AN INQUIRY INTO INDONESIA´S INBOUND TOURISM INDUSTRY THROUGH THE PERSPECTIVE OF
SIX TOUR ELEMENTS
MARCHEL PIERSON RUMLAKLAK
FINAL THESIS
SUBMITTED IN PARTIAL FULFILMENT OF
THE REQUIREMENTS FOR THE
UNDERGRADUATE DEGREE IN TOURISM MANAGEMENT
TRAVEL DEPARTMENT
TRISAKTI INSTITUTE OF TOURISM
JAKARTA
2009
CHAPTER I
PREFACE
A. Research Background
Ever since tourism was proclaimed to be a universal and fundamental right of all citizens of the
world in the Universal Declaration of Human Rights of December 1948, the tourist floodgates have
opened dramatically (Singh et al, 2003). People are trying to get a prestige position in society by
retains a high post in office, possess expensive properties and travelling around the globe. In this
21st century, one is considered a person of substance if he or she had a vacation in another
countries or able to travel around the world. Certainly this prejudice is not a hundred percent
true, but indeed if somebody is able to have a vacation abroad, their three basic needs must be
already very well satisfied. Common term to address travelling activities of a person outside his or
her living area for leisure purpose is tourism. Thus it is comprehensible why tourism industry is
growing in a rapid pace and becoming a huge market that involving all service sectors and
generating massive income for those involve in it since human living standard are getting better
from time to time.
The average people living in this century earning more than average people living on the fifteenth
or sixteenth century. Therefore they who earn much money need to suit their demand for luxuries
and emotional urge to explore exotic places. According to World Tourism Organisation, on the
year 2020 the number of people commuting worldwide for tourism purpose is ranging from 1, 5
until 1, 6 billion people. This tremendous amount of travelling people also means enormous
amount of money to spent on hotel, restaurant, travel agency, and other travel related services.
No wonder there is several countries put tourism industry as a major income generator. Maldives,
a nation consist of tiny cluster of islands in the south of India is an exact example of tourism rely
nation. It is a favourite spot for westerner who craves for a tranquil retreat on a beach resorts
sprawling through white sandy beaches and crystal sea water. Technically, travelling for tourism
purpose divided into two categories according to destination place namely outbound tourism and
inbound tourism. Outbound tourism happens when people originated from our country visiting or
spend their holiday on another country. On the contrary, inbound tourism occurred when people
originated from another country visiting our country for tourism purpose.
This essay will analyze Indonesia’s inbound tourism rather than outbound tourism since from
economy point of view; inbound tourism is far more beneficial because the government can earn
income through VISA application and legal taxation.
In tourism industry, particularly inbound tour industry, there are six elements which is working
side by side and supporting each other into shaping a perfect tour. Betsy Fay (1992) defines those
elements as below:
1. Transportation
2. Lodging
3. Dining
4. Sightseeing/Guides Service
5. Attractions
6. Shopping
If these six elements are serving properly, efficient, and professionally there is no doubt the
inbound tourism growth in that country is flourishing. Indonesia, a country in South East Asia
despite its possession of various natural and man-made tourism spots is still lagging behind its
neighboring countries in term of inbound tourism industry. Compared with Australia, Thailand, or
even Singapore, Indonesia has lingering problems in its inbound tourism industry that caused the
development seem insignificant. The six basic elements of tour in Indonesia is serving the foreign
tourist well but not to it’s fully extent. This condition is triggered by the poor management in
those six tour elements.
In case of transportation, Indonesian airlines have a degraded reputation in international stage
especially European market due to it´s flight accidents in recent years. Despite the ban for
Indonesian airlines to entering European airports have been removed there is still slight hesitation
linger in European tourist mind when they are going to use Indonesian airlines. No wonder there
is a high number of flight accidents in Indonesia´s airlines history since nearly all aircraft own by
the Indonesian airlines is a second hand. And this is condition not only occurred in airlines industry
but in sea transportation, and land transportation as well.
On lodging or accommodation sector, Indonesian hotel standard in several tourism spots is still far
below international standard. For instance is Pangandaran, a beach city in the south coast of Java
island. In spite of it´s relatively close distance to other big cities in Java, doesn´t have any four or
five star hotel. This situation indirectly affects the number of foreign tourist visiting that place who
put pleasant and luxury accommodation as a first thing in a holiday. There is also a persisting
decline in the Average Length of Stay on Indonesian hotels since 2001. This situation is going to be
worse if there is no considerable action which is being taken by government to solve this
phenomenon.
The next vital element in inbound tour industry is restaurant and fine dining. Indonesia has various
kinds of traditional cuisines which are not being exposed toward the foreign tourist yet. In
Indonesia, culinary tourism still need to be develop professionally so that in the future it can serve
as a main attraction . Until now the standard menu in almost restaurant in Indonesia´s tourism
destination places mainly consist of traditional Javanese, European, Chinese, and Padang food. In
fact, Indonesia has thirty three provinces and each province has it´s own traditional cuisine. Thus
if those cuisine are simply modified to meet the foreign tourist taste, it is more likely that the
number of foreign visitors will increase because there is a motivation to try Indonesian traditional
food. Long waiting time is also a key issue in most of Indonesian restaurant because most of the
foreign tourist becomes uncomfortable when they have to waiting up to half an hour to be served.
There is also a need to manage Indonesia´s sightseeing and attractions. From the Northern tip of
Sumatra to West Papua dangle various kinds of natural and man-made places of interest which is
not being fully expose to international tourism market. Indonesia has numerous archaeological
sites, temples, colonial heritage buildings, beautiful rice fields, lush green tropical forest, scuba
diving spots, white sandy beaches, and many other things as well. Indonesia also possesses
tremendous culture richness, ranging from traditional dances, ceremonies, houses, attires, and
customs. Unfortunately most of the places of interest and traditional events especially in Eastern
part of Indonesia are not well known in foreign tourist mind. This circumstance is very much
caused by lack of promotion by local and central tourism department. The common favorite
places of interest in Indonesia are Sumatra, Java, Borneo, Bali, Celebes, and Lombok, but beside
those places mentioned above there is a vast number of marvelous places scattered in Indonesia
which is still stand in the dim light.
Another difficulty came from professional guide sector. The quality of Indonesia´s professional
tour guide is adequate but the problems are on the language proficiency and competencies in tour
handling. A simple case is most of the foreign tourist participating in Java and Bali overland tour
came from The Netherlands but the quantity of professional tour guides who prowess in Dutch
language is very small. Nearly all of the professional tour guides who speak a fluent Dutch
language is a senior tour guides. The common practice is sometimes a new tour guide can escort a
tour group even though he or she does not possess a license as an officially permitted tour guide.
Certainly this practice is very risky as those illegal tour guides does not know the right guiding
techniques and ethic codes of the legitimate tour guide. Every so often those illegal tour guides
convey inadequate or even wrong information about the tourism objects to the foreign tourist
with the result of misinterpretation in the mind of foreign tourists.
The next thing to be improved is shopping industry in Indonesia´s inbound tourism, mainly
souvenir and handicraft industry. The fact is local handicraft industry in Indonesia is growing at a
steady pace, but for the new entrepreneurs who wants set up their own handicraft business it is
pretty hard to get a loan from financial institution such as bank and other lending organization.
Poor international marketing system and public tendency to work on already run establishment
rather than becoming an entrepreneur is hampering the growth of souvenir industry in Indonesia.
Ultimately, to increase the number of foreign tourist who visiting Indonesia, the existing problem
in those six element must be coped and solved efficiently therefore all players involved will gain
more income and in the end improving the living standard of the Indonesian citizen.
B. Problem Identification and Formulation
1. Problem Identification
Ever since year 2000, there was a slight slump in the figures of foreign tourist visiting Indonesia.
Despite there was an increase in the figures of inbound tourist, it was only a slight raise and never
consistently going up. Only on 2007 the index shows a significant improvement, but on average
Indonesia´s inbounds tourism still lagging behind it´s neighbouring countries. Another unsolved
enigma is since 2001, the length of stay of foreign visitors in Indonesia continues to decline. Thus,
it has been a big on-going task for the government and tourism based companies to promoting
and inviting overseas traveller to come into this country, especially after series of riots, terrorist
bombings in Bali and Jakarta, and recent global economic downturn. If analysed carefully,
Indonesia´s major lingering problems that hampering it´s inbound tourism growth laid on each
sector of the six elements of tour namely:
a. There is a slight feeling of reluctant in the mind of foreign tourist to using Indonesian airlines
aircraft when visiting Indonesia cause by the several flight accidents in recent years.
b. In lodging or accommodation sector, most of hotels in smaller tourism destination cities are still
far below international hotel standard. Security issue is also taken into consideration.
c. Lack of food variation and long waiting time is a key concern in most of Indonesian restaurant
located in tourism destination cities.
d. Sightseeing and attractions which is considered new to the international market is still poorly
managed and marketed into international market thus the main tourism destination provinces is
only on 14 provinces which has a good tourism management instead of all the provinces in
Indonesia.
e. Lack of professional tour guides who skilled in foreign languages becoming major issue in
Indonesia´s inbound tourism especially on the other provinces outside Java and Bali. Related
problem is there are a high number of unlawful tour guides who working as a professional tour
guides on Indonesia’s inbound tourism.
f. Poor marketing system and public tendency to work on already established institutions rather
than becoming an entrepreneur make the growth of shopping sector particularly souvenir
industry in Indonesia´s inbound tourism slightly inhibited.
2. Problem Formulation
Based on the problems identification, the emerged key questions that underlining those main
difficulties is how the problems in the six tour elements in Indonesia´s inbound tourism can be
solved in order to increase the number of foreign visitors and how to extend their length of stay?
