Exploring the Potential of Indonesia's Tourism Industry

Exploring the Potential of Indonesia’s Tourism Industry

  • InCorp Editorial Team
  • 5 May 2023
  • 4 minute reading time

Indonesia’s tourism industry is experiencing an exciting phase of growth and development, presenting numerous opportunities for potential investors. With its diverse natural attractions, rich cultural heritage, and warm hospitality, Indonesia has become an increasingly popular destination for global travelers. 

The Indonesian Government has also taken several measures to support the tourism industry’s growth by opening it up to foreign investment and prioritizing sustainable tourism projects.

As a result, the industry has grown steadily in recent years, making it an attractive sector for investors looking for high investment returns. 

In this context, exploring the investment opportunities available in Indonesia’s tourism industry can be wise for those seeking to diversify their portfolio and tap into the country’s thriving tourism market.

The Tourism Industry in Indonesia

The goal of the Indonesian Government is to attract up to 7.4 million foreign tourists in 2023, almost twice the number of foreign tourists that visited the country this year. 

The Tourism Minister, Sandiaga Uno, said they aim to earn between $2.07 billion and $5.95 billion in foreign exchange earnings in 2023. 

As of October 2022, Indonesia had already exceeded its 2022 target of having 3.6 million foreign tourists arrive, with around 3.92 million foreign tourists visiting the country. 

Tourism contributed $4.26 billion to Indonesia’s foreign exchange earnings, almost ten times higher than the previous year. 

According to Sandiaga, this is due to the country’s better handling of the COVID-19 pandemic and the reintroduction of the visa-on-arrival scheme, which increased foreign tourists. 

The country’s hosting of the G20 and other international events, such as the Mandalika MotoGP, also helped boost the tourism sector.

Investing in Indonesia’s Tourism Sector 

The Indonesian tourism sector may face challenges in 2023 due to the threat of a global recession, high airfares, and inflation, impacting consumer spending behavior. 

The tourism ministry has taken steps to tackle these difficulties by allowing foreign investment in sustainable tourism ventures. They focus on five key tourist destinations and eight special economic zones created for tourism.

The ministry has also stated that these opportunities are valued at $1.5 billion and would create 1.5 million new jobs.

Read more: Understanding Visit Permits in Indonesia: An Overview for Foreigners

Investment Opportunities in Indonesia’s Tourism Sector

Exploring the Potential of Indonesia's Tourism Industry

Indonesian President Joko Widodo believes 2023 will be a good time to accelerate tourism growth. 

He emphasized the need for sustainable tourism development to preserve the country’s natural and cultural heritage. 

The president expressed his optimism that Indonesia can achieve its target of attracting foreign tourists in 2023.

The Ministry of Tourism and Creative Economy in Indonesia has identified three priority sports events for sports tourism in 2023. In general, the events were:

1. FIM MotoGP World Championship

This premier motorcycle racing championship attracts thousands of fans and participants worldwide.

The event is scheduled in Mandalika, Lombok, and is expected to showcase Indonesia’s natural beauty and cultural heritage.

2. 2023 World Beach Games

This event is organized by the Association of National Olympic Committees (ANOC) and will feature beach sports such as beach volleyball, beach soccer, surfing, and stand-up paddleboarding. 

The event will occur in Bali, attracting thousands of athletes and spectators worldwide.

3. FIBA World Cup 2023

Indonesia has been actively preparing for the FIBA World Cup 2023 since it was announced as the host country. The government has invested heavily in upgrading basketball infrastructure, including building new stadiums and renovating existing ones.

The Gelora Bung Karno Sports Complex in Jakarta, which will host the opening ceremony and some of the games, has undergone major renovations to meet international standards.

Read more: How Indonesian Tourism Development Will Bounce Back

The Challenge Investing in Indonesia’s Tourism Sector

Exploring the Potential of Indonesia's Tourism Industry

President Joko Widodo has stated that the Indonesian Government needs to address three key challenges to boost the growth of its tourism industry: licenses, incentives, and infrastructure. 

He emphasized the importance of streamlining the licensing process for tourism-related businesses to reduce bureaucracy and attract more private-sector investment. 

The president also called for incentives for investors to develop the country’s tourism industry and enhance its competitiveness. 

Additionally, improving transportation and accommodation infrastructure is critical to attracting more visitors, creating jobs, and driving economic growth. . 

Indonesia continually improves and focuses on its tourism sector. But, aside from that, the Indonesian Government has even identified its shortcomings in these sectors and is moving to address them. 

The current scenario presents a favorable opportunity for foreign investors seeking to invest in the Indonesian tourism sector.

Conclusions

To accomplish the task above, partnering with a reputable organization with ample experience and expertise in navigating the Indonesian regulatory framework would be highly beneficial. 

InCorp Indonesia, with years of industry knowledge and efficient processes, stands out as the ideal collaborator for obtaining KITAS (Limited Stay Permit Card) and even assisting with company registration procedures.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Frequent Asked Questions

As an investor, you are required to have a minimum investment of IDR 1 billion in invested shares to be eligible for an investor KITAS.

An Index 313 Investor KITAS will allow its holder to stay in Indonesia for a year, while an Index 314 Investor KITAS allows for a 2 year stay.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.