Indonesia Tourism Report Q3 2009

Steady Start To 2009 Indonesia had a relatively strong start to 2009 according to tourist arrivals data. About 1.82mn tourists visited the archipelago over the January-April period, representing annual growth of 1.35%, according to figures from the Central Bureau of Statistics (Badan Pusat Statistik, BPS). At a time when its neighbours are struggling with falling visitor numbers, this is an impressive result.

Looking forward, Indonesia should continue to benefit from its status as a ‘low-cost’ Asian holiday destination. It has not been as affected by the ongoing credit crunch as some of its peers have. However, it is hard to see how the country will entirely escape from the ongoing economic crisis gripping developed world markets. We still believe that a very slight fall in tourist arrival numbers is the best case scenario for 2009, with 2010 proving essentially flat. Beyond this point however, we see scope for a rapid rebound in the industry as demand returns. Fundamentally, BMI remains upbeat on the long-term potential for Indonesian tourism.

Difficult Operating Environment The current global economic slowdown is providing a challenging backdrop for companies operating within the Indonesian tourism industry at present. A report in The Jakarta Post underlined the seriousness of the current situation, quoting Harry Waluyo, director of the Ministry of Culture and Tourism’s Data and Network Centre, as saying that the domestic tourism industry could lose 20% of its workforce, 4.41mn people.

BMI will continue to monitor the situation in Indonesia to see if any further changes to our tourism forecasts prove necessary. For now, the country’s attraction as a ‘low-cost’ destination is insulating it from some of the turmoil gripping other Asian tourism sectors.

EU Team In Jakarta To Discuss Airline Safety Indonesian airlines are banned from entering either the EU’s or the US’ airspace. These bans were implemented by the relevant civil aviation authorities in 2007 following concern that Indonesian aviation standards were not in compliance with the International Civil Aviation Organisation (ICAO). In June 2009, a team of EU officials arrived in Jakarta to discuss the country’s aviation industry.

According to a report in the Jakarta Globe, the ICAO previously identified 69 recommendations on safety regulations that Indonesia needs to meet before the EU will consider lifting its ban. The newspaper quoted Minister of Transportation Jusman Syafii Djamal saying that so far 66 of the recommendations had been fulfilled, with the three remaining recommendations being addressed at the time.

However, there is no word yet on whether the EU or the US are considering lifting the bans on Indonesian aircraft entering their airspace. Although no Indonesian carriers were flying to the EU when the ban was introduced, it acts as a deterrent to European travellers wanting to travel around the country on domestic flights, as European travel agents are obliged to warn their clients about the risks of travelling by air.