C. Writing Purposes
This literature contains several purposes namely:
a. To find out the actual problems in the six tour elements in Indonesia´s inbound tourism and how
to solve it in order to spur the growth of inbound tourism in Indonesia.
b. This research will serve as an additional guidance to those who involved and want to develop
Indonesia ´s inbound tourism industry.
D. Data Gathering Method
There are 2 methods utilized to find the reasons and causes of the problems cited above, namely:
1. Primary Data
Updated information about Indonesia´s inbound tourism condition and it´s difficulties are
gathered from field observations and direct interviews with those who working and running a
business in this field.
2. Secondary Data
Several books are researched in order to find the right solution toward the difficulties. Statistics
data are collected from Central Statistical Bureau, Ministry of Culture and Tourism, Republic of
Indonesia, The Indonesian Tourist Guide Association, and several other reliable sources.
E. Content Structure
In general, the content of this writing encompassing the brief introduction into Indonesia and it´s
inbound tourism difficulties, problem researching and suggestions created to overcoming the
problems. But specifically, the matters in this writing were split up into 5 (five) main chapter:
CHAPTER I: PREFACE
This chapter contain the analysis of Indonesia´s inbound tourism potential in general, it´s current
difficulties, purposes of this writing, data gathering method, and content structure.
CHAPTER II: THEORETICAL FRAMEWORK
On this section, there are theories about the definition and concepts from the experts in this field
about the interpretation of inbound tourism, the six tour elements, and other related topics in this
research.
CHAPTER III: GENERAL DESCRIPTION OF THE RESEARCH OBJECT
This chapter describe the general description of Indonesia and it´s inbound tourism from several
points of views such as history, geography, demography, and Indonesia´s inbound tourism brief
history.
CHAPTER IV: INVESTIGATION RESULT AND DISCUSSION
This chapter explain the current situation and problems in the six tour elements of Indonesia´s
inbound tourism, it´s impacts into inbound tourism and other sectors.
CHAPTER II
THEORETICAL FRAMEWORK
Tourism
Tourism is the temporary, short-term travel of non-residents to and from a destination (Hall
1991). Tourism in the 21st century will not only be the world´s biggest industry, it will be the
largest by far that the world has ever seen (Page and Dowling 2001). By all means, tourism will
overtake other industry as a number one in term of high yielding income generator and job
creation. Thus it can be said that tourism is a cluster of operations especially the activities which
have linkage with economic movements that directly affecting the entering and exiting process of
visitors in a city, area, or a country.
Tourism is also the total relationship and phenomena arising from the travel and the stay of
strangers, provide the stay does not imply the establishment of a permanent resident. The
interpretation of this definition is tourism is a mixture of the symptoms which caused by the
journey and accommodation of visitors that stay only for a certain period of time or permanently.
If these definitions is combined, the result give the combination interpretation namely tourism
is a moment of travelling activity from one place to another place not for business purpose but for
leisure and recreation purposes.
In economical conception, tourism industry is a very promising sector since this industry
possess huge investment prospect. When compared to the other sectors, including extractive
industries and manufacturing, tourism-related investment hold the perceived promise of rapid
returns.
Tourism is an attractive sector for policy makers primarily because of it´s wealth and job
creating potential, not to mention that `ordinary residents have often benefited from tourism
related investments, both financially and through improved amenities’ (Fainstein and Gladstone
1999). With the penetration of tourism industry into one area, it is not only the tourism related
companies and local government that is going to pluck the benefits and advantages, but the
indigenous or local people as well. The worldwide perception of tourism as a growth sector stems
from the fact that, unlike most consumer services (e.g. retailing), it can be considered an export or
basic industry (Law 1992), albeit an odd one, because the consumer must visit the place of
production as opposed to the goods being transported to the market (Debbage and Daniels 1998).
Unlike other sectors, tourism usually requires little, by value in imports for every unit of foreign
exchange which it generates and thus a greater proportion of the foreign exchange earnings of
tourism can be used for investment in the development of manufacturing industries or in reducing
the foreign earnings debt (Mathieson and Wall 1982).
Explanation on the previous paragraph shows that tourism is a very promising industry in
sustaining the economy of one country since this industry requires the buyer to come to the
production place instead of goods which is being send to the customer place as usual export or
trading activity does.
Based on its impact toward the National Balance Sheet, tourism divided into two parts:
a. Outbound Tourism or Passive Tourism
The indication of this tourism activity is the outgoing of citizens from the origin country into the
other country as foreign visitors. This type of tourism called as passive tourism since if it is
observed from national point of view this tourism activity only spent the money in the destination
country thus decrease the level of foreign exchange in the origin country (Oka Yoeti 1996).
b. Inbound Tourism or Active Tourism
Inbound Tourism is the type of tourism marked by the ingoing of foreign tourists into one
particular country. This type of tourism is called active tourism since with the influx of foreign
tourist means the increased of foreign exchange reserve in the visited country thus strengthening
the position of balance sheet in visited country (Oka Yoeti 1996). As this research observe the
phenomena inside inbound tourism instead of outbound tourism, there is another definition of
inbound tourism from World Tourism Organization (Jafari 2000) defines, inbound tourism as an
influx of incoming tourism as that which involves non-residents of a country travelling to that
destination. This literally interpret as an activity of foreign tourist from another country that
comes to Indonesia for tourism purpose and stay only for certain period of time. Thus there is a
distinct difference between tourism oriented travel and business oriented travel.
Inbound tourism in one country comprise of six tour elements as stated in previous chapter. Next
is the definition of each element in a tour, particularly inbound tour.
1. Transportation
Collison 1990 define transportation in its simplest form is the movement from one place to
another of either people or goods (tangible products). There are five modes of transportation,
based on the physical characteristics of the service offered namely:
a. Air
The air mode consists of aircraft flying often at a considerable altitude. These aircraft may be
‘heavier than air’ (fixed-wing aircraft such as jets and non-fixed wing aircraft such as helicopter) or
lighter than air (such as blimps, balloons, or dirigibles). Typical speeds for aircraft vehicles are
from about 960 kilometres (600 miles) per hour for most jet aircraft to 2,170 kph (1,350 mph) for
supersonic aircraft such as Concorde. Aircraft such as helicopters may provide passenger
transportation over short distances of only a few kilometres or miles.
b. Highway
The highway mode consists of a number of types of vehicles including bus, taxicabs, car hire,
and automobiles. Bus services can be found within urban areas and connecting origins and
destinations of varying distances while taxicabs are generally used only for trips of short duration.
Automobiles, whether private or rented can travel anywhere from a few blocks to thousands of
kilometres or miles in process of transporting a traveller. The motorcoach industry has made great
inroads in passenger comfort in recent years, including fully equipped rest rooms, cocktail bar,
large windows and observation areas, video display units and the like. Most motorcoaches hold 46
or 48 adults, and are 40 feet long and 102 inches wide (Field 1990).
c. Railway
Despite it several surpluses such as free from any traffic jam, rail transportation is confined to a
limited right of way, since the carrier must travel where there is a set of railroad tracks. Often
railroads tracks are only found between and within urbanised areas where sufficient volumes of
passengers can be found. The speed of rail service can vary widely from over 300 kph (200mph)
for high speed rail services to average speeds lower than 80 kph (50mph).
d. Water Transportation
The water mode is characterised by vehicles that move on the surface of the water, such as
passenger ships, ferries, or hovercraft. Ferries are generally used on shorter routes, including
within urban areas and in the archipelagos. In some cases the mode operates below the surface of
the water, such as with submarines. These vessels are used primarily for viewing marine life and
underwater scenes, rather than for transporting passenger between origins to a destination. The
water mode does not provide very high speed compared to air, rail, or highway, with a typical
cruise vessel operating about 40 kph (25mph).
All modes of transportation are regulated in some manner, be it economic or non-economic.
Economic regulation focuses on the routes served, frequency and capacity of the service provided,
and the fares or rates charged by carriers. Non-economic regulations, on the other hand focus on
aspects such as safety, certification of carrier personnel and traffic control. All nations have some
form of domestic transportation regulation, with international regulation often being more
complex.
Passenger transportation plays a critical role in determining the success or failure of nearly
every segment of tourism. Without any reliable and economic form of passenger transportation
to, from and within a destination, enticing tourists to visit tourism destination places may be very
difficult.
2. Lodging
Lodging or accommodation is a term used to encompass the provision of bedroom facilities on
a commercial basis within the hospitality or tourism industry (Turner 1996). Lodging is also an
establishment that provides shelter and overnight accommodation to guests (Fay 1992).
Primarily, lodging is associated with the hotel sector, and is readily applied to properties as
diverse as business and conference hotels, resort hotels, motels and budget hotels, guest houses,
bed and breakfast establishments. Lodging or accommodation also embraces other forms of
hospitality outlets, such as university halls of residence, youth hostels, residential care facilities
and hospital hotel services.
Hotel is the first thing appears in mind when it is come to literary interpretation of
accommodation. The definition of hotel by Keith Johnson is a tourism business unit as its main
endeavor, rents room accommodation to the general public for a minimum duration of one night.
This activity is supported by the provision of food and drink and other related services. Hotels vary
in the number of rooms available, the level of service provision, target markets, tariff charged and
type of ownership and operation.
