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Jakarta Post

Tourism stakeholders focus on infrastructure, long-term investment amid slump

  • Mardika Parama

    The Jakarta Post

Jakarta   /   Mon, August 10, 2020   /   07:41 pm
Tourism stakeholders focus on infrastructure, long-term investment amid slump This aerial picture taken on April 4, 2019, shows Indonesia's Lake Toba, from Sigapitan, which covers some 1,707 square kilometers of North Sumatra, nearly twice the size of Singapore. The lake was formed by a gigantic volcanic eruption some 70,000 years ago. It is the largest resurgent caldera on Earth. (AFP/Goh Chai Hin)

The government is focusing on improving infrastructure and bringing long-term investments to tourist destinations this year, as it projects pandemic-related pressures to continue affecting the sector in the coming years.

The Tourism and Creative Economy Ministry’s deputy of destination and infrastructure development, Hari Santosa Sungkari, said on Aug. 7 that the ministry expected a full recovery of foreign tourist arrivals by 2025.

This year, it estimates foreign tourist arrivals to reach between 2.8 million and 4 million visitors, well below the government’s initial target of 18 million.

With the lengthy recovery, the government will focus instead on developing infrastructure at tourist spots, including creative hubs at so-called “super-priority” tourist destinations, slated to be completed by next year. The creative hubs would showcase art projects and market local products to visitors, Hari said.

“We are running a rebound program for super-priority tourist destinations through the Clean, Health, Safety and Environmental protocol and through the construction of creative hubs,” he said.

The government has been working to develop five super-priority tourist destinations as part of its effort to make the tourist industry one of the new drivers of the country’s economic growth. The destinations are Lake Toba in North Sumatra, Borobudur in Central Java, Labuan Bajo in East Nusa Tenggara, Mandalika in West Nusa Tenggara and Likupang in North Sulawesi.

The COVID-19 pandemic has depressed foreign tourist arrivals to Indonesia, which plummeted 59.96 percent to 3.09 million in the first half of the year amid international border closures and travel restrictions, Statistics Indonesia (BPS) data show.

Amid the tourism slump, Lake Toba Tourism Authority Board (BOPDT) director Arie Prasetyo said the government was currently running several infrastructure projects to improve travel between the destinations.

For example, near Lake Toba is the expansion of Sisingamangaraja XII International Airport, as well as Sibisa Airport construction.

“We are also revitalizing our national roads, which have reached the 90 percent progress mark,” he said.

According to Arie’s presentation document, the government is running two national road projects near the lake, the Lake Toba ring road and Samosir ring road, set to be completed this year.

The government is also in the process of completing a master plan for Labuan Bajo and preparing basic tourism infrastructure at the destination to host the G-20 Summit and ASEAN Summit in 2023.

Meanwhile, state-owned Indonesian Tourism Development Corporation (ITDC), the developer of tourist destination Mandalika, projected the area’s basic infrastructure projects to reach completion by 2022.

“We have submitted a proposal for a state-fund injection to the government and investment proposals to private entities to fund the island’s [infrastructure development projects],” ITDC development director Edwin Darmasetiawan said on Aug. 7.

ITDC presentation documents show that the company plans to build two five-star hotels, two villa compounds and a convention hall for the G-20 and ASEAN summits.

The state-owned firm previously signed agreements with 12 investors, such as global hotel chains Pullman, Marriott and Paramount, to build lodging in the region with a total investment commitment of around Rp 2.8 trillion (US$190.6 million).

ITDC had also signed an investment deal in 2018 with French construction company Vinci Construction Grands Projets to build hotels, entertainment districts and a hospital with a total investment of Rp 14.2 trillion.

However, ITDC also reported that negotiations with the Walt Disney Company to build a theme park on the island had faltered.

“We’ve approached Disney about building a theme park in Mandalika, but they said it’s not the right time because visitor traffic was low,” Edwin said.

Investment Coordinating Board (BKPM) investment planning coordinator Nurul Ichwan acknowledged on Aug. 5 that attracting investment in the tourism sector would be difficult during the COVID-19 pandemic and developers should change their marketing narratives.

“We should prepare investment proposals that emphasize [the destinations’] long-term potentials,” he told The Jakarta Post during an online discussion held by the Pacific Asia Travel Association (PATA).

According to BKPM data, foreign investment in hotels and restaurants fell 57.9 percent year-on-year (yoy) in the second quarter of 2020 to $48.7 million. Domestic investment in the sector also fell, by 43.6 percent yoy to Rp 2.45 trillion during the same period.