Indonesia Priority Sector: TourismYogyakarta, 14 March 2018

Dr. Ir. Arief Yahya, M.Sc.Tourism Minister, Republic of Indonesia

Why you should invest in tourism sector?

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“Indonesia is in top-20 fastest growing travel destinations in the world.”

(The Telegraph, 2017)

3Source: Countries’ Own Statistics

ASEAN, Growth : 7 %

World, Growth : 6,4 %

Indonesia, Growth: 22%

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)

INDONESIA INTERNATIONAL VISITOR GROWTH

VS REGIONAL AND GLOBAL MARKET

Indonesia’s Growth is 3 times higher than that of Regional and Global Growth

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“I declare tourism as the leading sector.Tourism as a leading sector is a good news, and all other Ministries must support tourism development”.

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Government AnnualWork Plan 2018:PRIORITY SECTORS DEVELOPMENT

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O U T L I N E

A. Indonesia Tourism Performance

B. Indonesia Competitiveness Index1. Indonesia Global Competitiveness Index2. Indonesia Tourism Competitiveness Index

D. Investment Opportunity

C. Policy Update

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A. Indonesia Tourism Performance

“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

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2018 started big time: Wonderful Indonesia received

23 awards in 4 countries

BREAKING NEWS

BREAKING NEWS

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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

West Bali National Park announced 2nd

Best of Asia Pacific for Green

Destination at ITB Berlin 2018.

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BREAKING NEWS8 March 2018

A BIG SUCCESS!

Tourism Minister’s Pilot Project on National Eco Tourism in West Bali National Park stipulated in 2016

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BREAKING NEWS

Wonderful Indonesia is Brand Of The Year Indonesia 2018

8 March 2018

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WONDERFUL INDONESIA ACHIEVEMENTS 2018 ON CNN INDONESIA

BREAKING NEWS

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B. Indonesia Competitiveness Index

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B. 1. Indonesia Global Competitiveness Index

COMPETITIVENESS INDEX GROWTH BENCHMARK WITH SOUTHEAST ASIA COUNTRIES

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No. Countries 2017 2018

1 Singapura 2 3

2 Malaysia 25 23

3 Thailand 34 32

4 Indonesia 41 36

Only 4 Southeast Asia countries make it to the Top 40 World Economy Competitiveness Index by WEF

WEF Score for Indonesia’s 3 Sub Index and 12 pillars

No. Sub Index dan Pilar Rank 2017 : 41 Rank 2018 : 36BASIC 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

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B. 2. Indonesia Tourism Competitiveness Index

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INDONESIA'S TTCI WEF PERFORMANCE GROW POSITIVELY 2008 - 2017

Source : World Economic Forum (WEF), 2017

RA

NK

SC

OR

E

80 81

7470

50

42

3.70

3.80

4.004.03 4.04

4.16

3.40

3.50

3.60

3.70

3.80

3.90

4.00

4.10

4.200

10

20

30

40

50

60

70

80

90

2008 2009 2011 2013 2015 2017

Rank Score

Related to Competitiveness Index, Indonesia is improving significantly.

Source : World Economic Forum (WEF), 2017.

Travel and Tourism Competitiveness Report 2017 by World Economic Forum (WEF) records Indonesia comes 4th after Singapore, Malaysia and Thailand

: Top 3 (Rank) : Bottom 3 (Rank)

INDONESIA TOURISM COMPETITIVENESS INDEX VS ASEAN

INDEX - SUBINDEX – PillarsINDONESIA 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

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Sumber: WEF (2017).

World Economic Forum / WEF (2017)

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WONDERFUL INDONESIA COUNTRY BRAND PERFORMANCE AMONG ASIAN COUNTRIES

Indonesia is at 47th rank,Followed by Thailand (68) and Malaysia (85)

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

Wonderful Indonesia Branding Strategy for online penetration is still better compared to Thailand and

Malaysia, but still below Singapore.

Nation

Country Brand Strategy rating

(max=100)Rank Point

Jepang 42 79.5India 81 72.6

Singapore 38 79.7Indonesia 47 79.1Hongkong 17 84.8

Korea 52 78.7Thailand 68 74.7Malaysia 85 72.1

Priority Program 2018

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Top

3 P

rio

rity

Pro

gram

s

Oth

ers

Pri

ori

ty P

rogr

ams

Digital Tourism (E-Tourism)

Homestay

Air Accesibility

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

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

Ministry of Tourism contributes to thedevelopment of 100 thousand homestay aspart of the 1 Million Home Program

President Jokowi plans to develop a ruraltourism concept

Air Connectivity is the Success Factor to push

international visitor growth because 75% -

80% international tourists arrive with air

transportation

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C. Policy Update

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DEREGULATION IN INDONESIA

1. Ease of Entering Indonesia.

2. Ease of Doing Business (FDI).

In order to attract tourists and investors,Indonesia Deregulations efforts focused on two things :

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1. Visa FreePresidential Regulation No 21/2016 regarding Visa Free from 15 countries in 2013 to 169 countries in 2016

1. EASE OF ENTERING INDONESIA

2. Simplifying Yacht Arrivals

3. Abolition of Cruise Cabotage Principle

To allow passengers of foreign cruise ships embark and disembark in 5 Indonesia’smain ports.