An explanation of the most common categories of lodging properties utilized by tour planners
follows:
a) Inn
This type of lodging is a generic, historical term that preceded the term hotel and is not to be
confused with the term country inn. The use of ‘‘inn’’ in a company name (such as Holiday Inns
and Ramada Inns) has become synonymous with ‘‘motor inn’’ in some cases and reflects the
fascination many people have with the term (Howell 1989).
b) Hotel
Hotel is a building where lodging, meals, entertainment and various personal services are
provided for sale to the public (Starr and Silva 1990). Historically, the term ‘‘hotel’’ was associated
with centre city, high rise structures. The primary differentiation between hotels and motor inns
or motels is in the level of service. A hotel is usually ‘‘full-service’’, offering a variety of services to
the traveller including food, beverage, room service, valet, recreational facilities and so on ( Fay
1992).
c) Motor Hotel
This type of property is similar to a hotel except that parking space is usually available near the
room. Motor hotels tend to have three or fewer floors and are often located near the highway
serving the traveller who desires quick and easy access to an automobile (Fay 1992). Tour
operators are concerned with adequate motorcoach parking, not with automobile parking.
d) Resort
A resort hotel is one that people visit for relaxation, recreation, or entertainment (Howell 1989). A
factor that makes resort a resort is it´s location, remote from major cities, yet in relaxing,
enjoyable area. Resort hotels have elaborate facilities and services that allow the customer to stay
on the property for days on end. Another aspect of a resort is it´s formality. Many resorts have
maintained the formal ‘‘country club’’ atmosphere that was prevalent at the turn of the twentieth
century (Fay 1992).
e) Lodge
Lodges are usually located in resort areas but choose to differentiate them from the formality of a
resort. Hence lodges are usually less formal in both service and décor such as a ski lodge versus a
ski resort (Fay 1992).
f) Suite Hotel
A suite hotel provides accommodations to it´s guests in the form of suites or multiple-rooms units.
Most have kitchens, living or entertaining rooms, and at least one bedroom (Fay 1992). Suite
hotels tend to be luxurious in terms of accommodation and recreational amenities, but are not
likely to offer food and beverage services because there is a fully equipped kitchen in each unit.
3. Dining
Dining is an establishment of property where refreshments or meals are served (Jones 1996).
There are many different types of restaurant depending on the market served (mass, family, up-
scale), concept or theme (ethnic, dinner house), product range (type of menu and number of
items), service style (quick service, fast food) and price. The restaurant sector is a significant part
in the tourism industry. There are various ways in which restaurants may be categorized. Oka
Yoeti (1995) divides restaurant type as:
a) Gourmet Restaurant
The type of restaurant which is put luxurious and exclusive food service toward the customer. The
quality of food and presented to the visitor is a high quality standard sometimes classified as a VIP
only restaurant.
b) Family Type Restaurant
This restaurant usually serves the customer with moderate or average price food. The quality of
food and beverages served is good and this restaurant atmosphere is family oriented.
c) Convenience Restaurant
This restaurant distinguished itself from other restaurant type by emphasizing the faster service in
meet customer request (quick service) and a relatively lower food prices.
d) Self Service Restaurant
Customers who come to this restaurant choose their own meals, take, and bring it to the available
tables. This restaurant also called buffet or cafeteria restaurant and generally operating in chain or
franchise operation systems.
e) Specialty Restaurant
Only serving certain kind of food and beverages, this type of restaurant stressed the difference of
interior design and decoration as a main attraction. The prices are ranging between the price of
Gourmet and Family Type Restaurant.
f) Carry-out Restaurant
This restaurant provide a fast food service, where food can be ordered by telephone subsequently
being carry to the customer place whether it is in the office, hotel, or even camping site.
The quick service segment is subdivided mainly on the basis of core product. Mid-scale
restaurants are made up of seven concepts groups: cafeteria, casual dining, family style, hotel,
steakhouse, specialty, and varied menu. The up-scale segments has concepts described as casual
dining, high check (high-priced), moderate check (moderately priced) hotel, specialty and varied
menu.
Restaurant is related with other elements in inbound tourism. Meals can serve as another
attraction to the foreign tourist which is visiting one country. The traditional cuisines and local
made dishes is a unique form of enticement that not fully explored yet. Recent trend in restaurant
business is the establishment of various chained restaurant, with any kind of category and
distinction.
4. Sightseeing/Guide Service
Sightseeing is what a destination has to offer in terms of natural beauty and interest (Fay 1992).
This geographical unit visited by tourists may be a self-contained centre, a village or a town or a
city, a region or an island or a country. Furthermore, a place of interest or a destination is a single
location, a set of multi-destinations as part of a tour, or even moving destination such as a cruise
(Jafar Jafari 2000). En route from one destination to another, a tour operator might choose to
travel the scenic highway rather than the superhighways, allowing tour passengers to experience
the true beauty of an area. Sightseeing is generally considered to be more interesting when
combined with the services of a tour guide (Fay 1992).
Holloway (1981) describe tour guides are those who responsibility to shepherd and inform a
group of tourists. Consequently, tour guides are more likely to have decent education and
formally trained, few countries actually require them to possess a license to practice. The role of
tour guide suffers from being a largely seasonal occupation (apart from those key year round
tourism centers such as London), and from offering little career progression. Thus it is often seen
as temporary or part time job. Tour guide´s main responsibility is to escorting and giving adequate
information about the setting. The most common practices of guided tour is guided bus tour,
walking tour, ecotourism based tour, Guide service enhances a tour through the assistance of a
professional who is trained to facilitate a tour. Tour Guide can travel with a group for the duration
of the tour, or he/she can be a local specialist who spends as little 1 to 2 hours with a group. An
independent tour would not provide daily guide service, hence the term ‘‘guided tour’’ is usually
reserved for tour groups (Fay 1992).
5. Attraction
Attraction is generally considered to be entertainment that requires an admission ticket or
advance reservation. An attraction visit usually requires at least a one hour length of stay. A fine
line sometimes distinguishes an attraction from sightseeing; however under most circumstances
distinctions can be made (Fay 1992).
The common elements in attraction are:
Natural Attractions (Scenery, climate, beaches)
Built Attractions (Historic sites, resorts, theme parks)
Cultural Attractions (Museum, art galleries)
Social Attractions (meeting the residents of destination and experiencing their way of life)
Betsy Fay divides attractions into:
Scenic Transportation (train and ferries)
Theme parks
Amusement parks
Museums
Historical attractions
Educational/cultural attractions
Attractions need other amenities in order to retain and improving the number of the visiting
tourist. They include:
Basic infrastructure
Accommodation
Transportation
Catering Services
Entertainment
Shopping Facilities
Visitor Information
The lack of amenities might cause tourists to avoid a particular destination because this provides
the basic facilities which are regarded as a contribution to the quality of the destination (Cho
1996). Next crucial factor in places of interest is the accessibility. Destination access is mainly a
matter of transport infrastructure such as airports, harbours, roads, and railways. There is a close
relation between transportation sectors with the success of a tourism destination places. The last
factor which is considered vital in a success of a destination places is public image. Public image
can be regarded as the ideas and beliefs which tourists hold about the destinations. Numerous
studies have revealed that a place of interest possesses a public image and the choice is
influenced by the tourist’s impressions of alternative destinations, regardless of these impressions
are true or not.
6. Shopping
Travellers keen to purchase souvenirs and presents for their relatives. Shopping is distinguished
from the attraction category because there is almost never an admission charge for entrance to a
shopping area, and while shopping may provide just as much entertainment as an attraction, the
primary purpose of visiting an attraction is different from the primary purpose of visiting shopping
area (Fay 1992).
The ordinary shopping places in a tour are:
Malls
Specialty Shops
Duty-free shops
Factory outlet shops
The growing importance of retailing in destination areas and resorts is reflection of the role of
shopping in the tourist experience. In terms of time budgets and expenditures, shopping can now
be considered as an important tourist activity. Although shopping is not commonly mentioned as
a prime motive or a key factor in the destination choice, recent surveys of tourist behaviour
patterns indicate the actual time budgets spent on shopping (Jansen – Verbeke 1994).
The prevailing relation between tourism and shopping are:
a. Tourist´s propensity to shop varies according to their cultural background; the range and
nature of shopping opportunities are promoted as the core product.
b. Potential tourists are now being offered arrangements for shopping trips in with the
shopping opportunities are promoted as core product.
CHAPTER III
GENERAL DESCRIPTION OF THE RESEARCH OBJECT
A glance into Indonesia in general as an object of research in this essay
A. Etymology
The name Indonesia derives from the Latin Indus, meaning "India", and the Greek nesos,
meaning "island". The name dates to the 18th century, far predating the formation of
independent Indonesia. In 1850, George Earl, an English ethnologist, proposed the terms
Indunesians and, his preference, Malayunesians for the inhabitants of the "Indian Archipelago or
Malayan Archipelago". In the same publication, a student of Earl's, James Richardson Logan, used
Indonesia as a synonym for Indian Archipelago. However, Dutch academics writing in East Indies
publications were reluctant to use Indonesia. Instead, they used the terms Malay Archipelago
(Maleische Archipel); the Netherlands East Indies (Nederlandsch Oost Indië), popularly Indië; the
East (de Oost); and even Insulinde. From 1900, the name Indonesia became more common in
academic circles outside the Netherlands, and Indonesian nationalist groups adopted it for
political expression. Adolf Bastian, of the University of Berlin, popularized the name through his
book Indonesien oder die Inseln des Malayischen Archipels, 1884–1894. The first Indonesian
scholar to use the name was Suwardi Suryaningrat (Ki Hajar Dewantara), when he established a
press bureau in the Netherlands with the name Indonesisch Pers-bureau in 1913.
B. Geographical Location
The Republic of Indonesia is a country in Southeast Asia and Oceania, with an estimated
population of around 237 million people, it is the world's fourth most populous country, and has
the largest Muslim population in the world. Indonesia is a republic, with an elected legislature and
president. Indonesia consists of 17,508 islands, about 6,000 of which are inhabited. These are
scattered over both sides of the equator. The five largest islands are Java, Sumatra, Kalimantan
(the Indonesian part of Borneo), New Guinea (shared with Papua New Guinea), and Sulawesi.
