Indonesia Priority Sector: Tourism Yogyakarta, 14 March 2018 Dr. Ir. Arief Yahya, M.Sc. Tourism Minister, Republic of Indonesia
2 Why you should invest in tourism sector? Indonesia is in top-20 fastest growing travel destinations in the world. (The Telegraph, 2017)
INDONESIA INTERNATIONAL VISITOR GROWTH VS REGIONAL AND GLOBAL MARKET Indonesia s Growth is 3 times higher than that of Regional and Global Growth Indonesia, Growth: 22% ASEAN, Growth : 7 % World, Growth : 6,4 % Source: Countries Own Statistics Indonesia 22 % (January December 2017) Vietnam 29% (January December 2017) Malaysia 4,0 % (January December 2017) Singapore 5,8 % (January December 2017) Thailand 8,7 % (January December 2017) 3
I declare tourism as the leading sector. Tourism as a leading sector is a good news, and all other Ministries must support tourism development. 4
5 Government Annual Work Plan 2018: PRIORITY SECTORS DEVELOPMENT
6 O U T L I N E A. Indonesia Tourism Performance B. Indonesia Competitiveness Index 1. Indonesia Global Competitiveness Index 2. Indonesia Tourism Competitiveness Index C. Policy Update D. Investment Opportunity
A. Indonesia Tourism Performance 7
8 Tourism is the easiest and cheapest contributor of GDP, foreign exchange and employment opportunities for Indonesia. Dr. Ir. Arief Yahya, M.Sc Tourism Minister, Republic of Indonesia
BREAKING NEWS 9 2018 started big time: Wonderful Indonesia received 23 awards in 4 countries
BREAKING NEWS Indonesia is the 7th in the world, 4th in Asia Pacific, and 1st in South East Asia in international openness according to the UNWTO s data 2016 1 March 2018 5
11 BREAKING NEWS 8 March 2018 West Bali National Park announced 2 nd Best of Asia Pacific for Green Destination at ITB Berlin 2018. A BIG SUCCESS! Tourism Minister s Pilot Project on National Eco Tourism in West Bali National Park stipulated in 2016
12 BREAKING NEWS 8 March 2018 Wonderful Indonesia is Brand Of The Year Indonesia 2018
13 BREAKING NEWS WONDERFUL INDONESIA ACHIEVEMENTS 2018 ON CNN INDONESIA
B. Indonesia Competitiveness Index 14
B. 1. Indonesia Global Competitiveness Index 15
COMPETITIVENESS INDEX GROWTH BENCHMARK WITH SOUTHEAST ASIA COUNTRIES 16 Only 4 Southeast Asia countries make it to the Top 40 World Economy Competitiveness Index by WEF No. Countries 2017 2018 1 Singapura 2 3 2 Malaysia 25 23 3 Thailand 34 32 4 Indonesia 41 36
WEF Score for Indonesia s 3 Sub Index and 12 pillars No. Sub Index dan Pilar Rank 2017 : 41 Rank 2018 : 36 BASIC REQUIREMENTS 52 46 1 Institutions 56 47 2 Infrastructure 60 52 3 Macroeconomic Environment 30 26 4 Health and Primary Education 100 94 EFFICIENCY ENHANCERS 49 41 5 Higher Education and Training 63 64 6 Goods Market Efficiency 58 43 7 Labor Market Efficiency 108 96 8 Financial Market Development 42 37 9 Technological Readiness 91 80 10 Market Size 10 9 INNOVATION AND SOPHISTICATION FACTORS 31 32 11 Business Sophistication 39 32 12 Innovation 31 31 Top 33 Bottom 3
B. 2. Indonesia Tourism Competitiveness Index 18
RANK SCORE INDONESIA'S TTCI WEF PERFORMANCE GROW POSITIVELY 2008-2017 Related to Competitiveness Index, Indonesia is improving significantly. 0 10 2008 2009 2011 2013 2015 2017 4.16 4.20 4.10 20 4.00 4.03 4.04 4.00 30 3.90 40 50 3.80 50 42 3.80 60 3.70 3.70 70 80 80 81 74 70 3.60 3.50 90 3.40 Rank Score Source : World Economic Forum (WEF), 2017 19
