Indonesia Tourism Shifts Focus to Domestic Travel for Recovery

Following the onset of the COVID-19 pandemic, Indonesia has pivoted its tourism strategy to rely on domestic travelers as a primary engine for economic recovery [2]. While foreign tourist arrivals saw a significant decline of 60.98% by the end of 2021 compared to the previous year, the movement of local tourists increased by 12% during the same period [2].

Key takeaways

• Domestic tourist movements increased by 12% in 2021, serving as a critical driver for the national tourism sector [2].
• Tourism foreign exchange earnings rose to US$0.36 billion in 2021, a 4% increase over 2020 figures [2].
• The government is targeting 260 million to 280 million domestic tourist movements in 2022 to support GDP growth [2].
• Indonesia is transitioning its tourism model from a focus on quantity to quality and sustainable practices [2].
• The creative economy, including culinary, craft, and fashion sectors, is expected to generate over 600,000 new jobs in 2022 [2].

Prioritizing Domestic Travel and Creative Industries

The shift toward domestic tourism is part of a broader effort to stabilize the national economy, which has historically relied heavily on raw commodity exports [1]. Minister of Tourism and Creative Economy Sandiaga Uno noted that the pandemic accelerated a paradigm shift toward "quality and sustainable tourism," a directive originally set by President Joko Widodo in 2019 [2]. This approach emphasizes personalized, localized, and smaller-scale travel experiences, supported by improvements in infrastructure, access, and amenities [2].

Beyond tourism, the government is leveraging the creative economy to stimulate growth. In 2021, the added value of the creative economy reached IDR 1,273 trillion, with export values for creative products estimated at US$20.58 billion [2]. For 2022, officials have set ambitious targets to create 400,000 new jobs in the tourism sector and up to 700,000 in the creative economy [2]. These efforts are complemented by a focus on the MICE (Meeting, Incentive, Convention, and Exhibition) industry to further attract activity [2].

Why it matters

The pivot to domestic tourism and the creative economy represents a strategic attempt to diversify Indonesia's economic foundations. While the country possesses significant potential due to its large, burgeoning population and abundant natural resources, it has faced challenges from fluctuating commodity prices and global economic slowdowns [1]. By strengthening domestic sectors, the government aims to reduce its vulnerability to external shocks and create a more resilient economic structure [1]. Looking ahead, the success of these initiatives depends on continued infrastructure development and the ability to maintain political and fiscal stability, which have been key factors in attracting international investment and credit rating upgrades in recent years [1].