Indonesia shares land borders with Malaysia on the islands of Borneo and Sebatik, Papua New
Guinea on the island of New Guinea, and East Timor on the island of Timor. Indonesia also shares
borders with Singapore, Malaysia, and the Philippines to the north and Australia to the south
across narrow straits of water. The capital, Jakarta, is on Java and is the nation's largest city,
followed by Surabaya, Bandung, Medan, and Semarang. At 1,919,440 square kilometres
(741,050 sq mi), Indonesia is the world's 16th-largest country in terms of land area. Its average
population density is 134 people per square kilometre (347 per sq mi), 79th in the world, although
Java, the world's most populous island, has a population density of 940 people per square
kilometre (2,435 per sq mi). At 4,884 meters (16,024 ft), Puncak Jaya in Papua is Indonesia's
highest peak, and Lake Toba in Sumatra its largest lake, with an area of 1,145 square kilometres
(442 sq mi). The country's largest rivers are in Kalimantan, and include the Mahakam and Barito;
such rivers are communication and transport links between the island's river settlements.
Indonesia's location on the edges of the Pacific, Eurasian, and Australian tectonic plates makes it
the site of numerous volcanoes and frequent earthquakes. Indonesia has at least 150 active
volcanoes, including Krakatau and Tambora, both famous for their devastating eruptions in the
19th century. However, volcanic ash is a major contributor to the high agricultural fertility that has
historically sustained the high population densities of Java and Bali.
Lying along the equator, Indonesia has a tropical climate, with two distinct monsoonal wet and
dry seasons. Average annual rainfall in the lowlands varies from 1,780–3,175 millimetres (70–
125 in), and up to 6,100 millimetres (240 in) in mountainous regions. Mountainous areas—
particularly in the west coast of Sumatra, West Java, Kalimantan, Sulawesi, and Papua—receive
the highest rainfall. Humidity is generally high, averaging about 80%. Temperatures vary little
throughout the year; the average daily temperature range of Jakarta is 26–30 °C (79–86 °F).
C. Government and Politics
Indonesia is a republic with a presidential system. As a unitary state, power is concentrated in
the central government. Following the resignation of President Suharto in 1998, Indonesian
political and governmental structures have undergone major reforms. Four amendments to the
1945 Constitution of Indonesia have revamped the executive, judicial, and legislative branches.
The president of Indonesia is the head of state, commander-in-chief of the Indonesian National
Armed Forces, and the director of domestic governance, policy-making, and foreign affairs. The
president appoints a council of ministers, who is not required to be elected members of the
legislature. The 2004 presidential election was the first in which the people directly elected the
president and vice president. The president may serve a maximum of two consecutive five-year
terms.
The highest representative body at national level is the People's Consultative Assembly (MPR).
Its main functions are supporting and amending the constitution, inaugurating the president, and
formalizing broad outlines of state policy. It has the power to impeach the president. The MPR
comprises two houses; the People's Representative Council (Indonesian: Dewan Perwakilan
Rakyat, or DPR), with 550 members, and the Regional Representative Council (DPD), with 128
members. The DPR passes legislation and monitors the executive branch; party-aligned members
are elected for five-year terms by proportional representation. Reforms since 1998 have markedly
increased the DPR's role in national governance. The DPD is a new chamber for matters of
regional management.
D. Foreign Relations and Military
In contrast to Sukarno's anti-imperialistic antipathy to western powers and tensions with
Malaysia, Indonesia's foreign relations since the Suharto "New Order" have been based on
economic and political cooperation with Western nations. Indonesia maintains close relationships
with its neighbours in Asia, and is a founding member of ASEAN and the East Asia Summit. The
nation restored relations with the People's Republic of China in 1990 following a freeze in place
since anti-communist purges early in the Suharto era. Indonesia has been a member of the United
Nations since 1950, and was a founder of the Non-Aligned Movement (NAM) and the Organisation
of the Islamic Conference (OIC). Indonesia is signatory to the ASEAN Free Trade Area agreement,
the Cairns Group, and the WTO, and has historically been a member of OPEC, although it is
withdrawing as of 2008 as it is no longer a net exporter of oil. Indonesia has received
humanitarian and development aid since 1966, in particular from the United States, Western
Europe, Australia, and Japan.
Indonesia's 300,000-member armed forces (TNI) include the Army (TNI–AD), Navy (TNI–AL,
which includes marines), and Air Force (TNI–AU). The army has about 233,000 active-duty
personnel. Defence spending in the national budget was 4% of GDP in 2006, and is controversially
supplemented by revenue from military commercial interests and foundations. One of the
reforms following the 1998 resignation of Suharto was the removal of formal TNI representation
in parliament; nevertheless, its political influence remains extensive.
E. Administrative Divisions
Administratively, Indonesia consists of 33 provinces, five of which have special status. Each
province has its own political legislature and governor. The provinces are subdivided into
regencies (kabupaten) and cities (kota), which are further subdivided into sub districts
(kecamatan), and again into village groupings (either desa or kelurahan). Following the
implementation of regional autonomy measures in 2001, the regencies and cities have become
the key administrative units, responsible for providing most government services. The village
administration level is the most influential on a citizen’s daily life, and handles matters of a village
or neighbourhood through an elected lurah or kepala desa (village chief).
The provinces of Aceh, Jakarta, Yogyakarta, Papua, and West Papua have greater legislative
privileges and a higher degree of autonomy from the central government than the other
provinces. The Acehnese government, for example, has the right to create an independent legal
system; in 2003, it instituted a form of Sharia (Islamic law). Yogyakarta was granted the status of
Special Region in recognition of its pivotal role in supporting Indonesian Republicans during the
Indonesian Revolution. Papua, formerly known as Irian Jaya, was granted special autonomy status
in 2001. Jakarta is the country’s special capital region.
F. Economy
Indonesia's estimated Gross Domestic Product (GDP) for 2007 is US$408 billion (US$1,038 bn
PPP). In 2007, estimated nominal per capita GDP is US$1,812, and per capita GDP PPP was
US$4,616 (International Dollars). The services sector is the economy's largest and accounts for
45.3% of GDP (2005). This is followed by industry (40.7%) and agriculture (14.0%). However,
agriculture employs more people than other sectors, accounting for 44.3% of the 95 million-strong
workforce. This is followed by the services sector (36.9%) and industry (18.8%). Major industries
include petroleum and natural gas, textiles, apparel, and mining. Major agricultural products
include palm oil, rice, tea, coffee, spices, and rubber.
Indonesia's main export markets (2005) are Japan (22.3%), the United States (13.9%), China
(9.1%), and Singapore (8.9%). The major suppliers of imports to Indonesia are Japan (18.0%),
China (16.1%), and Singapore (12.8%). In 2005, Indonesia ran a trade surplus with export revenues
of US$83.64 billion and import expenditure of US$62.02 billion. The country has extensive natural
resources, including crude oil, natural gas, tin, copper, and gold. Indonesia's major imports include
machinery and equipment, chemicals, fuels, and foodstuffs.
In the 1960s, the economy deteriorated drastically as a result of political instability, a young
and inexperienced government, and ill-disciplined economic nationalism, which resulted in severe
poverty and hunger. Following President Sukarno's downfall in the mid-1960s, the New Order
administration brought a degree of discipline to economic policy that quickly brought inflation
down, stabilized the currency, rescheduled foreign debt, and attracted foreign aid and
investment. Indonesia is Southeast Asia's only member of OPEC, and the 1970s oil price raises
provided an export revenue windfall that contributed to sustained high economic growth rates.
Following further reforms in the late 1980s, foreign investment flowed into Indonesia, particularly
into the rapidly developing export-oriented manufacturing sector, and from 1989 to 1997, the
Indonesian economy grew by an average of over 7%.
Indonesia was the country hardest hit by the East Asian financial crisis of 1997–98. Against the
US dollar, the Rupiah dropped from about Rp. 2,600 to a low point of 14,000, and the economy
shrank by 13.7%. The Rupiah has since stabilised in the Rp. 8,000 to 10,000 range, and a slow but
significant economic recovery has ensued. However, political instability, slow economic reform,
and corruption at all levels of government and business, have slowed the recovery. Transparency
International ranked Indonesia 143rd out of 180 countries in its 2007 Corruption Perceptions
Index. GDP growth, however, exceeded 5% in both 2004 and 2005, and is forecast to increase
further. This growth rate, however, is not enough to make a significant impact on unemployment,
and stagnant wages growth and increases in fuel and rice prices have worsened poverty levels. As
of 2006, an estimated 17.8% of the population live below the poverty line, 49.0% of the
population live on less than US$2 per day, and unemployment rate at 9.75%
G. Demography
Most Indonesians are descendant from Austronesia-speaking peoples who originated from
Taiwan. The other major groupings are Melanesians, who inhabit eastern Indonesia. There are
around 300 distinct native ethnicities in Indonesia, and 742 different languages and dialects. The
largest is the Javanese, who comprise 42% of the population, and are politically and culturally
dominant. The Sundanese, ethnic Malays, and Madurese are the largest non-Javanese groups. A
sense of Indonesian nationhood exists alongside strongly maintained regional identities. Society is
largely harmonious, although social, religious and ethnic tensions have triggered horrendous
violence. Chinese Indonesians are an influential ethnic minority comprising less than 1% of the
population. Much of the country's privately owned commerce and wealth is Chinese-controlled,
which has contributed to considerable resentment, and even anti-Chinese violence.
The official national language, Indonesian, is universally taught in schools, and is spoken by
nearly every Indonesian. It is the language of business, politics, national media, education, and
academia. It was originally a lingua franca for most of the region, including present-day Malaysia,
and is thus closely related to Malay. Indonesian was first promoted by nationalists in the 1920s,
and declared the official language on independence in 1945. Most Indonesians speak at least one
of the several hundred local languages (bahasa daerah), often as their first language. Of these,
Javanese is the most widely spoken as the language of the largest ethnic group. On the other
hand, Papua has 500 or more indigenous Papuan and Austronesian languages, in a region of just
2.7 million people. Much of the older population can still speak a level of Dutch.