INDONESIA TOURISM COMPETITIVENESS INDEX VS ASEAN Travel and Tourism Competitiveness Report 2017 by World Economic Forum (WEF) records Indonesia comes 4 th after Singapore, Malaysia and Thailand INDEX - SUBINDEX Pillars INDONESIA SINGAPORE MALAYSIA THAILAND VIETNAM PHILIPPINES LAO PDR CAMBODIA Rank Rank Rank Rank Rank Rank Rank Rank TRAVEL & TOURISM COMPETITIVENESS INDEX 42 13 26 34 67 79 94 101 ENABLING ENVIRONMENT 87 8 35 73 66 98 89 107 Business Environment 60 2 17 45 68 82 47 125 Safety & Security 91 6 41 118 57 126 66 88 Health & Hygiene 108 62 77 90 82 92 106 109 Human Resources & Labour Market 64 5 22 40 37 50 65 110 ICT Readiness 91 14 39 58 80 86 115 101 T&T POLICY AND ENABLING CONDITION 5 1 21 37 105 64 63 69 Prioritization of Travel & Tourism 12 2 55 34 101 53 54 29 International Openness 17 1 35 52 70 60 71 58 Price Competitiveness 5 91 3 18 35 22 14 51 Environmental Sustainability 131 51 123 122 129 118 98 130 INFRASTRUCTURE 66 2 32 33 91 90 99 105 Airport Infrastructure 36 6 21 20 61 65 97 96 Ground & Port Infrastructure 69 2 34 72 71 107 111 108 Tourist Service Infrastructure 96 24 46 16 113 87 86 102 NATURAL & CULTURAL RESOURCES 16 53 29 19 28 46 91 71 Natural Resources 14 103 28 7 34 37 71 62 Cultural Resources 23 28 34 37 30 60 107 76 Source : World Economic Forum (WEF), 2017. : Top 3 (Rank) : Bottom 3 (Rank) 20
WONDERFUL INDONESIA COUNTRY BRAND PERFORMANCE AMONG ASIAN COUNTRIES World Economic Forum / WEF (2017) Country Brand Nation Strategy rating (max=100) Rank Point Jepang 42 79.5 India 81 72.6 Singapore 38 79.7 Indonesia 47 79.1 Hongkong 17 84.8 Korea 52 78.7 Thailand 68 74.7 Malaysia 85 72.1 Indonesia is at 47 th rank, Followed by Thailand (68) and Malaysia (85) Wonderful Indonesia Branding Strategy for online penetration is still better compared to Thailand and Malaysia, but still below Singapore. This Sub-pillar is evaluated with the following considerations: 1. NTO indicators focused on Digital Demand (D2) 2. Positioning Strategy and tourism promotion with regards to brandtags 3. Total online searches from international tourists Sumber: WEF (2017). 21
Top 3 Priority Programs Others Priority Programs Priority Program 2018 Digital Tourism (E-Tourism) 63% of all travels, searched, booked, purchased and sold are online 50% from all online travel sales involves more than 1 devices More than 200 reviews per minute posted on TripAdvisor Homestay Ministry of Tourism contributes to the development of 100 thousand homestay as part of the 1 Million Home Program President Jokowi plans to develop a rural tourism concept Air Accesibility Air Connectivity is the Success Factor to push international visitor growth because 75% - 80% international tourists arrive with air transportation Branding / PR-ing Top 10 Originasi Top 3 Main Destinations (15 Destination Branding) Development of 10 Priority Tourism Destinations Human Resource Competence Certification & Tourism Awareness Movement Tourism Investment Enhancement Crisis Center Management 22
C. Policy Update 23
24 DEREGULATION IN INDONESIA In order to attract tourists and investors, Indonesia Deregulations efforts focused on two things : 1. Ease of Entering Indonesia. 2. Ease of Doing Business (FDI).
