Indonesia 2018 | TOURISM | VIP INTERVIEW

TBY talks to Arief Yahya, Minister of Tourism of Indonesia, on tourism growth, declining commodity prices, and international cooperation.

What are some key milestones the tourism sector has reached in the past year, and what has contributed to these achievements?

From January to May 2017, tourism growth in Indonesia was one of the best in the world and among the top 20 fastest growing Asian tourist destinations. Based on our statistics, our growth rate is 20%. We are lucky to have a president who is committed to growing the sector, and tourism has been labeled as a leading sector since 2014. For foreign exchange earnings in 2016, tourism is ranked fourth among other sectors here. In Indonesia, the first sector is oil and gas, the second is coal, the third is CPO, and the fourth is tourism. Oil and gas is decreasing by 40%, coal is decreasing 20%, CPO is also decreasing. Only tourism has increased and is the highest foreign exchange earnings for all service sectors. In 2019, tourism will be number one in foreign exchange received. Compared with our competitors, in terms of inbound tourist arrivals, Malaysia is decreasing by a half percent, while Indonesia and Vietnam are performing the best in Asia. According to the World Economic Forum, as of 2017 our global rank is 42. Price competitiveness for Indonesia is top five and in cultural and natural resources we are in the top 20. We have a good product and a good price. Bali is the best destination, and for halal tourism we are ranked third, number one is still Malaysia and number two is the UAE. We used to be number six, but we have improved our ranking. We have promotions from Australia, Japan, Singapore, Amsterdam, Paris, and the US. When Obama visited Indonesia, we advertised in Time Square twice. We advertise in Saudi Arabia as well prior to King Salman's entourage arrived in Indonesia in early 2017. During 2014, 2015, and 2016, tourism was a leading sector. Our competitor has always been Malaysia, which is our spiritual competitor, and Thailand is our professional competitor. We received congratulations from our President for the sharp rise in foreign tourism; it has been growing 20% year on year.

What are your key priorities moving forward?

We have three top priorities. The first is digital tourism, the second is homestay, and the third is accessibility. Two thirds of customers are using digital devices, even Chinese tourists are sharing using digital media. The manual travel agent is diminishing. We have 17,000 islands and 75,000 villages in Indonesia. The solution for village tourism is homestay. We are going to develop 100,000 homestays within three years in rural areas. Currently we have three main destinations here in Indonesia and Bali is contributing to 40% of Indonesian tourism. Jakarta contributes 30% and Riau Island, next to Singapore, contributes around 20%. These three make up 90% of our international tourist arrivals. We have to develop new destinations, and we have thus far pointed out 10 of them. We call them the 10 new Balis. Our target for incoming visitors has increased from 12 to 15 million, in terms of air connectivity there is still a shortage of 2 million seat capacity, so we need to fulfill that 2 million to achieve 2017 target of 15 million international arrivals. By 2019, to achieve 20 million international arrivals, we need an additional 4.8 million in seat capacity.

Infrastructure has been a key piece of the President's economic agenda. What role is the Ministry playing in supporting investment in infrastructure?

In Bali, we are planning to build a rapid-exit taxi way at the current Ngurah Rai International Airport to increase and optimize its capacity. For 2019, we are also developing a new Bali airport, new Kertajati airport in West Java that will finish in 2018, and new Jogja airport. Toba island is already famous for its lake, the largest volcanic lake in the world. There are almost 30 million people in the greater Jakarta area, who have the greatest purchasing power in the country. In terms of financing the development of the destinations in Indonesia, we cannot depend only on the government budget, we have to invite foreign investment. The government will provide deregulation incentives and special economic zones for these top 10 destinations. That is what we are trying to give and provide to compete with the other destinations in the region.

What is your broader strategy for international cooperation? How does that contribute to the ministry's mission?

Telecommunication, transportation, and tourism have assimilated made Indonesia easy to access from a wide variety of destinations—I call them the 3Ts. Still, proximity is the main factor that contributes to the number of customers, specifically cultural proximity and distance proximity. If we are going to build international cooperation it must start with our neighbor countries, in this case that is ASEAN. Based on the ATF, 50% of ASEAN tourists are visiting from other ASEAN countries. That is why we have an association called ATF, the ASEAN Tourism Forum. We also have APT, which is ASEAN Plus Three, including China, Japan, and South Korea. These three countries are contributing 30%. In total, ASEAN +3 countries are contributing 80% of our international tourists. India is another country of focus. The number of wealthy people in India is 250 million. That is the same number of the entire population of Indonesia. India is a major market for us, and we believe by the end of 2017 India will surpass Japan in terms of tourism.

What are your key ambitions for the coming year?

We believe in 2017 the number of tourists will increase by around 25% compared with the previous year. Regarding tourism investments, they are already USD525.94 million for this year alone, equating to growth of almost 95% from 2016 in the first quarter. We are simplifying protocol for yacht and cruise arrivals as well, and we are more open for foreign investment. It is smart to invest in Indonesia because it has a high purchasing power; it has the fourth largest population in the world with one of the highest rates of economic growth. The government and the Ministry of tourism have made a serious effort to improve our ease of doing business in all sectors. The government understands that we need to make a fully supportive industry so that the mentality of the people is the same and positive.