In 2008, tourist arrivals to Indonesia increased by 13.2%, to 6.23mn. This was just shy of our forecast of6.35mn arrivals for the year and reflects the deteriorating economic backdrop seen over the latter half ofthe year. However, the performance has still marked a solid year for Indonesian tourism, in the face ofmany challenges, including the global economic crisis and travel advisories warning against travel to thearchipelago. To some extent, Indonesia may have benefited from tourists switching holidays away fromtroubled Thailand, where anti-government protests closed the country’s main international airport duringNovember 2008. Tourism receipts for the year have been estimated at US$7.5bn by Tourism MinisterTourism and Culture Minister Jero Wacik.
But 2009 Will Be Challenging
Despite Indonesia’s resilience in 2008, it is hard to see how the country will escape from the ongoingeconomic crisis gripping developed world markets. As such, although Indonesia might still fare betterthan its competitors, due to its image as a ‘low-cost’ travel destination, we still think it prudent to makesome downward revisions to our previous forecasts for tourist arrivals in 2009 and beyond. Moreover, thecountry has both parliamentary and presidential elections during the current year, which may raise thespectre of social unrest. We now believe that a slight fall in tourist arrival numbers is the best-casescenario for 2009, with 2010 proving essentially flat. Beyond this point however, we see scope for a rapidrebound in the industry as demand returns.
Garuda Pilot Sentenced
In April 2009, the pilot of the Garuda Indonesia Boeing 737 which crashed at Yogyakarta Airport inMarch 2007, killing 21 people, was found guilty of criminal negligence and jailed for two years. MarwotoKomar ignored some 15 cockpit warnings not to land his plane as he tried to land at twice the safe speed.Reaction from families of the five Australian victims has been critical, with many saying that a two-yearsentence was too lenient. Indeed, prosecutors had been seeking a longer four-year term. Certainly, thetrial has done much to remind foreign travellers that air travel in Indonesia remains less safe thanelsewhere in the region.
Temporary Ban On Hotel Construction On Bali
An April 2009 report on the Tourism Indonesia website stated that the Balinese provincial administrationhas issued a temporary ban on the construction of new hotels and villas. According to the report, thedecision was taken after a three-day development planning meeting and is intended to protect theecosystem of the island. The chairman of the Balinese branch of the Association of Indonesian Hotels andRestaurants (PHRI), Tjokorda Oka Artha Ardana Sukawati, welcomed the decision and said that hisorganisation had been recommending a ban on new builds, particularly of large hotels, for some time.Difficult Operating Environment For Tourism Companies
The current global economic slowdown is providing a challenging backdrop for companies operatingwithin the Indonesian tourism industry at present. Hotel occupancy rates across the archipelago are fallingand airlines are having to deal with slumping demand.
A recent report in The Jakarta Post underlined the seriousness of the current situation, quoting HarryWaluyo, director of the culture and tourism ministry's Data and Network Centre, as saying that thedomestic tourism industry could lose 20% of its workforce (some 4.41mn people).As such, BMI will continue to monitor the situation in Singapore to see if any further changes to ourtourism forecasts prove necessary.
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