1. EASE OF ENTERING INDONESIA There are 3 deregulations regarding the ease of entering Indonesia : 1. Visa Free Presidential Regulation No 21/2016 regarding Visa Free from 15 countries in 2013 to 169 countries in 2016 2. Simplifying Yacht Arrivals Waiving Clearance Approval for Indonesia Territory (CAIT) Policy entry permit from 3 weeks to 3 hours. 3. Abolition of Cruise Cabotage Principle To allow passengers of foreign cruise ships embark and disembark in 5 Indonesia s main ports. 25
26 2. EASE OF DOING BUSINESS (FDI) As a result of deregulations on Ease of Doing Business, more than 90% of tourism businesses are open for FDI (52 out of 57). 36 Tourism business are open 100% for FDI (Foreign Direct Investment) 16 Tourism business are open under specific conditions (49%-67%) 4 Tourism business are purposed for micro, small, and medium enterprises : Homestay Tourism Travel Agents Tour Guides Art Studios 1 Business closed for any investment on gambling business : casino
D. Investment Opportunity 27
USD Million TOURISM INVESTMENT REALIZATION 2000 1500 32.17% 28.96% 1000 53.17% 13.64% 500 0 2013 2014 2015 2016 2017 FDI 462.52 511.81 732.46 1192.92 1326.56 DDI 140.18 173.08 316.61 159.96 461.49 Total 602.7 684.89 1049.07 1352.88 1788.05 1,788.05 USD Million Tourism Investment Realization Jan-Dec 2017 32% Growth from 2016 to 2017 102% Reached from total target in 2017 Source: Indonesia Investment Coordinating Board (BKPM), 2017 28
TOURISM INVESTMENT REALIZATION IN 2017 Tourism Investment Realization in 2017 USD 1,788.05 Million Foreign Direct Investment (FDI) USD 1,326.56 Million Originating Country Business Type Investment Destination Singapore USD 462.68 Million Tiongkok USD 333.40 Million South Korea USD 69.34 Million Star Hotel USD 525.18 Million Other Short Accomodation USD 325.42 Million Restaurant USD 120.16 Million Bali USD 483.40 Million DKI Jakarta USD 234.76 Million Kepulauan Riau USD 221.48 Million Domestic Direct Investment (DDI) USD 461.49 Million Business Type Investment Destination Growth 32% From 2016 Star Hotel USD 343.45 Million Theme Park USD 53.59 Million Manmade Attraction USD 20.52 Million West Java USD 118.53 Million Central Java USD 75.15 Million East Java USD 45.67 Million USD 1 = Rp13.,400 Source: Indonesia Investment Coordinating Board (BKPM), 2017 29
CREATING 10 NEW BALI Currently we are developing Top-10 tourism priority destinations called 10 New Bali. Lake Toba, North Sumatera Tanjung Kelayang, Belitung Tanjung Lesung, Banten Kepulauan Seribu, Jakarta Borobudur, Central Java Bromo Tengger Semeru, East Java Mandalika, West Nusa Tenggara Labuan Bajo, East Nusa Tenggara Wakatobi, South East Sulawesi Morotai, North Maluku 30
These are Top-10 Tourism Priority Destinations on the map 31 Lake Toba Area : 1,849 Ha Investment : USD 1.6 Billion Tanjung Kelayang Area : 324.4 Ha Investment : USD 1.4 Billion Borobudur Area : 309 Ha Investment : USD 1.5 Billion Wakatobi Area : 532 Ha Investment : USD 1.5 Billion Morotai Area : 1,101.76 Ha Investment : USD 2.9 Billion Tanjung Lesung Area : 1,500 Ha Investment : USD 4 Billion Kep. Seribu (Thousand Island) & Kota Tua (Old City) Area : 1,009 Ha Investment : USD 1.5 Billion Bromo Tengger Semeru Area : 325 Ha Investment : USD 1.4 Billion Mandalika Area : 1,175 Ha Investment : USD 3 Billion Labuan Bajo Area : 400 Ha Investment : USD 1.2 Billion Tourism Authority Tourism Special Economic Zone National Strategic Tourism Zone
INVESTMENT PROFILE OF TOP 10 PRIORITY TOURISM DESTINATIONS Total Investment needed is USD 20 Billion (USD 10 Billion Public Infrastructures Investment and USD 10 Billion Private Investment) PROJECTION 2019 NO DESTINATION INVESTMENT (USD MILLION) INTERNAT L TOURIST ARRIVAL (PEOPLE) FOREIGN EXCHANGE (USD MILLION) 1 Lake Toba 1,600 1,000,000 1,000 2 Tanjung Kelayang 1,400 500,000 500 3 Tanjung Lesung 4,000 1,000,000 1,000 4 Kepulauan Seribu & Kota Tua Jakarta 1,500 1,000,000 1,000 5 Borobudur 1,500 2,000,000 2,000 6 Bromo-Tengger-Semeru 1,400 1,000,000 1,000 7 Mandalika 3,000 2,000,000 2,000 8 Labuan Bajo 1,200 500,000 500 9 Wakatobi 1,500 500,000 500 10 Morotai 2,900 500,000 500 TOTAL USD 20,000 10 Million USD 10 Billion 32
33 3 REASONS TO INVEST IN INDONESIA S TOURISM SECTOR A B C A B C A HIGH PURCHASING POWER World s 4 th Largest Population and demographic bonus (more than 65% of population at productive age until 2050). Economic Growth Potential (above 5%), driven by strong consumer confidence and spending (above 50% of GDP). Endless explorable possibilities in investment opportunities in Indonesia. Open for tourism investment HIGH INVESTMENT INCENTIVE Supportive political will through Special Economic Zone (SEZ) policy. Various tourism investment incentives for large-scale tourism projects HIGH INVESTMENT GRADE Good Support for business (rank Baa3 on Moody s; BBB+ on Fitch and BBB- on S&P) B Medium class global tourism competitiveness (rank 42 out of 137 on WEF TTCI 2017) C Best countries to invest rank #2 (US News Report)
THANK YOU 34