Waiving Clearance Approval for Indonesia Territory (CAIT) Policy entry permit from 3 weeks to 3 hours.

There are 3 deregulations regarding the ease of entering Indonesia :

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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).

1 Business closed for any investment on gambling business : casino

4Tourism business are purposed for micro, small, and medium enterprises : Homestay Tourism Travel Agents Tour Guides Art Studios

16 Tourism business are open under specific conditions (49%-67%)

36 Tourism business are open 100% for FDI (Foreign Direct Investment)

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D. Investment Opportunity

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TOURISM INVESTMENT REALIZATION

Source: Indonesia Investment Coordinating Board (BKPM), 2017

32%Growth from 2016 to 2017

102%Reached from total target in 2017

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

0

500

1000

1500

2000

USD

Mill

ion

13.64%

53.17%

28.96%

32.17%

1,788.05USD Million

Tourism Investment RealizationJan-Dec 2017

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TOURISM INVESTMENT REALIZATION IN 2017

Tourism Investment Realization in 2017

USD 1,788.05 Million

Growth

32%From 2016

Foreign Direct Investment (FDI)

USD 1,326.56 Million

Originating Country

SingaporeUSD 462.68 Million

TiongkokUSD 333.40 Million

South KoreaUSD 69.34 Million

Investment DestinationBusiness Type

Star HotelUSD 525.18 Million

Other Short AccomodationUSD 325.42 Million

RestaurantUSD 120.16 Million

DKI JakartaUSD 234.76 Million

BaliUSD 483.40 Million

Kepulauan RiauUSD 221.48 Million

Domestic Direct Investment (DDI)

USD 461.49 Million

Investment DestinationBusiness Type

Star HotelUSD 343.45 Million

Theme ParkUSD 53.59 Million

Manmade AttractionUSD 20.52 Million

West JavaUSD 118.53 Million

Central JavaUSD 75.15 Million

East JavaUSD 45.67 Million

USD 1 = Rp13.,400

Source: Indonesia Investment Coordinating Board (BKPM), 2017

CREATING

“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

Wakatobi, South East Sulawesi Morotai, North MalukuLabuan Bajo, East Nusa Tenggara

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Currently we are developing Top-10 tourism priority destinations called 10 New Bali.

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These are Top-10 Tourism Priority Destinations on the map

Lake TobaArea : 1,849 Ha

Investment : USD 1.6 Billion

Tanjung KelayangArea : 324.4 Ha

Investment : USD 1.4 Billion

BorobudurArea : 309 Ha

Investment : USD 1.5 Billion

WakatobiArea : 532 Ha

Investment : USD 1.5 Billion

MorotaiArea : 1,101.76 Ha

Investment : USD 2.9 Billion

Tanjung LesungArea : 1,500 Ha

Investment : USD 4 Billion

Kep. Seribu (Thousand Island) & Kota Tua (Old City)

Area : 1,009 HaInvestment : USD 1.5 Billion

Bromo Tengger SemeruArea : 325 Ha

Investment : USD 1.4 Billion

MandalikaArea : 1,175 Ha

Investment : USD 3 Billion

Labuan BajoArea : 400 Ha

Investment : USD 1.2 Billion

Tourism Special Economic Zone National Strategic Tourism ZoneTourism Authority

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NO DESTINATION

PROJECTION 2019

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

4Kepulauan Seribu & Kota

Tua Jakarta1,500 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

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)

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3 REASONS TO INVEST IN INDONESIA’S TOURISM SECTOR

HIGH PURCHASING POWER

A World’s 4th Largest Population and demographic bonus(more than 65% of population at productive age until 2050).

B Economic Growth Potential (above 5%), driven by strong consumer confidence and spending(above 50% of GDP).

C Endless explorable possibilities in investment opportunities in Indonesia.

HIGH INVESTMENT INCENTIVE

A Open for tourism investment

B Supportive political will through Special Economic Zone (SEZ) policy.

C Various tourism investment incentives for large-scale tourism projects

HIGH INVESTMENT GRADE

A 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)

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THANK YOU