Seeing Tourism as Crucial, Indonesia Tries to Step Up Its Game

JAKARTA — On a recent bright Sunday morning, tourists sipped cool drinks and dined on platters of fried rice and satay at the air-conditioned Café Batavia, nestled inside a 19th-century building in Jakarta’s old colonial city, Kota Tua.

Outside, other structures built by the Dutch traders who once ran Jakarta crumbled in the tropical heat.

Officials say they hope one day Kota Tua’s canals and stone streets will resemble Venice. But for now, the scene is one of dilapidation, and Café Batavia is one of the few tourist-friendly restaurants in an area the government has designated for a major revitalization project.

“It’s lost in the dirt and grime,” said Sharon Venhoek, an Australian visiting her daughter in Jakarta. “If they were able to restore it, it would be amazing.”

Tourism is one of the “pillars” of Indonesia’s economic growth strategy, said Helen Marano, the vice president of government and industry affairs at the World Travel and Tourism Council, a global organization for travel businesses. Officials say an increase in tourist numbers would increase the country’s revenue, generate jobs for locals and help lift trade and investment.

“They’re trying to improve the health and wealth of the entire country, not just one center,” Ms. Marano said.

That means the industry is crucial at a time when the Indonesian economy may be poised to take off.

Indonesia has found foreign direct investment surging 27 percent in the first quarter to a record 65.5 trillion rupiah, or $6.7 billion, according to official figures released last week. But in a March 18 report, the World Bank said regulatory uncertainty, specifically in the resources sector, could slow growth. Costly fuel subsidies continue to drain the state budget, and lower prices for the commodities that make up nearly two-thirds of the country’s exports have pushed the country’s current account — a measure of foreign trade and investment — into deficit.

“Now that the current account has deteriorated because of low exports, because of the prices of commodities, tourism is an easy way to increase foreign exchange earnings,” said Fauzi Ichsan, a senior economist and head of government relations at Standard Chartered Bank in Jakarta. “Plus, you’ve got huge sources of tourists from China, India and the other Asian countries that have been doing well over the past five years.”

Indeed, tourism is the country’s fifth-largest foreign currency earner, after several major commodities — oil and natural gas, palm oil, coal and rubber.

Tourism to the Asia-Pacific region has grown faster than in all other regions in the world over the past two years and is expected to grow between 5 percent and 6 percent in 2013, according the U.N. World Tourism Organization. Much of that growth will come from within the region, and travel industry analysts say Indonesia wants to do more to attract tourists from Asia, and particularly from China.

The number of foreign visitors to Indonesia has grown consistently over the past seven years, to eight million last year from five million in 2005, according to the U.N. tourism organization, which ranks Indonesia 33rd among 50 countries for tourist arrivals, below Singapore, Thailand and Malaysia, but above Vietnam and India.

Revenue from tourism is up too, to $9.12 billion last year from $6.3 billion in 2009, according to the Indonesian tourism ministry, which calculates data using a method developed by the U.N. agency.

Total spending from tourists and investment contributed about 250 billion rupiah to the country’s economy in 2012; that represented about 3 percent of gross domestic product, according to the World Travel and Tourism Council, which projects that the number will grow to 8.5 percent of G.D.P. in 2013.

To increase the number of foreign visitors to 10 million by 2014, the tourism ministry has participated in international travel fairs, promoting the slogan “Wonderful Indonesia.”

Seeing Tourism as Crucial, Indonesia Tries to Step Up Its Game