Although religious freedom is stipulated in the Indonesian constitution, the government
officially recognizes only six religions: Islam, Protestantism, Roman Catholicism, Hinduism,
Buddhism, and Confucianism. Although it is not an Islamic state, Indonesia is the world’s most
populous Muslim-majority nation, with almost 86.1% of Indonesians declared Muslim according to
the 2000 census. 8.7% of the population is Christian, 3% are Hindu, and 1.8% Buddhist or other.
Most Indonesian Hindus are Balinese, and most Buddhists in modern-day Indonesia are ethnic
Chinese. Though now minority religions, Hinduism and Buddhism remain defining influences in
Indonesian culture. Islam was first adopted by Indonesians in northern Sumatra in the 13th
century, through the influence of traders, and became the country’s dominant religion by the 16th
century. Roman Catholicism was brought to Indonesia by early Portuguese colonialists and
missionaries, and the Protestant denominations are largely a result of Dutch Calvinist and
Lutheran missionary efforts during the country’s colonial period.
H. Culture
Indonesia has around 300 ethnic groups, each with cultural differences developed over
centuries, and influenced by Indian, Arabic, Chinese, Malay, and European sources. Traditional
Javanese and Balinese dances, for example, contain aspects of Hindu culture and mythology, as do
wayang kulit (shadow puppet) performances. Textiles such as batik, ikat and songket are created
across Indonesia in styles that vary by region. The most dominant influences on Indonesian
architecture have traditionally been Indian; however, Chinese, Arab, and European architectural
influences have been significant.
Sports in Indonesia are generally male-orientated and spectator sports are often associated
with illegal gambling. The most popular sports are badminton and football; Liga Indonesia is the
country's premier football club league. Traditional sports include sepak takraw, and bull racing in
Madura. In areas with a history of tribal warfare, mock fighting contests are held, such as, caci in
Flores, and pasola in Sumba. Pencak Silat is an Indonesian martial art.
Indonesian cuisine varies by region and is based on Chinese, European, Middle Eastern, and
Indian precedents. Rice is the main staple food and is served with side dishes of meat and
vegetables. Spices (notably chilli), coconut milk, fish and chicken are fundamental ingredients.
Indonesian traditional music includes gamelan and keroncong. Dangdut is a popular contemporary
genre of pop music that draws influence from Arabic, Indian, and Malay folk music. The
Indonesian film industry's popularity peaked in the 1980s and dominated cinemas in Indonesia,
although it declined significantly in the early 1990s. Between 2000 and 2005, the number of
Indonesian films released each year has steadily increased.
The oldest evidence of writing in Indonesia is a series of Sanskrit inscriptions dated to the 5th
century CE. Important figures in modern Indonesian literature include: Dutch author Multatuli,
who criticized treatment of the Indonesians under Dutch colonial rule; Sumatrans Muhammad
Yamin and Hamka, who were influential pre-independence nationalist writers and politicians; and
proletarian writer Pramoedya Ananta Toer, Indonesia's most famous novelist. Many of Indonesia's
peoples have strongly rooted oral traditions, which help to define and preserve their cultural
identities.
Media freedom in Indonesia increased considerably after the end of President Suharto's rule,
during which the now-defunct Ministry of Information monitored and controlled domestic media,
and restricted foreign media. The TV market includes ten national commercial networks, and
provincial networks that compete with public TVRI. Private radio stations carry their own news
bulletins and foreign broadcasters supply programs. At a reported 25 million users in 2008,
Internet usage is limited to a minority of the population, approximately 10.5%.
I. Brief History about Indonesia´s Inbound Tourism
Inbound tourism history in Indonesia divided into three major periods namely the Dutch
colonialism era, Japan occupation era, and Indonesian independence era. Next is the short
introduction about how Indonesia´s inbound tourism evolved from the first period until now.
a) Dutch Colonialism Era
Around 1910 the tourism activities in Indonesia are handled by the Dutch authority through
their operating tourist bureau at that time. One responsible official organization from the Dutch
administration is Vereeniging Toeristen Verkeer (VTV). This organization located in Jakarta at
Rijswijk No.11 and then moved to Noorwijk No.36 as a part of presidential palace where at that
time also housed KLM, a Royal Dutch Airlines Company. As the years gone by, with the increasing
rate of trade between Europe and Indonesia the number of tourist who visited Indonesia also
increased. On the year 1928 another travel agency is established in Batavia (present time Jakarta)
at Jalan Majapahit No.2 that is Lisonne Lindeman (Lislind) which has a head office in Holland. At
1928 the name Lislind changed into NITOUR (Nederlandsche Indische Toeristen Bureau) as a
subsidiary of KPM. In this period, it can be said that all tourism activities only conducted by the
European race.
Accommodation
Despite the number of foreign tourists at that time is not as much today, the Dutch
administration has set up few numbers of international standard hotels in Indonesia´s several big
cities. In Batavia or Jakarta there are Hotel Des Indes, Hotel der Nederlanden, Hotel Royal, and
Hotel Rijswijk. Surabaya has Hotel Sarkies and Hotel Oranye. Semarang has Hotel Du Pavillion.
Medan has Hotel de Boer. Hotel Grand and Stat Hotel located in Makassar. Hotel function at that
era is only to accommodate the customer and ship-passenger from Holland and other European
countries. Since 1933 the number of hotel in Indonesia is improved as a consequence of the
escalating travel and tourism activities of the indigenous Indonesian.
Transportation
During Dutch colonialism era, KLM is the only airline connecting Indonesia and world. This
airline has monopolizing right in transporting passenger within Indonesia as well. Water
transportation in Indonesia is monopolized by KPM. Railway system is well connected in Java
Island. The city which is reachable by train in Java is Buitenzorg (Bogor), Bandung, Garut,
Jogjakarta, Semarang, and Batavia (Jakarta).
b) Japan Occupation Era
With the outburst of the Second World War and Japanese invasion to Indonesia, tourism
industry was totally ignored. At that time the figure of visiting to this country is dropped
significantly. These conditions led by the economic crisis and security implications. People
consider that travelling for leisure purpose is a luxury at that time. Most of the tourism objects
were in poor condition, supported infrastructures such as roads and bridges were destroyed.
Hotels were used as military hospitals. High inflation rate emerged after the Hiroshima and
Nagasaki bombing. This situation caused tourism activities in Indonesia completely paralyzed.
Thus it is understandable why tourism data from this era is very inadequate and incomplete since
the internal state of affairs in Indonesia at that time was at crisis alert.
c) After Independence Era
On 1946, a year following Indonesian independence, all hotels under Dutch ownership turned
into Indonesian management. Those hotels handled by HONET (Hotel National and Tourism) with
R. Tjipto Ruslan as it´s chairman. By the decision in Round Table Conference, all Dutch properties
must be handed back to the real owners thus HONET was disbanded by the government. Tourism
Inter-Department Committee was created on 1952 to develop Indonesia as a tourism destination.
The chairman of this board was Nazir. St. Pamuncak. After Asian African Conference in Bandung
at 1955 the inflow of foreign tourist was in steady growth. As a real action to address this
situation, the stakeholders in Indonesia´s tourism decided to establish Yayasan Tourisme
Indonesia (YTI) with R. Hendarmin as a chairman. This foundation has official branches in almost
every province in Indonesia and working side by side with all stakeholders in tourism industry to
initiate a thriving tourism oriented climate in Indonesia. This foundation was considered
successful as a main organization that triggered a healthy tourism development in Indonesia.
Similar association was instituted on 1960 namely Dewan Pariwisata Indonesia (DEPARI) with a
purpose to provide a better services toward foreign visitors. Intensified development was started
on the Pembangunan Lima Tahun (PELITA) or Five Year Development Term. The sectors advanced
during first PELITA are accommodation, the number of visiting tourist, and the raise in labour
force working number at tourism businesses. In accommodation, the total room number grew
from 1.000 rooms to approximately 7.000 rooms.
The figure of visiting tourist was increased from 52.000 in 1968 to 270.300 in 1973. There was also
a significant improvement in the average number of national income from tourism sector namely
from US$ 6.500 in 1968 to US$ 27.600 at 1973. Also there was a massive increase in the number
of people working in tourism related businesses from 13.030 at the beginning of first PELITA to
38.438 at the end of that period. On the second PELITA there was a noticeable increase in the
number of domestic tourist in Indonesia´s inbound tourism. This was real evidence of how the five
year term development that stipulated by the administration of that era was working well.
Development on inbound tourism sector still becoming an important concern in the next PELITAs.
Nowadays Indonesian government, in this case the Tourism Ministry put infrastructure
development and advancement in tourism objects as the main issues. Beside Bali and Java,
current administration allocate adequate fund to upgrade the facilities and amenities of tourism
destination places in outer islands such as Sumatera, Sulawesi and Nusa Tenggara. The gradual
progress in Indonesia´s inbound can be achieved if there are positive collaborations by the
government, tourism based organization and companies, professional tourism related workers,
and Indonesian society as a whole.
CHAPTER IV
INVESTIGATION RESULT AND DISCUSSION
The thorough investigation and discussion into the main problems of six tour elements in
Indonesia´s inbound tourism
Based on explanations in chapter one, there are several problems need to be solved in the
major elements in Indonesia`s inbound tourism industry. Those major elements are (1)
Transportation, (2) Lodging, (3) Dining, (4) Sightseeing or Guide Service, (5) Attractions and (6)
Shopping. Before those problems scrutinized one by one, first is the current condition of
Indonesia´s inbound tourism and it´s performance.
