Indonesia: Promotion Drive for Tourism

INDONESIA - Report 01 Nov 2016 by Cyrillus Harinowo

In the past few months, the Indonesian government has intensified its drive to promote tourism. Increasingly it believes that aside from sectors such as agriculture, mining, manufacturing, tourism is the next promising sector to which it should give priority. There are 10 new tourist destinations “Beyond Bali” that the government will prioritize.

At its recent media briefing, the government set priority for three destinations to be developed in 2017: Toba Lake and its environs on Sumatera Island; Borobudur and its surroundings, including the historic city of Yogyakarta; and Mandalika on Lombok Island, which will specifically cater to tourists from the Middle East. In Mandalika the government will promote “Halal Tourism”, meaning it will concentrate on tourism that will make Muslim tourists feel comfortable.

The Indonesian government has set a high bar in its tourism promotion by creating the new tagline “Wonderful Indonesia”. Many buses and taxis in London now also carry advertisements for "Wonderful Indonesia" because tourists from the UK are a target audience for this promotion.

One of the reasons for the strong promotion of tourism is the stagnant nature of Indonesian trade, even though the trade balances have posted surpluses over the past several months. In September 2016, for instance, the trade balance once again showed a monthly surplus. However, Indonesian exports declined considerably, accompanied by a significant decline in imports. The surplus for September reached $1,216.9 million, above the surplus for August, which was $363.1 million. Exports were $12,514.1 million in September, a decline of 1.84% or $234.2 million from the previous month, at $12,748.3 million. Meanwhile, imports reached $11,297.2 million in September, a decline of $1,088.0 million or 8.78% month over month. For the first three quarters of the year, exports were $104,306.50 million while imports reached $98,693.4 million, leading to a trade surplus of $5,667.1 million.

In the mean time, the month of September 2016 was marked by relatively mild inflation, at 0.22%. Yearly inflation in September 2016 was 3.07%, below the low end of the target corridor of the Central Bank. For that reason, and to stimulate the economy, the Central Bank further slashed the official benchmark rate (the seven-day reverse repo rate) by 25 basis points, to 4.75%.

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