foreign direct investment accounted for 97% of the total; namely: star hotels (65.07%), other short-term accommodation providers (16.57%), management consulting (7.62%), catering and moving food providers (6.28%) %) and tourist areas (1.75%). Likewise, the five provinces receiving the most FDI in tourism – Bali, DKI Jakarta, Riau Islands, West Java and East Java – accounted for 88% of the total. In terms of DDI, the top five industries accounted for 99%, and the top five provinces accounted for 72%. To increase investment in tourism, Indonesia is focusing on improving infrastructure and facilities, amenities, tourism development, and continued recovery of key strategic destinations.

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