Statistics from Indonesian Culture and Tourism Ministry shows that Indonesia has serious
declining trend in the number of foreign visitors. On 1999 Indonesia received 5 million visitors or
14% from overall number of foreign visitors in South East Asia, Singapore got 21%, Malaysia got
24%, and Thailand got 26%. On the next seven year, Indonesia´s contribution dropped to 8.6%,
Singapore has 17.1%, Thailand 24.4%, and Malaysia becoming the biggest contributor to South
East Asian tourism by enhanced its share to 31%. By detail, the exact figures of foreign visitors on
2006 is 17.5 million in Malaysia, 13.8 million in Thailand, 9.7 million in Singapore, and 4.8 million
in Indonesia. This result is an important issue need to be considered seriously by every elements
in Indonesia´s inbound tourism if better result in the impending year is expected. Compared to
Malaysia, Thailand, or even Singapore, Indonesia possessed more diverse cultural forms, natural
attractions, and interesting destinations. With those potential Indonesia has to be a number one
country in this region in terms of tourism, but the real situation is different. Indonesia is
considered lagging far behind the neighboring countries in creating and maintains a successful
inbound tourism. Multi-dimensional crisis, terrorism, earthquake, tsunami, bird flu, and flight ban
to European countries are some of the problems that hampering this country tourism
development. Indeed there are lots of problems exist, those problems mentioned before are only
difficulties that emerged in the surface of the water. Deep down underneath the surface sprawl
various kind of petty problems which is also contributing to inhibit the growth of Indonesia´s
inbound tourism.
In the end of 2007 World Economic Forum (WEF) issued the Index of Tourism Competitiveness.
This index put Indonesia at 60th position. Thailand on the 43rd, Malaysia got 31st, and Singapore on
the 8th position. WEF assessment was not only based on culture or natural potential in one
country, but also government´s regulation and statutes concerning tourism, whether it is creating
a good tourism climate or not. Other things taken into consideration is the government´s policies
toward natural environment, security in destination places, clean and health matters, air transport
infrastructures, information and technology, price competitiveness, human resources quality, and
national perception or national image. The appraisals also consider certain nation´s image in
international forum. In Indonesia´s case, WEF put this country at 60th position worldwide because
Indonesia still considered as a country that still has security issues and inadequate infrastructures
in the tourist destination places.
Travel and tourism report 2008 put Indonesia´s tourism industry on the 80th position, Singapore
on the 10th, and Malaysia 32nd. Not really different with WEF, this index based it´s assessment on
regulations concerning tourism, law, infrastructures condition, human resources, natural and
cultural tourism management. Compared with the neighboring countries, Indonesia has to
manage her tourism sector with intensive cares.
Regarding a minuscule state budget allocation of Indonesian administration in this sector, it is no
wonder why inbound tourism industry in this country is in average position. Next matter relating
with security issue is the performance of Indonesian authority when dealing with negative news
that spreading in international media. Indonesian authority still considered not put enough
campaign in cleaning the image of this country´s tourism in international media.
Indonesian authority especially Culture and Tourism Department cannot just sleep on the laurel
because of the small feat in the increase of the visitor number who arrives on 2008. As a matter of
fact, the raise is only 6.429.027 in 2008 from 5.505.759 in 2007. The increased number was less
than a million. On the other hand there is a steady decline in the average length of stay since 2001
until now. The average length of stay in 2001 is 10.49 days and in 2008 it is wane into 8.58 days.
Certainly there must be a sound explanation behind this phenomenon.
Betsy Fay create a theory about six basic elements consist in tour industry, thus here are the
elaboration of those elements in Indonesia´s tourism and the lingering problems in it.
1. Transportation
A study conducted by PATA shows that from all foreign tourist coming to Pacific and Far East
area, 99 percent of them using aircraft and only 1 percent that is using ship. This result told that
air transportation is very essential in tourism industry. Critical problem in transportation related
to Indonesia´s inbound tourism is laid on air transportation sector. It is not because there are no
problems at all at the other form of transportation such as water or land transportation but
merely because Indonesia´s inbound tourism is very much damaged by the high number of
accidents in Indonesian airlines. Few months ago European Union just lifts the flight ban to at
least 50 Indonesian airlines and flight operator that had been banned to entering European
territories. Indeed this decision put Indonesian airline companies at ease since the sanction really
decreased their income. But the behavior and tendencies of international customer was not
changed dramatically by this decision. In international scale, Indonesian airlines still considered
not really safe and below the standard stipulated by ICAO. For instance is most of the European
travellers which is going to spent their holiday in Indonesia is very seldom to use Garuda Indonesia
Airways as Indonesian national flag carrier when flying from Europe to Indonesia and vice versa.
They tend to use their own national flag carrier until Kuala Lumpur or Singapore, then continuing
with Malaysian Airlines to Jakarta or Denpasar. Why this inconvenience stereotype is labeled into
Indonesian airline companies?
First let´s take a look into the reason behind European Union´s decision to impose a prohibition
for Indonesian airlines to entering European countries. Indonesian Transportation Minister
stipulates by the official decision number 5/2006 that all of the aircraft operating in Indonesia
must be at least 20 years of age and has 50.000 fly cycles.
The maximum limit of aircraft operation time is 35 years of age and 75.000 fly cycles. According to
several experts on aviation industry this rule is not apt in Indonesian aviation system. Since most
of the aircrafts in Indonesian airline companies is second-hand airplanes there are bigger
possibility that all this aircrafts need special treatment.
For comparison, Australia also has an airline company which is running the same procedure
namely Qantas, but it is out of question to comparing Indonesia and Australia in aviation system
because Australia, particularly Qantas has an immaculate reputation in its service history - zero
total in the number of dead casualties in the last 50 years. Aviation criterions prevailing in
Indonesia demand a bigger fund allotment for the maintenance.
Thus it will cause a higher amount in term of flight tickets. Older aircrafts needs more money to be
taken care of; on the other hand new aircrafts need less money for maintenance and spare parts.
In Indonesia´s aviation case, this situation is worse because of corruption level in this country
airlines industry. There also some companies that reducing the ticket price in order to gain more
customers but in the end, it is the life of the passenger that put at stake. The standard operational
procedure and safety that has to be to put above all company’s interests is being compromised
because of the desire to gain more income but being careless about safety procedures.
European Union´s decision to ban at least 51 Indonesian commercial and cargo airlines to
entering its territory is because the emissaries send by Federal Aviation Administration and ICAO
audit team found out that most of Indonesian airlines companies do not comply with Chicago
Convention at 1944. As a member of ICAO since 1950, Indonesia is obliged to complying all the
ICAO rules, standard operational procedures, and Chicago 1944 Convention in her aviation
system.
The actual condition is most of Indonesian airline companies failed to fulfill the standard safety
procedures administered by ICAO and Chicago 1944 Convention and the result is European Union
send an announcement letter to Indonesian authority at July 6th 2007 that at least 51 of airline
companies from this country is banned to operating in European territories.
European Union assumes that Indonesian authority has to alter and improve it´s national aviation
safety standard. Indeed those standards have to comply with ICAO safety standard procedures
and Chicago Convention.
Table 4.1: Recent accidents with casualties in Indonesia´s commercial aviation
Date Location Airline Company Aircraft Type
Dead Casualties
07-03-2007 Sutjipto Airport, Yogyakarta Garuda Indonesia B 737-400 22
01-01-2007 Enroute Surabaya-Manado Adam Air B 737-400 102
05-09-2005 Polonia Airport, Medan Mandala Airlines B 737-200 111
30-11-2004 Adi Sumarmo Airport, Solo Lion Air MD 82 25
Source: Indonesian Air Transport Department
Australia´s TV station, Channel 7 broadcasted a talk show with senior editorial staff from Air
Transport World Journal on June 29th 2009 which was talking about international air transport
safety. On the conversation there was a statement that there are 5 countries in the world which
has an unsecure aviation system and airline companies who does not paying careful attention to
international safety standard procedures. Those countries are Indonesia, Angola, Liberia, Sudan,
and North Korea.
There is also an issue raised about why the Australian authority does not put Indonesian airline
companies in the blacklist and ban it´s aircraft to entering Australian territory. Definitely this is a
serious statement that has to be taken into consideration. Because of international urge and the
loss of income, most of Indonesian airline companies have been tried to improving their safety
standard procedures. Garuda Indonesia Airways as a national flag carrier has completed it´s IOSA
audit on 2008. IOSA is (IATA) Operational Safety Audit that is administered by IATA toward every
airline companies who has international routes. Garuda Indonesia is 206th company that received
IOSA from at least 224 member of IATA.
With gradual improvements and intensified maintenance in safety standard procedure of flying, at
July 2nd 2009 four Indonesian airline companies has regain flying permit from European Union.
This means that aircrafts from these companies is eligible and legitimate to flying to European
countries as usual. These four airlines companies are Garuda Indonesia, Mandala Airlines, Airfast
Indonesia, and Prime Air. Indeed this was very good news for Indonesian aviation sector.
One thing should be bear in mind is that European Union banned 51 Indonesian airlines thus if
four airlines has been granted with flying permit, there are still 47 seven airlines has to improve
their aircrafts qualities and meet IATA safety standard procedure. Indonesian Air Transport
Department has to urge the other 47 airlines which are still on the blacklist of European Union to
improve their safety standard procedures like the prevailing rules stipulated by IATA, also
persuade the international market to using Indonesian airline companies since the European
Union ban is already revoked. It is certain that there must be a doubt lingering in international
market customer´s mind when they are about to use Indonesian airlines. Therefore it is an
essential task to cleaning Indonesian airline´s image on international media. Indonesian current
administration must be able to create a thorough campaign to reassure international market that
all Indonesian airline companies comply with IATA safety standard procedure and able to deliver
the passengers safely to the destinations.
