Indonesia’s foreign tourism investment falls short in 2023

Although international arrivals to Indonesia in November 2023 exceeded 10.4 million arrivals – surpassing the target of 8.5 million – Indonesia’s tourism investment is still not up to expectations and remains dominated by domestic direct investment.

According to the latest data from the Ministry of Tourism and Creative Economy (MoTCE), the total tourism investments between January and September 2023 was US$1.6 billion – 12 per cent lower than in 2022’s US$1.8 billion – out of which US$1.1 billion was domestic direct investment, while the remaining US$588 million was foreign direct investment.

From left: TTG Asia’s Tiara Maharani, MoTCE’s Agustini Rahayu, Check-in Asia’s Gary Bowerman, MoTCE’s Sandiaga Uno, and GIPI’s Haryadi Sukamdani (Photo: MoTCE)

Addressing delegates at the Indonesia Tourism Outlook 2024 Forum in Jakarta, Sandiaga Uno, Indonesia’s minister of tourism and creative economy stated that in order to boost foreign investment, the government will be more active in providing interested parties with investment opportunities.

He is optimistic that investment achievements in 2024 will improve since the government has made it easier to invest in the five super priority destinations and areas in the Special Economic Zones.

“Government policies are also made with an investor-centric approach, including our commitment to prioritise tourism development with a sustainable and environmentally-friendly concept, which is in line with the vision of today’s international investors,” he said.

Sandiaga also promised that more roadshows and promotions will be conducted this year. Earlier this month, a roadshow was held in the UAE to meet with Ayana Holding’s chairman Abdullah Lahej to offer an investment opportunity in Indonesia. Similar opportunities have been made to Indonesia’s top foreign investors, including Singapore, Hong Kong and India.

During the forum, Check-In Asia’s director Gary Bowerman opined that despite the global economic situation slowing down investment flows, investors were less interested in injecting funds into Indonesia, as most global investors tend to focus its feasibility studies on the country’s inbound market performance.

This is because many international investors do not know how monumental Indonesia’s domestic market movement is, Bowerman said, thus it is up to the government to explain and promote this so as to encourage international investments.

To do this, Bowerman pointed out that the government needed to explain its tourism plan, tourism targets, and marketing and branding in order to reassure international investors.

He added: “Another key point is connectivity. The government needs to (stimulate) more flights to connect to destinations, both globally or domestically.”

In addition, Hariyadi Sukamdani, chairman of the Indonesian Tourism Industry Association (GIPI), said the government needed to maintain the investment climate and encourage the development of local investor businesses by optimising financial institutions, such as the Financial Services Authority, and Banking, to develop funding instruments or create investment financing schemes.

Local investors must not be forgotten, and given incentives to help grow their businesses, added Hariyadi. “When local investors increase, the domestic market will grow, and international investors will definitely come.”

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