The Impacts of Global Financial Crisis to the Indonesian’s Tourism Receipts

Tourism can aid the economic growth by providing foreign currency receipts to finance to purchase the essential imports, increasing local income and employment, and government revenue from taxation and stimulating investment. The tourism industry in Indonesia has expanded as a prospective contributor for earning of a number of areas. Nowadays, tourism is not only potential in Bali but also probable in all parts of Indonesia. Tourism industry becomes more prospective sector in Indonesia.

Indonesia’s tourism sector generated 7,377.39 million US$ in 2008 and in absolute terms, tourism receipt increased US$ 2,031.41 million compare to previous year 2007. The tourism receipts also increased in 2007 to some US$ 5,345.98 million against US$ 4,447.98 in 2006.

Global financial crisis that began to affect the tourism industry since 2008 as the data presented by UNWTO, apparently does not provide the same effect if we see the tourism receipts of Indonesia. The data indicates that the trend of tourism receipts is increasing. The condition is different compare to other neighboring countries that affected by the global financial crisis. Among them, Singapore, Thailand, and Japan’s tourism industry in the same period experienced negative growth. Singapore in January-April 2009 grew minus 11.8% (down 401,957 people), Thailand in January 2009 minus 19.69% (down 206,322 people) and Japan in January-March 2009 minus 27.2% (down 582,259 people).

During 2001 to 2008, the average growth of tourism receipt was 6.17%. Indonesia’s tourism receipts grew at 20.19% (compared to a decline of 1.63% in 2006) and increased reached 38% in 2008. The events in Bali have had an adverse effect on tourism receipts and the current account balance, as tourism in Bali accounts for approximately one-quarter of national tourism receipts (1-1.5% of GDP). The government also plays an important role in the industry by initiating government to government (G2G) and government to business (B2G) relationships to promote and facilitate travel and tourism in the country. Some bilateral relationships include the new relationship with Russia after Vladimir Putin’s visit, promotions by overseas cultural attachés, co-operation with Jakarta and its sister cities through the Jakarta Tourism Summit, and public-private sector co-operation in building infrastructure and facilities. The government is also very supportive in developing tourism alternatives such as Meetings, Incentives, Conferences and Exhibitions (MICE) by encouraging local travel and tourism players to participate in PATA Travel Mart 2007.

Indonesia got the benefit of this crisis due to the image of Indonesia as value for money destination. According to World Economic Forum (2008b), Indonesia ranks number one overall on price competitiveness in the Travel and Tourism industry because of very reasonable hotel prices, low ticket taxes and airport charges, favourable fuel prices and overall relatively low prices. The global financial crisis make the tourist very selected in choosing the tourist destination, where they want to travel and most of them plan to reduce the frequency of travel in order to deal with the insecurity of their finance.

The year 2009 is the big challenge for tourism industry in Indonesia as WTTC (2009) indicates that the downturn will continue through 2009. The deterioration in global economic conditions squeezes spending on Travel & Tourism by both households and businesses. International demand is likely to be under the most pressure, as world trade declines and more travellers cut costs by choosing to holiday in their home countries. In 2009, travel and tourism in Indonesia is forecast to see real decline (-2%) direct industry GDP to US$ 13bn, (-2.3%) of direct industry employment to 2,044.000 jobs, 0.1% economy GDP to US$ 43bn, and (-0.3%) economy employment to 6,743,000 jobs.

The current global economic slowdown is providing a challenging backdrop for companies operating within the Indonesian tourism industry at present. Hotel and airlines industries have to deal with slumping demand. These will impact both on tourist-related sectors and local livelihoods to Indonesia’s tourism industry. The impact is not only in Bali as the main tourist destination but also in other areas such as East Java and Lombok that are dependent on market demand in Bali. In the case of Bali as the main tourist destination in Indonesia, the impact from the global financial crisis has started to be felt by the tourism business. Hotel room cancellations for December 2008 have reached 20%, the cancellations mostly came from Europe, the US, and Australia. Meanwhile cancellations from Asia, like Taiwan, Singapore, and Japan, have not been as many.