2. Lodging
Related on the data provided by Departemen Kebudayaan dan Pariwisata Indonesia or
Indonesian Culture and Tourism Department, the type of lodging or accommodation in
Indonesia´s inbound tourism divided into several types namely;
a) Classified Hotel, a legal commercial hotel that has fulfilled the requirements as classified
hotel which are determined by the Department of Culture and Tourism where any persons
can stay, obtain foods and services, and use other facilities against payment
b) Non Classified Hotel, an establishment using a building or a part of building especially
provided/reserved, included melati hotel, youth hostel, home stay, and other
accommodation establishments.
c) Jasmine Hotel, a kind of accommodation which managed commercially by using a building
or a part of building where any person can stay against payment. This kind of
accommodation is usually not really sophisticated in term of amenities.
d) Youth Hostel, a kind of accommodation provided for teenager who doing tourism activities
for recreation, spread acknowledgement/experience of trip.
e) Home Stay, a kind of accommodation using a part of building/house provided/reserved,
where any person can stay against payment. The room rate in Home Stays is used to be
very cheap.
f) Wisma, a kind of accommodation using a part of building/house provided/reserved, where
any person can stay against payment. The room rate in Wisma is varying according to the
room type and the policies of each owner.
The term accommodation itself mean an establishment using a building or a part of building
especially provided/reserved, that any person can stay, obtain food and service and use other
facilities against payment.
Key problems in lodging or accommodation sector of Indonesia´s inbound tourism as
mentioned before on the opening paragraph in this chapter is the declining on the Average Length
of Stay which is steadily occurred since 2001 until 2008.
The average length of stay in 2001 is 10.49 days and in 2008 it is wane into 8.58 days. How could
this trend occur in Indonesian inbound tourism?
Table 4.2: Visitor Arrivals to Indonesia 2001-2008
Source: Statistical Report on Visitor Arrivals to Indonesia
More or less this phenomenon happened because there are security related problems in
Indonesia. Terrorism acts, especially bombings in Indonesian luxuries hotels are tremendous
reason behind this declining trend. Foreign visitors especially the westerner and first timer tourist
in Indonesia do not feel very safe to stay longer because of security issues.
As a matter of fact, several European countries had to ban their citizen to visit Indonesia of any of
purpose due to terrorist acts in two luxuries hotels in Jakarta. With the arrest and execution of
Visitor
Arrival
Average Expenditure Per Person (US$)
Average
Length of Stay
Tourism
(Million US$)
Per Visit Per Day
5.153.620 1.053,6 100,42 10,49 5.396,26
5.033.400 893,26 91,29 9,79 4.305,56
4.467.021 903,74 93,27 9,69 4.037,02
5.321.165 901,66 95,17 9,47 4.797,88
5.002.101 904,00 99,86 9,05 4.521,89
4.871.351 913,09 100,48 9,09 4.447,98
5.505.759 970,98 107,70 9,02 5.345,98
6.429.027 1.178,94 137,38 8,58 7.377,39
terrorist kingpins such as Noordin M Top, Dr Azahari and Amrozi Cs, the Indonesian authority is
trying to show to international forum that this country is doing it´s best efforts to coping terrorism
threat. Still, Indonesian authority has to working hard to mend the country´s public image on
international forum in order to increase the average length of stay of the foreign tourists.
Average length of stay is the number of bed-night used (guest-nights), divided by the
number of guests coming to stay at the accommodation. This table show the steady declining on
the average length of stay in Indonesia´s inbound tourism since 2001. If there is not serious action
and campaign from Indonesian authority, tourism department, and all stakeholders in inbound
tourism industry to improving the standard of our tourism system and stability, the continuous
decline in this country average length of stay of foreign tourist is going to be more likely in the
impending years.
Room Occupancy Rate is the number of room-nights occupied, divided by the number of room
nights available, multiplied by 100%. Data in the table above shows that the room occupancy rate
in fourteen main tourism destination provinces experience a slight improvement on middle of the
year months such as May, June, July, and culminating on August. This phenomenon was caused by
vacation season on almost European, Asian, and American countries.
The influx of incoming foreign tourist to Indonesia also augments the profits of accommodation
business. On table 4.2 where the steady decline in the average length of stay in Indonesian
classified hotel emerged as a crucial issue, the seasonal increasing of room occupancy rate double
the lingering problem in Indonesian accommodation sector.
Table 4.3: Room Occupancy Rate of Classified Hotel in Fourteen Main Tourism Province
Destination, 2008
Month Rate
January 48,36
February 48,24
March 48,63
April 49,07
May 50,83
June 52,37
July 54,57
August 55,19
September 42,66
October 48,83
November 48,36
December 49,69
Source: Statistical Report on Visitor Arrivals to Indonesia
Most of the classified hotels in Indonesia´s fourteen main tourism destination provinces
operate below the average international room occupancy rate namely 65 percent. Even on the
peak season between May, June, July, and August, the room occupancy rates in fourteen main
tourism destination provinces remained low. The highest point was 55 percent in August.
Afterwards there was a steep declining in September then began to increase slightly at October
until December. Room occupancy rate continued to fluctuate according to the vacation season
and market trend, thus it is the responsibility of government, tour operator, hotel industry, and
society as a whole to create a more attracting tourism oriented climate and maintain a
comprehensive security in order to boost the number of foreign tourist that coming to Indonesia -
increase the average length of stay.
Hotel industry is heavily depended on tour operator and travel agency to sell their products.
Travel agency and tour operator are able to make a maximum sale toward to potential market if
the destination places have an attractive appeal, secure condition, and adequate supporting
infrastructures and facilities. Accommodation is one of the main elements required in a perfect
tour. Nevertheless, in several tourist destination places in Indonesia, an international standard
hotel is still rather hard to be found.
Pangandaran, a beach and natural tourism object in southern coastal of Java island is one of the
case. In spite of its location which is not very far from other big cities in West Java, has a poor
quality in term of accommodation. Most of the hotel in this place has a relatively small room and
below-international standard toilet. Based on the interviews with foreign visitors on last July in
Pangandaran, the information gathered explained most of them felt uncomfortable with the
hotels room condition and services. This is an important issue that needs to be addressed with
serious concern. The unsatisfied tourist with the accommodation condition and poor service may
think twice to come back to the same country again.
If the foreign tourists are unsatisfied they can tell their relatives and friends about their
experiences and definitely this will decreasing the number of foreign tourist who want to visit
Indonesia in the future. Indonesian tourism department has to put more strict regulations toward
various accommodation forms in tourism destination places in this country, such as international
standard rooms and professional service standard. Security standard is also another factor which
possesses a close linkage with the number of visiting tourist to this country - thus has to be
improved by the authority.
3. Dining
Dining or restaurant or food and beverages industry is a sector that is very much identical with
accommodation sector. In Indonesia, both of these sectors accommodated into one association
namely Perhimpunan Hotel dan Restoran Indonesia (PHRI) or Association of Indonesian Hotel and
Restaurant. The major task of this organization is to monitoring hotel and restaurant industry in
Indonesia, creating a healthy competition between member companies and act as a
representative of hotel and restaurant industry in Indonesian society. This organization used to
establish rules, requirements, and policies toward hotel and restaurant industry in Indonesia.
Roughly, foreign visitors used to spend a huge amount of expenses in this sector. Related
sources give an estimate assumption that restaurant or food and beverages industry in this
country absorb between 35 to 40 percent of foreign tourist spending on inbound tourism.
Compared to other sector in tourism industry, restaurant sector generates a tremendous size of
income and set up an extent livelihood toward indigenous society in Indonesia.
The restaurant industry is supporting the existence of hotel industry since the hotel occupants
need daily food. In resort hotel, the role of restaurant own and run by the hotel management is
vital to serve the hotel occupants because resort hotel generally located on the remote areas.
Thus the only option for the resort hotel occupant is the hotel restaurant itself. Up until now
Indonesian restaurant industry does not face a really serious threat or problems. But the thing
that has to be improved is the variety of food served in most of this country restaurant chains,
especially in the restaurant located on or near tourism destination places.
Indonesia possesses a great wealth of traditional cuisines which are originated from local people
that is still unknown to the foreign tourists. If we travelling to the restaurants in most of
Indonesian tourism destination place now, the typical food on the menu is common Indonesian
food such nasi goreng, nasi rames, sate, and gado-gado. This kind of food is categorized into a
more adaptive Indonesian food which is relatively well known for the foreign tourist especially
those who come from the Netherlands, since there are lots of Indonesian restaurant sell these
kind of food in their cities. The steps must be taken by the restaurant industry to promoting
Indonesian traditional cuisines toward the foreign tourist is to modify those traditional cuisines
into westerner taste and introduce it gradually toward foreign tourist.
The way of introducing can be establishing a routine culinary festival which is only exhibit local
traditional food from every province in Indonesia. Traditional food which is going to be introduced
can be Sagu bread and Papeda from Maluku, Woku Blanga from North Sulawesi, or Empek-empek
from West Sumatra etc. PHRI can create a new regulation which obliged the entire restaurant in
tourism destination places to put traditional food on their menu or launch a traditional food day,
where all the food being served on that day is traditional cuisines. Indeed at first two or three
months this program will generate a disturbance on foreign tourist appetite but on the long run
this plan can be a success strategy taken by restaurant industry.
Restaurant industry can boost its income through product variety, and on the other hand this step
will help Indonesian traditional food to be preserved on current modern competition.
4. Sightseeing and Attractions
Social, historical, cultural, built, and natural attractions are the elements in sightseeing and
attractions that entice foreign tourist to visit places of interest in one area. The sociocultural
environment also serves as both an attraction and a recipient of tourism´s impacts on host
communities (Lindbergh and McKercher 1997). In Indonesian inbound tourism, the social and
cultural attractions always become a major appeal toward foreign tourist.
