China now a key driver of tourism investment in Indonesia

Chinese tourism investment in Indonesia has surged in recent years, totalling US$333.4 million last year, second only to investment from Singapore.

Speaking at the opening of the Third Coordinating Meeting of the Ministry of Tourism in Jakarta earlier this week, Indonesia tourism minister Arief Yahya said: “The growth of investment from China is quite surprising. Five years ago, we did not even see China on the list of investors. Today it has become the second biggest foreign investor in tourism sector in line with the growth of arrivals from China.”

Foreign tourism investments concentrated in Bali, Jakarta (pictured) and Riau Islands

Total investment in Indonesia’s accommodation and restaurants hit US$1.4 billion last year, with the largest chunk from Singapore (US$462.7 million), followed by China and South Korea (US$69.3 million).

As expected, Bali, Jakarta and Riau Islands – the most visited tourist destinations in the country – received the bulk of these investments.

China has not been a key source of foreign tourism investment until recently. In the last four years, Singapore has been the biggest investor, followed by Hong Kong, the British Virgin Islands, South Korea and Japan, according to Wisnu Soedibjo, deputy chairman of Indonesia’s Investment Coordinating Board.

Over the past four years, investment in tourism has grown at an average of 36 per cent annually, he added.

Still, Arief estimates the destination needs an additional Rp500 trillion (US$34 billion) in investment for 2019-2024. To meet tourism growth targets, the destination would need around 120,000 more hotel rooms, 15,000 restaurants, 100 recreational parks, 100 dive operators, 100 marinas and 100 more Special Economic Zone, he opined.

Outside of the private sector, these investments would come from the government sector – including the Ministry of Transportation, Ministry of Public Works and Housing, Airport Authorities, Ministry Communications and Information and Ministry of Tourism.

“Apart from the banks as the source of fund, this will be the first time in history that investment in tourism will be supported by the capital market,” Arief said.

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