Hotel investors emphasise private sector role in Indonesia’s tourism development

Hotel investors from the private sector are calling for the Indonesian government to be decisive in their list of destinations earmarked for tourism development and to engage the private sector in the planning process early on.

Speaking at the 7th Tourism, Hotel Investment & Networking Conference (THINC) in Bali last week, Budi Tirtawisata, group CEO of Panorama Group, said: “As travel players from the private sector, we believe in the future of tourism in Indonesia and the commitment of the government in the sector, but we need to see the roadmap on where we should go from here.

Lake Toba is among the 10 priority destinations the Indonesian government has earmarked for development

“In the beginning, the government set 16 priority destinations to develop, which was then reduced to 10. This was then refocused to four (and, most recently, five). As investors, we then ask, ‘So where should we invest now?'” he said.

Apart from that, Budi also highlighted other factors the government should consider, such as the source of investments, and whether the destination meets the investors’ requirements and will bring forth sustainable growth.

Meanwhile, Shirley Tan, CEO of Rajawali Property Group, noted that the challenges with the “10 New Balis” developments were that some destinations were more marketable than the others.

She pointed out the need for the government to cull feedback from the private sector early on during the master planning process in areas such as airport and connectivity to prioritise the government’s spending.

She added that there could be a disparity between the areas the government are earmarking their funds and which destinations the private sector will put money into immediately to develop them.

“The government needs to invest in the right infrastructure and in the right places where the private sector can immediately invest in. They need to get feedback from the private sector in terms of land arrangements because you cannot be trying to build new infrastructure and (automatically) expect the private sector to invest in them,” she said.

In response to the investors’ input, Hiramsyah Thaib, team leader, acceleration for the development of priority destinations, Ministry of Tourism, said that since the beginning of the Joko-Widodo administration, the government has picked 10 priority destinations for development.

“That does not change. The focus on four super priority destinations – Lake Toba, Borobudur, Labuan Bajo and Mandalika – is actually based on the needs of these places for huge government support on infrastructure development, and the areas covered are huge,” he said.

He added: “The Lake Toba area comprises eight regencies and they need major infrastructure development like airport and toll roads. The Borobudur development area covers Yogyakarta and Central Java, and a new airport is needed, and thus (the construction of) Yogyakarta International Airport.

“On the other hand, Wakatobi’s market, for example, is quite niche so massive infrastructure development is not needed, while Mt Bromo area is already well connected with Surabaya and Malang.”

He also explained that president Joko Widodo recently added Likupang, Manado, as the fifth super priority destination, after seeing North Sulawesi’s five-fold arrival growth in the last couple of years.

Hiramsyah also asserted that the current government has always engaged the private sector in the planning process. “We are currently setting up the Integrated Tourism Master Plan for the Super Priority Destinations and all the penta-helix stakeholders – the government, private sector, academicians, media and communities – are active participants in the process,” he said.

Hiramsyah refuted allegations that investors were reluctant to come in to these super priority destinations, despite the massive development works carried out by the government in those places.

“In Lake Toba area, seven investors have signed up for hotel projects worth a total of Rp6.1 trillion (US$435.7 million). The private sector will start developing when the basic infrastructure is ready,” he said.

He added: “President Jokowi has instructed us that all basic infrastructure in the super priority destinations must be ready by 2020.”

Sponsored Post