Contributing 5.1% to the national GDP, Indonesia’s tourism industry remains a key area targeted to attract foreign investment and fuel economic growth. The Indonesian government is actively working to entice foreign entrepreneurs to invest their capital in Indonesia.
Comprehensive Investment
Building on the momentum of the successful June 2024 International Tourism Investment Forum that secured USD 53,2 million, Indonesia’s Ministry of State-Owned Enterprises wasted no time. In mid-July, they proactively sought collaboration with additional foreign investors.
Minister Erick Thohir’s initiative bore fruit, attracting a major investment from Eagle Hills, a prominent property developer from the United Arab Emirates. This strategic partnership, valued at USD 3 billion, signifies a shared vision to enhance Indonesia’s tourism and infrastructure sectors. The investment promises to drive national economic growth and create new employment opportunities.
The collaboration involves comprehensive investments across various sectors. Minister Thohir elaborated that it will encompass hotel property development, airport zones, and the creation of holistic tourism destination ecosystems.
Notably, Eagle Hills has also expressed their commitment to supporting airport development and the modernization of state-owned hotels. All projects will adhere to the highest international standards, contributing to the development of new and thriving tourism destinations in Indonesia.
Falls Short
In 2024, the contribution of tourism to the Indonesian economy is estimated to exceed USD 70 million, a significant jump of 12.3% from 2023 and even exceeding pre-pandemic levels (7.7% higher than 2019). With tourism bringing in more money than ever, investment needs to catch up to ensure this growth is sustainable.
Data from 2023 reveals that while investment in the tourism sector reached US$3,604 million, a staggering 80% concentrated on luxury hotels, restaurants, cafes, and fitness centers. This trend continued into the first quarter of 2024, with US$943.40 million invested, primarily in hotels, restaurants, and apartment hotels.
Notably, this figure falls short of the US$3 billion target. To make tourism sustainable, Indonesia might need another US$15-20 billion invested. This money should help the environment, culture, and local people, so everyone benefits from tourism in the long run.
Chain Reaction
Yes, Indonesia’s tourism industry is taking off and it offers many business opportunities. Especially in favorite destinations like Jakarta, Jogjakarta, Bali and Lombok. Tourism sector is not all about hotels and entertainment business, it sets off a chain reaction which means tourism also relies on a network of supporting industries, such as:
- Food and Beverage (F&B): Restaurants, cafes, and bars cater to tourists’ dining needs, offering various local and international cuisine.
- Real Estate: Tourism growth increases the demand for accommodation, driving investment in coworking spaces, vacation rentals and even property development for second homes.
- Retail: Tourists often frequent shops selling souvenirs, handicrafts, clothing, and other goods. This fuels sales for retail businesses.
- Transportation: Ride-hailing services, car & motorbike rentals play a crucial role in transporting tourists to and around their destinations.
- Financial Services: Currency exchange services, money transfers, and travel insurance are all essential for tourists.
Supporting Industries
Those supporting industries are indirectly impacted by tourism’s growth and contribute to the overall tourist experience. Certainly, a goldmine of exciting investment possibilities. However, for foreign business, managing legal aspects and language barriers through legal processes in Indonesia can create some challenges. This is where Seven Stones Indonesia can be your trusted local partner.
We provide comprehensive support for foreign businesses, from corporate services like market-entry preparation and company incorporation, to finding prime property location and tax & accounting matters. We handle all the legal complexities of starting and running a business in Indonesia so you can operate with peace of mind.
If you need more details about investment and setting up business in Indonesia, contact us today to talk to our experts. Or fill in our contact form below with your questions. We will answer your questions and help you turn your investment vision into reality.
