IT’S A MATTER OF WHEN

Indonesia 2018 | TOURISM | INTERVIEW

TBY talks to Arief Yahya, Minister of Tourism, on his industry's huge contribution to foreign exchange reserves, creeping up the ranks in halal tourism, and boosting homestays in rural villages.

Arief Yahya
BIOGRAPHY
Arief Yahya started his career as a member of the management board at PT Telekomunikasi Indonesia in 1986. He served as Head of Regional Division IV Kalimantan, Head of Regional Division V East Java, and Director of Enterprise & Wholesale before being appointed CEO of PT Telkom in 2012. He was also Commissioner of PT Telkomsel, the biggest cellular operator in Indonesia. After serving as head of Ikatan Alumni Elektro (IAE) from 2009 to 2013, in 2014 he was appointed Minister of Tourism for 2014-2019. Yahya graduated as an electric engineer from the Bandung Institute of Technology in 1986, has a master’s in telematics from the University of Surrey, and a doctorate in business management from Padjadjaran University.

What key milestones did the tourism sector reached in the past year, and what has contributed to those victories?

From January to May 2017, tourism growth in Indonesia was one of the best in the world, putting us among the top-20 fastest-growing tourist destinations in Asia with growth of 20%. We are lucky to have a president committed to growing the sector, and tourism has been labeled as a leading sector since 2014. As far as foreign exchange earnings in 2016 go, tourism is ranked fourth—after oil and gas, coal, and CPO. Yet oil and gas decreased by 40%, coal by 20%, and CPO as well. Only tourism has increased and is easily the highest foreign exchange earner among service sectors. In 2019, tourism will be number one in foreign exchange received. Compared to 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 great product and affordable prices. Bali is the best destination, and for halal tourism we are ranked third; Malaysia is still first while the UAE is second. We used to be number six, but 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 advertised in Saudi Arabia as well prior to King Salman's trip to 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, while Thailand is our professional competitor. We were congratulated by our president for the sharp rise in foreign tourism; it has been growing 20% YoY.

What are your key priorities moving forward?

We have three top priorities. The first is digital tourism, the second are homestays, and the third is accessibility. Two thirds of customers are using digital devices; even Chinese tourists are sharing using digital media. The traditional travel agent is disappearing. We have 17,000 islands and 75,000 villages in Indonesia, and the solution for village tourism is homestays. 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, but have already pointed out 10 of them, which we call the 10 new Balis. Our target for incoming visitors has increased from 12 to 15 million, though in terms of air connectivity there is still a shortage of 2 million seats, which we need to fulfill in order to achieve our 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 part 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 taxiway at the current Ngurah Rai International Airport to increase and optimize its capacity. For 2019, we are also developing a new Bali airport, a new Kertajati airport in West Java that will finish in 2018, and a new Jogja airport. Toba island is already famous for its lake, the largest volcanic lake in the world. Yet to finance Indonesia's destinations, we cannot depend on the government alone, but have to invite foreign investment. The government will provide deregulation incentives and special economic zones for these top-10 destinations.