Indonesia’s
tourism in global perspective and what should we do about it
Bambang Udoyono
There is no doubt that tourism is getting more and
more important in global economy. That explains why Indonesia does not want to
miss the tremendous opportunity. Despite the fact that Indonesia has natural
beauty and various cultural heritage throughout the country, the number of
arrival and earning is still relatively low compared to neighboring countries
in Southeast Asia. The question is what
are the factors behind these low numbers?
Then I search for information and try to find answer to my
questions. Now let’s pay attention to
the following facts.
Data provided by World Economic Forum who published
Travel and Tourism Competitiveness Index reveals some interesting facts on Indonesia’s
tourism. Here is my note about the data.
Travel
and Tourism Competitiveness Index is a biannual report published by World
Economic Forum starting in 2007. In
their own words it “measures the
set of factors and policies that enable the sustainable development of the
Travel & Tourism sector, which in turn, contributes to the development and
competitiveness of a country”.
The TTCI consist of fourteen pillars organized into
four sub indexes. Here are the four sub indexes and the pillars:
The Enabling Environment that consist of:
1. Business Environment
2. Safety and Security
3. Health and Hygiene
4. Human Resources and
Labour Market
5. ICT Readiness.
The Travel and
Tourism Policy and Enabling Conditions:
6. Prioritization of Travel and Tourism
7. International Openness
8. Price Competitiveness
9. Environmental Sustainability.
Infrastructure
sub index consists of:
10. Air Transport Infrastructure
11. Ground and Port Infrastructure
12. Tourist Service Infrastructure.
Natural and
Cultural Resources Index consists of:
13. Natural Resources
14. Cultural Resources and Business Travel.
Those
pillars consist of many detailed indicators.
Each pillars and sub indexes will be valued from 1 to 7. They conduct survey in 141 economies and then
made a rank of them. There are two ranks – global rank and regional rank. Here
is the top ten in global rank.
Rank Country/Economy Value
1 Spain 5.31
2 France 5.24
3 Germany 5.22
4 United States 5.12
5 United Kingdom
5.12
6 Switzerland 4.99
7 Australia 4.98
8 Italy 4.98
9 Japan 4.94
10 Canada 4.92
50 Indonesia 4.04
Indonesia ranks
no 50 out of 141 countries while in Asia Pacific region Indonesia ranks 11.
This is regional
rank.
1.
Australia.
2.
Japan.
3.
Singapore.
4.
Hong
Kong SAR.
5.
New
Zealand.
6.
China.
7.
Malaysia.
8.
Republic
of Korea.
9.
Taiwan.
10. Thailand
11. Indonesia.
Here are the
detailed values of Indonesia in the above- mentioned pillars.
The Travel & Tourism Competitiveness Index
Rank (out of 141) Score
(1–7)
50 4.04
Enabling Environment .......................80 ...........4.46
Business Environment....................... 63 ...........4.48
Safety and Security............................. 83 ...........5.16
Health and Hygiene ............................ 109 ...........4.24
Human Resources and Labour Market … 53 ............4.70
ICT
Readiness........................................
85 ............3.73
T&T Policy and Enabling Conditions........ 9 ............4.59
Prioritization of Travel & Tourism ..........
15 ............5.61
International Openness ........................55 ............3.55
Price Competitiveness ............. 3 ............6.11
Environmental Sustainability .........
134 ...........3.11
Infrastructure ...................................
75 ...........3.38
Air Transport Infrastructure ............
39 ...........3.81
Ground and Port Infrastructure.....................
77 ...........3.27
Tourist Service Infrastructure.......................
101 ..........3.07
Natural and Cultural Resources. ............
17 ..........3.74
Natural
Resources.......................................... 19 ..........4.36
Cultural Resources and Business Travel......... 25 ..........3.12
From the above
data it is clear that Indonesia’s strength is price competitiveness. It ranks 3 out of 141 countries. Its value is 6.11. The indicators for this factor are:
Value rank
8.01 Ticket taxes, airport charges (0–100
best)*......... 92.7 .............11
8.02 Hotel price index
(US$)*...................................... 93.9 .............17
8.03 Purchasing power
parity*...................................... 0.4 .............17
8.04 Fuel price levels (US$ cents/litre)*.......................
47.0 .............11
Therefore the Indonesian
government should try its best to keep the fuel price at the current level. It
is advisable that the business community maintain hotel price at this level.
Indonesia’s
weakness is environmental sustainability which ranks 134 or ranks 8 from
below. The indicators are:
Value
rank
9.01 Stringency of environmental
regulations†.............. 4.0 .............73
9.02 Enforcement of environmental
regulations†........... 3.9 .............64
9.03 Sustainability of T&T development†...................... 4.6 .............57
9.04 Particulate matter (2.5) concentration
(μg/m3)*.....9.2 .............80
9.05 No. of envtl. treaty ratifications (0–27
best)*.......... 20 .............63
9.06 Baseline water stress (0–5 worst)* ........................
3.3 .............99
9.07 Threatened species (% total species)* ................
13.1 ...........129
9.08 Forest cover change (% average per year) *........
–5.5 .............97
9.09 Wastewater treatment (%) *..................................
0.0 ...........117
9.10 Coastal shelf fishing pressure (tonnes per
km2)*..... 0.2 .............73
Besides that
tourist service infrastructure ranks 101.
