Sector

Tourism

Indonesia has designated tourism as a primary sector with a strong commitment to integrated infrastructure development and the enhancement of skilled and quality human resources. In 2023, the realization of investment in the tourism sector was predominantly driven by domestic investment (PMDN), reaching Rp 14.9 trillion. The PMDN funds were allocated to various types of businesses, including Rp 8.228 billion for star-rated hotels in West Nusa Tenggara, Rp2.601 billion for tourism areas in DKI Jakarta, and Rp1.656 billion for restaurants in Bali.

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Tourism

Indonesia has designated tourism as a primary sector with a strong commitment to integrated infrastructure development and the enhancement of skilled and quality human resources. In 2023, the realization of investment in the tourism sector was predominantly driven by domestic investment (PMDN), reaching Rp 14.9 trillion. The PMDN funds were allocated to various types of businesses, including Rp 8.228 billion for star-rated hotels in West Nusa Tenggara, Rp2.601 billion for tourism areas in DKI Jakarta, and Rp1.656 billion for restaurants in Bali.

Indonesia has identified 10 priority tourism destinations, including Borobudur, Mandalika, Labuan Bajo, Bromo Tengger Semeru, Thousand Islands, Lake Toba, Wakatobi, Tanjung Lesung, Morotai, and Tanjung Kelayang. Both domestic and international tourists constitute the country’s tourism market potential. In 2023, the number of foreign tourist visits reached 11.68 million, with the largest contributions coming from Malaysia, Australia, Singapore, China, and East Timor. This increase in visits also corresponds with the growth of tourism foreign exchange earnings, which reached US$6.08 billion in the first semester of 2023.

Major provinces attracting international tourists include Bali, DKI Jakarta, Riau Islands, West Nusa Tenggara, and East Java. Meanwhile, the number of domestic tourist trips in 2023 reached 749,114,709 trips, with DKI Jakarta, DI Yogyakarta, and East Java having the highest travel ratios.

Aside from the tourism sector, Indonesia’s creative economy sector has also shown significant growth, with exports reaching US$11.82 billion in the first half of 2023. The fashion subsector is the main contributor with US$6.56 billion (55.52 percent), followed by culinary products with US$4.46 billion (37.70 percent), and crafts with US$792.67 million (6.71 percent).

Moreover, the sector has realized US$225.28 million in foreign direct investment (FDI) and US$577.87 million in domestic direct investment (DDI) in the first quarter of 2023 out of the sector’s total target investment of US$2.68 billion in 2022. The Tourism and Creative Economy Ministry targets investment in this sector to reach US$6-8 billion, with the hope of creating 4.4 million new jobs in 2024.  This investment fund is planned to be allocated for the development of five-star hotel accommodations in super-priority tourism destination areas (DPSP) and 10 other priority tourism destinations.

Meanwhile, realized investments in the tourism sector in 2022 amounted to US$2.33 billion. Furthermore, FDI also contributes significantly, especially reaching Rp8.7 trillion from Singapore amounting to Rp2.458 billion, followed by Hong Kong with Rp1.720 billion, and India with Rp1.385 billion.

Latest News

August 27, 2025

President Prabowo Subianto used his first state of the nation address on Aug. 15 to talk up his hugely ambitious free nutritious meal program, claiming success although so far it has reached less than a quarter of the 83 million targeted recipients since its January rollout.

The message is clear: He will continue with his signature policy despite serious challenges about its feasibility and sustainability that had prompted critics to call for scaling it back or at least scaling it down.

He is not deterred. The free meals program was one of his main promises made on his way to win the presidential election in 2024 as a way of fighting stunting, with Indonesia among the countries with highest prevalence despite its upper-middle-income classification by the World Bank.

Prabowo has even expanded the program, originally aimed at all school children, estimated at 82.9 million, to include pregnant women and children under-five. No one has put a final figure with this expansion, but even the original numberwas daunting.

He is putting money where his mouth is. In the budget speech later the same day, he announced an allocation of Rp 335 trillion (US$21 billion) for the program in 2026, five times the figure for this year and accounting for 9 percent of the government’s total spending of Rp 3,786 trillion next year.

Prabowo based his success claim on the report he had received just that morning from the National Nutrition Agency (BGN) which overseas the program that coverage had reached 20 million. This is contentious given that just two weeks earlier it said it had only covered 10 million.

He compared this progress with Brazil, which he said needed11 years to reach 40 million people.

“This is not just a social program. It provides the necessary foundation to build a generation of healthy, smart and productive people. The United Nations says it is the best investment any nation can make,” the President said.

He said school attendance had gone up since the program’s rollout with children performing better, without citing any specific study to back the claim. The BGN says its own studies of the program in several cities in West Java, North Sumatra and Papua found children more focused and learning better compared with when they went to school on empty stomachs.

There is also the economic impact, with Prabowo citing that the 5,800 kitchens set up for the program created 290,000 new jobs and benefited one million farmers, fishermen, cooperatives and micro, small and medium enterprises(MSMEs) that are involved with the policy.

The target is to have 32,000 kitchens nationwide with even greater multiplier impacts on the economy, particularly in villages.

Undermining this claim of the impact on local economies is that many of these common free meals program kitchens are entrusted to the police and the military and some big religious organizations.

Prabowo did not directly address critics of the program but said they should recognize progress rather than focusing on the shortcomings.

BGN chief Dadan Hindayana separately recognized the problems but dismissed them as normal for any new government program of this scale.

But critics say some issues may be fundamental.

Administering them on a scale is already a huge challenge, including controlling the quality, with now frequent reports of food poisoning affecting children and teachers in the program.

There is also the classic problem of embezzlement affecting government programs, with reports of contractors not getting payment, or being paid less than they are owed, and of favoritism in awarding the contracts.

Because of the sheer scale, the government has already reduced the amount spent per meal. From the initial minimum of Rp 15,000 to ensure nutritious content, it was brought down to Rp 10,000, and now even less, raising questions about whether it can still be called nutritious.

With the President determined to succeed, the program is already taking precedence over all other government spending, even on education.

The Finance Ministry said the fund allocation for the program will come from the 20 percent of total annual government spending on education as mandated by the constitution. This means other spending items on education, including improving teachers’ salaries and repairing school building and providing facilities, will have to be sacrificed.

A big part of the problem is the question of scale, and this is something that the President can easily fix if he is willing to back off from his determination to make the program universal for all children in all schools, whether government or privately run.

If he was impressed with Brazil during his trip there early this year, he should know that its National School Feeding Program covers only government-run schools, which covers 40 million students. India’s mid-day meal scheme is also provided for government and government-aided-schools and covers 120 million children. The United States National School Lunch Program is a federally assisted meal program for children from poor families.

Indonesia is emulating rich Sweden, with a population 11 million, in trying to make its free meals program available to all children irrespective of what school they go to or their parents’ income. Even a casual observation will tell you that more than half of Indonesia’s 83 million schoolchildren are already well fed, and do not really need government assistance. Likely, they are getting far better meals at home than the program can provide.

The free meals program will continue to be a story in the coming years as it has become Prabowo’s signature policy. And if he decides to run for a second term in 2029, as he is likely to, he will be judged by the success of this program. Then voters will be more critical of whatever figures he shows.

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