The recent enactment of Indonesia’s Positive Investment List (Daftar Positif Investasi – DPI), has a knock-on effect on its Tourism sector. DPI has opened up wider possibilities for foreign investors to participate in Kawasan Strategis Pariwisata Nasional (KSPN), or commonly referred to as the “10 New Bali”- a nationwide project to expand Indonesia’s tourism investment climate beyond well-known Bali.
The new Positive Investment List has deregulated many sectors and business lines that were previously prohibited or partially open for foreign investment. Among these business lines include golf fields, themed parks, five-star and four-star hotels that have now been reclassified as Priority Sectors under Indonesia’s Positive Investment List which opens up opportunities for 100% foreign ownership.
What does it mean for foreigners entering Indonesia’s Tourism Investment?
Rebuilding The Future of Indonesia’s Tourism
For decades, Bali has been considered the epicenter of Indonesian tourism investment. In 2019, the number of international tourists in Bali grew to 6.3 million, up by 3.6%, from 6 million in 2018.
Bali’s economic output fell by 9.3% in 2020, making it the most affected province in Indonesia. However, the Bali government has started taking some serious strides towards reinvigorating its economy.
In early March, Bali launched a drive-thru vaccination that aims to inoculate 5,000 people, which accounts for half of the hospitality manpower living in Bali. Bali Governor, Wayan Koster hopes to vaccinate 2.5 million out of 4.5 million Bali residents by July when he targets reopen Bali for foreign travelers. Bank of Indonesia has forecasted Bali to recover 50% of its inbound tourists by the middle of 2021.
The tourism sector’s contribution towards Indonesia’s Gross Domestic Product (GDP) has increased from 11% in 2016 to 15% in 2019. With borders reopened and expected decline in social distancing through 2021 to 2022, Indonesia’s growth is projected to rebound to 4.4% by the end of 2021.
So what would Indonesia’s tourism sector look like if it had more than one Bali? Enters the government 10 New Bali project that aims to replicate Bali’s economic effect across 10 other islands.
Setting up Businesses in Bali, Lombok and Beyond
Consisting of over 17,000 islands, the archipelago has many more destinations with unique offerings that have yet to be discovered. Here are the new destinations that form Indonesia’s 10 New Bali Project:
- Mandalika, West Nusa Islands
Mandalika is specially designed as a tourism economic zone. Located on the south coast of Lombok Island, its other attractions include surfing spots and Gerupuk Village. The Government is also currently building a world-class MotoGP circuit in Mandalika which is expected to be completed by June 2021.
- Borobudur Temple, Central Java
Holding the title of the world’s largest Buddhist temple, Borobudur supports Indonesia’s reputation as home to cultural world heritage tourism. The temple houses no less than 2,672 painted reliefs and 504 Buddha statues, making it comparable to Cambodia’s Angkor Wat and Myanmar’s Bagan Temple.
- Lake Toba, North Sumatra
Occupying the caldera of a supervolcano, Lake Toba set in an area with ample opportunity for the continued expansion. Attractions in surrounding land include pine forests, waterfalls, and museums, where you can learn about the local Batak’s ways of life.
- Tanjung Lesung, Banten
Located in the westernmost of Java Island, Tanjung Lesung offers a bunch of holiday accommodation and beach activities. Its location is also close enough to gaze at the legendary Krakatoa Volcano.
- Thousand Islands, Jakarta
Stretched out 45 kilometers into the Java Sea, these scattering 110 of small islands is only a stone’s throw away from the capital city of Jakarta. Although the destination may not really carry the weight of its namesake, It’s still a perfect mix of marine activity and heritage tourism thanks to Dutch colonial fortresses.
- Tanjung Kelayang, Bangka Belitung
Mesmerizing rock formations litter this unique beach location that coupled with calm seawater that’s suitable for swimmers, undeveloped coastline, makes it a charming location for further enterprise.
- Mount Bromo, East Java
Located in the middle of a plain called ‘Sea of Sand’, Mount Bromo is included in the Bromo Tengger Semeru National Park, one of the most visited tourist destinations in East Java.
- Labuan Bajo, East Nusa Tenggara
A beautiful fishing town located at the western end of the large island of Flores in the Nusa Tenggara region of east Indonesia. With a local population eager to engage with tourists, Labuan Bajo is full of ample opportunities for visitors to experience what life is like in a small-scale rural Indonesian setting.
- Wakatobi, South Sulawesi
A luxury dive resort in a tranquil island setting far from crowds and cities. Wakatobi seamlessly blends five-star amenities and civilized comforts with a pristine natural environment; a pairing that has secured its reputation as one of the world’s finest diving and snorkeling destinations
- Morotai Island, North Maluku
An island of panoramic views, Morotai Island is popular with those interested in diving or fishing. Sits in the northernmost of the archipelago, its untapped beauty is begging to be developed with sensitivity and creative thought.
Some of 10 New Bali destinations, such as Tanjung Lesung, Morotai, Mandalika, and Kelayang, also considered as Economic Special Zone or commonly known as Kawasan Ekonomi Khusus (KEK), where the Government has imposed series of relaxed regulations and incentives for investment, including ease of doing business through Online Single Submission (OSS), as well as fiscal incentives such as Tax Holiday and Tax Allowance.
How Do You Start?
Although investing in 10 New Bali Project sounds promising at first glance, foreigners still need adequate knowledge regarding the market outlook. Successful market entry strategy usually involves extensive market research as an effective method to get a picture of the characteristics and opportunities in the local landscape.
The market study will help you to answers the following common questions:
- What is the economic potential in the territory?
- What are government regulations for this specific market sector?
- Which products are suitable for this market?
- What should be the pricing in the new market?
- Who are the potential local partners in the new territory?
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