The indicators are:
Value rank
12.01 Hotel rooms per 100
pop.*................................... 0.2 ...........100
12.02 Extension of business trips
recommended†.......... 5.3 .............67
12.03 Presence of major car rental
companies†................ 2 ...........105
12.04 ATMs accepting Visa cards per million
pop.*.... 301.0 .............86
Health and
hygiene ranks no 109. This is another important factor that cannot be ignored.
The indicators are:
Value rank
3.01 Physician density
per 1,000 pop.*........................ 0.2 ...........113
3.02 Access to improved sanitation (%
pop.)*............ 59.0 ...........105
3.03 Access to improved drinking water (%
pop.)*..... 85.0 ...........105
3.04 Hospital beds per 10,000 pop..............................
9.0 ...........113
3.05 HIV prevalence (%
pop.)*...................................... 0.4 .............74
3.06 Malaria incidence per 100,000
pop.*............. 2,268.5 .............48
I believe that
the most important of all is human capital or in WEF term it is called human
resources and labor market. It ranks 53. Here are the indicators:
Value rank
Qualification of the labour force ............................
5.4 .............57
4.01 Primary education enrolment rate
(%)*................ 92.2 .............85
4.02 Secondary education enrolment rate
(%)*........... 82.5 .............90
4.03 Extent of staff
training†.......................................... 4.7 .............24
4.04 Treatment of customers†......................................
5.0 .............39
Labour market ...................................................
4.0 .............72
4.05 Hiring and firing
practices†.................................... 4.3 .............32
4.06 Ease of finding skilled
employees†........................ 4.3 .............42
4.07 Ease of hiring foreign
labour†................................ 4.4 .............36
4.08 Pay and
productivity†............................................ 4.5 .............30
4.09 Female labour force participation (% to
men)*....... 0.6 ...........111
Those
factors must be fixed immediately if Indonesia wants to improve its
competitiveness to make ends meet. That’s
the picture of Indonesia’s present condition. Now let’s take a look at the opportunity
of tourism market in the future.
Meryl Lynch prediction.
Meryl
Lynch predicted that there will be 174 million Chinese tourists who go abroad
and estimated to spend US $ 264 billion. As for age composition, 35% of them
are between the ages of 25-34 years old. After that 27% of them are between
15-24. They are the world’s biggest
consumer of luxury goods.
The world’s biggest spender according to World Tourism
Organization.
World's Top Tourism Spenders
1 China
2 Germany
3 United States
4 United Kingdom
5 Russian Federation
6 France
7 Canada
8 Japan
9 Australia
10 Italy
11 Singapore
12 Brazil
13 Belgium
14 Hong Kong (China)
15 Netherlands
Source: World Tourism Organization (UNWTO) © (Data
as collected by UNWTO April 2013).
Those
facts make it clear that there will be great opportunity in global tourism
market by 2019. In brief the biggest
market will be Asian countries like China, Japan and Singapore. Next biggest
will be European market and last is American market. Unfortunately Indonesia is not an attractive
destination for them since Indonesia is only ranks 50 from 141 countries. Whether Indonesia can achieve its target of foreign
tourist arrivals of twenty million people is still a big question mark. Failure to achieve the target will bear serious
consequences both for government and for business community.
To be able to achieve the target the
Indonesian government must make extra effort to fix
weaknesses especially in health and hygiene, tourism service infra structure, environmental
sustainability, and human resources. If
those weaknesses still prevail in 2019 and the target is met then there will be
catastrophic consequences. How can they provide good service to millions of
people who visit Indonesia with mediocre infra structure? If the human
resources are not ready then the situation will get worse. The service will be below standard. Tourist
will complain and the following year foreign tour operators will be reluctant
to promote Indonesia to their markets.
Fixing
the weaknesses is far from easy because it needs inter departmental
coordination. Everybody knows that coordination among many government agencies
is one of the worst weaknesses in Indonesia. Take infrastructure development
for example. It will need coordination with local government and ministry of
public works, not to mention development of other supporting factors written
above. How can we do that in just four
years from now? It is hard to imagine.
Bearing
in mind that there will be many obstacles I come to a conclusion that it will
be better to change the target. The
ideal target is not about numbers of arrival but amount of money. Instead of
targeting twenty million tourist who will spend approximately 17 billion US$ it
is better to target about fifteen million tourist who will spend more than 17
billion US $, let’s say 20 billion US $.
Besides
extra effort to fix those weaknesses to improve Indonesian competitiveness
index and to promote Indonesia in global tourism market, it is advisable to
focus on the biggest spender in tourism market and also on the fastest growing
market. The fastest one is Asia Oceania
market which grew 16, 40% from 2013 to 2014, followed by Middle East market
which grew 15, 40% for the same period. (Sources : Biro Pusat Statistik /
Central Bureau of Statistic)
Therefore
I come to a conclusion that the target of achieving twenty million arrivals in
2019 is almost impossible if our rank in TTCI is not in the top ten. Even if the target is met but our rank is
below top ten then it will bring boomerang to Indonesian tourism industry. So
it is better to revise the target. It is better to focus on high end, more
profitable market and the fastest emerging market.
Sources
Biro Pusat
Statistik (Central Bureau of Statistic), Statistik Kunjungan Wisatawan 2014.
World Economic
Forum, The
Travel & Tourism Competitiveness Report 2015: T&T as a Resilient Contribution
to National Development.
UNWTO, World
Tourism Organization, Annual Report 2014.
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