Betsy Fay divides sightseeing and attractions into two different parts, but in this discussion both
of these elements are deemed one element due to its similarity and slight differences. Indonesian
sightseeing and attractions scattered throughout this country from the tip of Sumatra to the west
of Papua. Indonesia has 33 provinces and consists of 5 main islands which are Sumatra, Java,
Kalimantan, Sulawesi, and Papua.
From 33 provinces in Indonesia, only 21 provinces that is well known toward foreign tourist. It
does not mean that the rest of those provinces are not popular toward foreign tourist, but merely
the sightseeing and attractions on those provinces is not being maximized and unutilized well
enough yet.
In spite of large areas and abundant possession of places of interest, the popular tourism
destination provinces are only 21 out of 33 provinces.
The entire tourism destination places on these provinces are relatively well known in
international tourism market and fourteen provinces from these 21 provinces also declared by the
Indonesian government as main tourism destination provinces. These provinces can generating a
relatively good income from tourism sector because there is a mutual effort from local authority,
tour operator, hotel industry, and other elements in tourism industry to promote and introduce
those sightseeing and attractions to foreign visitors.
Even though Indonesia has mammoth variety of tourism destination places, this country still
lagging behind Thailand, Malaysia, and Singapore in term of tourism competitive index. World
Economic Forum consider Indonesia not doing so well in tourism promotion, does not maintain a
secure climate in tourism destination places, and has a poor bureaucracy system. This assessment
must be a stimulus that triggered a better improvement in all sectors of Indonesia´s inbound
tourism.
The rest 12 provinces which are considered not main tourism destination provinces in
Indonesia are:
1. Banten
2. Central Kalimantan
3. Bengkulu
4. East Nusatenggara
5. Lampung
6. Aceh
7. North Moluccas
8. Moluccas
9. Papua
10. South Kalimantan
11. West Papua
12. West Sulawesi
It is unwise to say that these 12 provinces are not popular at all on the international market.
The fact is most of the tourism attractions in these provinces are quite popular on particular
international market such as Moluccas for the Dutch people. Thus, the problem is not on the
sightseeing and attractions itself but the lack of promotional activities and international events.
Other thing which is must be taken into consideration is the tour packaging. Sometimes the
difference between high and low generating income provinces is lay on how tourism elements on
those provinces design an interesting tour products and the delivery process.
Bali tourism industry is a good example of excellent tour packaging. Using a geographical
advantage namely it´s relatively close location with Java Island, all of the local tour operator on
Bali combine their tour product with their counterparts in Java. The result is an all year round
Java-Bali overland tour that becomes a win-win solution between Bali and almost all provinces in
Java Island. It is more beneficial for several provinces to working together in creating an
integrated tour package rather than each province working alone to boost its income from
tourism industry.
Provinces in Sulawesi, Kalimantan, and Papua can work with their neighboring province on the
same island by creating a more integrated circulation in overland tour.
The tour products created could be Sulawesi overland tour, or Kalimantan overland tour.
Indeed these activities required a strong superstructures and adequate infrastructures which is
linking one province to the other. Tourism relies on the goodwill and cooperation of local people
because they are part of it´s product. Where development and planning do not fit in with local
aspiration and capacity, resistance and hostility can destroy the industry´s potential altogether
(Murphy 1985).
5. Guide Service
Tourist guide play an extremely vital role in creates a successful tour. Tourist guide in Indonesia
must obtain a guiding license from local department of tourism before working as a legitimate
tour guide. All kinds of tour required a tour guide to give appropriate information and services to
the tour participants. In Indonesia, tour guide must comply with ethics code stipulated by The
Indonesian Tourist Guide Association (ITGA) or Himpunan Pramuwisata Indonesia (HPI). The ethic
codes could be dress code, guiding techniques, foreign language proficiency, and tour handling
capability.
Figure 4.1: Standard Minimum Fee of DKI Jakarta Professional Tourist Guide
The figure shows that the regular type of fees earned by professional tour guide in Indonesia
inbound tourism is relatively adequate and it is fair enough to consider this kind of job as a good
or promising job for the Indonesians. The most active tour areas in Indonesia are Java and Bali
areas. Tourists from around the world used to come to Bali or Java each year on a regular basis. It
always occurred every year in the peak season’s months such as June, July, August, and
September that the number of tour groups coming to Java and Bali are in extremely high number.
This condition made most of the tour operators or travel agencies to hire freelance tour guides
to escort the rest of the tour groups which has no available official tour guide. It seems okay for
those travel agencies or tour operators to take this practice for granted because up until now
there was no serious case happened, but the thing must be carefully weigh is sometimes the
freelance tour guides which are hired by the travel agencies is illegal tour guides. The term illegal
tour guides in this circumstance is those who work as a tour guides but does not possess any
official license from Himpunan Pramuwisata Indonesia as one of the obligatory requirements for
any professional tour guide to work in Indonesia´s inbound tourism industry. This case must be
put into serious context since tour guides are those who encounter directly with foreign tourist on
a regular basis and the conjured image or information given by tour guides will represent the
origin culture and country stereotype of the tour guide itself.
It is more likely that the illegal tour guide will give an insufficient information or poor service since
he or she is not obtained any kind of training or workshop relating to tour guide´s job. Despite
those illegal tour guides claim to possess a basic knowledge about tour guiding, it is possible this
kind of tour guide cannot meet the basic standard of the service provided by a legitimate tour
guide. Thus a strict regulation must be imposed on Indonesia´s inbound tour guide association to
penalized those who conducting illegal tour guiding activities.
In recent month there was direct operations conducted by the authority and several tour related
elements to control Java Bali overland tour route intending to apprehend illegal tour guides who
operates on this route. Tour guide who does not have guiding practice license must pay fine worth
10 Million Rupiahs and black listed to do any kind of tour guide related job until he or she possess
guiding license.
Another thing must be improved from Indonesia’s inbound tour guide service is the level of
language proficiency in new tour guide generation. A simple case is the Dutch language
proficiency in the younger tour guides.
Based on observation in Java Bali overland tour route, most of the tour guides that are able to give
explanation in Dutch language are senior tour guides. This is really becoming a stumbling block in
Indonesia´s inbound tourism industry since the Dutch visitors are among the top 5 foreign visitors
that is coming to this country. It is not only proficiency in Dutch language which is hampering the
growth in tourism industry in Indonesia, but in another language as well, such Russian, Italian, and
Spanish. There must be an improvement made to meet this challenge such as language training
and skill workshop. By the enhancement of language proficiency, the tour guides in Indonesia´s
inbound tourism industry are capable to give an excellent service toward the foreign visitors and
at the end of the day leveraging the national income from tourism sector.
6. Shopping
Up until now the growth of shopping industry to sustain inbound tourism industry in Indonesia
is considered adequate enough in term of fulfillment the need of foreign tourists to do shopping
activities. From local traditional market until duty free shop and shopping malls are all available in
most of Indonesia´s tourism destination places. Usually, in an ordinary tour package or tour
itinerary, there is shopping activities which is slipped between one programs to the other program
or at the end of the tour day when the certain tour group has already visit all the places listed on
the itinerary.
The common practice is the foreign visitors will ushered by the tour guide to the shopping center
then they will be picked up on the on a certain time based on the agreement or tour guide
instruction before. Sometimes tour guide and bus driver are waiting on the meeting point until all
the tour participants gathered then departing from that place.
Basically, the shopping industry in Indonesia is in good condition. With the expansion of
shopping malls in several main and satellite cities, provide plenty of shopping choices for foreign
visitors. The thing that mattered is the growth of souvenir industry in Indonesia which is needed
to be maximized in order to sustain and support inbound tourism industry. Robust souvenir
industry will create a new livelihood for Indonesian citizens, especially those who settle on the
rural and remote areas in this archipelago country. On economic sector, most of career pathways
chosen by Indonesian citizen are working on companies and established institutions rather than
founding they own business. The scale of small and medium size enterprises (SMEs) are still low
compared to the number of total productive age population in this country. Therefore, it is no
wonder the souvenir industry in Indonesia is still considered as a job for those who have
inadequate education level and only for villagers.
Souvenir industry is also vital element in tourism but only taken for granted. On the other hand
with the global economic downturn that is crippling nearly all the export destination countries
such as European countries and USA, the market of Indonesia souvenir industry is only depend on
inbound tourism and domestic consumption.
Poor marketing strategy also impacted on low pricing of most of Indonesian made souvenir
products. The promotion of tourism in a certain community or region has an impact o local
entrepreneurial activity, although the precise nature of this impact has not yet been fully explored
(Mathieson and Wall 1982). The handicraft sell at Prambanan temple or Borobudur temple in
Jogjakarta for example are too cheap compared to the handicraft sell at Jerusalem in Israel Holy
Land Tour.
The price for a key holder in Jogjakarta is only Rp.5000 while in Jerusalem it is US$ 5 or Rp.50.000
for the almost same quality key holder. Indeed it is not only government problem to boosting the
competitiveness of Indonesian made products but it is also the responsibility of all elements in
inbound tourism industry to set up a system that is beneficial for every stakeholder in tourism
industry. Local entrepreneurs must be given a financial subsidy that can be returned gradually
with low interest in order to help them creating and maintain home based souvenir industry. It is
current government task to create a regulation that is helping the SMEs in running their business,
by ordering certain financial institution such as bank to administer credit with or without interest
toward local souvenir home industry.
The other problem also will emerge subsequently namely how to get the buyer for these souvenir
products – link back to the previous sectors analyzed before such as transportation,
accommodation, sightseeing and attraction, guide service, and restaurant.
If each of this sectors are able to improved, the number of foreign tourist will flow rapidly to this
country hence increasing the chance of souvenir industry to survive in Indonesia´s inbound
tourism.
*******
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