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Tourism listed among RI’s priority investments in 2017

Backing up the Tourism Ministry in maximizing Indonesia’s exceptional asset as the world’s largest archipelagic country, the Investment Coordinating Board (BKPM) has declared tourism as a priority investment target this year

Stefani Ribka (The Jakarta Post)
Nusa Dua
Sat, February 25, 2017

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Tourism listed among RI’s priority investments in 2017

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acking up the Tourism Ministry in maximizing Indonesia’s exceptional asset as the world’s largest archipelagic country, the Investment Coordinating Board (BKPM) has declared tourism as a priority investment target this year.

BKPM aims to receive Rp 18 trillion (US$1.34 billion) of capital from local and foreign investors this year, a 20 percent increase from last year’s Rp 15 trillion. About Rp 12.8 trillion of it came from foreign investments.

“I’m convinced that tourism will be a big industry in the future based off its robust growth in Indonesia. We project 15 to 20 percent growth in rupiah value this year,” said BKPM head Thomas “Tom” Lembong at the 2017 Regional Investment Forum in Bali on Thursday.

The forum, attended by 400 investors and Indonesia’s ambassadors to China, Singapore and the Netherlands, among others, was focused on attracting them to invest in public infrastructure that will support tourism activities mainly in 10 priority destinations dubbed “the 10 New Balis”.

Investors will enjoy ease of investment in the 10 new destinations: Morotai in Maluku, Labuan Bajo in West Nusa Tenggara, Tanjung Lesung in Banten, Tanjung Kelayang in Belitung, Wakatobi in Southeast Sulawesi, Lake Toba in North Sumatra, Bromo-Tengger-Semeru in East Java, the Thousand Islands in Jakarta, Borobudur in Central Java and Mandalika in West Nusa Tenggara.

Tourism Minister Arief Yahya tried to persuade the attendees that public infrastructure is open for private investors. However, for strategic infrastructure, such as main airports and sea ports, they will be required to collaborate with state-owned firms.

“We do accept private investment for public infrastructure. The government is realistic because it can only supply 30 percent of the amount of investment needed to develop the 10 New Balis,” he remarked.

The ministry has slated $20 billion from the state budget to build the destinations through 2019. Half of it will be spent on amenities, like resorts, hotels, restaurants and entertainment centers, while the rest is allocated for the infrastructure for roads, ports, water, electricity and waste management.

However, the central and regional governments can only cover 30 percent of the $10 billion investment needed for infrastructure.

Tom revealed that he had received many inquiries from investors in Singapore, the UK, the Netherlands and South Korea to build waste, water and energy management facilities, and they were now running feasibility studies and working on cooperation with the regional administrations.

Private investors can benefit from building the infrastructure through various methods, such as Build, Operate and Transfer (BOT), in which investors build and charge the public once the facility runs and then transfer the ownership rights to the government after the concession period ends. They can also benefit from the rise in land or asset prices once the area is well-developed.

Located on the equator with 17,000 islands and 300 ethnic groups, Indonesia benefits from natural and cultural resources that enhance its tourism contribution to the GDP.

Every $1 million in tourism spending supports 200 jobs and $1.7 million in GDP, according to the World Travel and Tourism Council. The World Bank has declared that Indonesia “has the potential to develop a world-class tourism industry,” the October 2016 Quarterly Economic Report reads.

Indonesia Ambassador to China, Soegeng Rahardjo, said more Chinese firms have stated their interest in building up the tourism infrastructure in Bali, Bintan and Belitung in Sumatra and Manado in North Sulawesi but are still doing feasibility studies. “Their biggest concerns are land disputes and red tape in regional administrations,” he said.

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