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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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.
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With little fanfare, Indonesia’s labor movement has joined President Prabowo Subianto ’s big coalition government, giving it an inside track in the corridors of power to fight for its interests. Although some might argue that it has been co-opted to blunt the movement.
On May 1, Prabowo joined a huge labor rally at the National Monument (Monas) Square opposite the Presidential Palace complex in Central Jakarta, and top union leaders happily embraced him on stage. A week earlier, the President recruited prominent labor activist Muhammad Jumhur Hidayat to his cabinet, though as minister for the environment rather than for labor.
Labor is the missing piece in Prabowo’s big tent coalition government comprising not only most of the political parties, but also major special interest groups, particularly business, Islam, the police and the Indonesian Military (TNI). Time will tell whether joining the coalition means more leverage for the labor movement, or simply co-option.
May 1 is now celebrated in Indonesia as a national holiday and a time for labor unions to show their teeth by holding rallies throughout the country. The one at Monas, attended by hundreds of thousands, was the largest, though not the only one that took place that day.
If past presidents avoided May Day rallies, Prabowo has embraced them. He joined leaders from more than 20 unions on stage and even seen sang some of the Indonesian words to “L’Internationale”, the anthem of the global labor movement. He chanted “Long live labor, long live Indonesia!”, and raised his fist in solidarity with workers.
He took off his safari shirt and threw it to the crowd, and when reduced to a black undershirt, spent the next 15 minutes hugging and shaking hands with the crowd. The workers responded in kind while the song “Kowe Cen Istimewa” (Javanese for “You Are Special”) played in the background. He gave out t-shirts to celebrate Labor Day with the inscription “For you my country, our body and soul” produced by the Palace.
Prabowo has delivered on some of his promises. The bill on the protection of domestic workers, a promise he made at last year’s May Day rally, was endorsed by the House of Representatives in April. In November, he named Marsinah, a woman labor activist murdered by the TNI in 1993, a national hero. On May 1, as a Labor Day gift, he issued a presidential regulation limiting online companies that run ride-hailing services to 8 percent in commission, instead of the going rate of 20 percent, making sure that riders get 92 percent of their fares.
It is too early to conclude that Prabowo is a “pro-labor” president, as against the “pro-business” label given to past presidents. His cabinet is still staffed by many business types.
The former Army general has departed from the TNI tradition of viewing labor with suspicion, as representing the communist ideology. The government only recognized May 1 as Labor Day, and made it a national holiday, in 2013.
The labor movement in Indonesia politically remains small and weak, a reason why past presidents could afford to ignore it or gave only token participation in their governments. The movement has suffered from low unionization rates and fragmentation into groups that often compete against one another.
Statistics Indonesia (BPS) says the size of Indonesia’s workforce was 155 million out of a working-age population of 220 million as of February. Estimates of how many workers are members of labor unions range between 4 and 13 percent. The Manpower Ministry says there are 21 labor confederations, 198 federations and more than 12,000 union shops. The bulk of Indonesian workers, more than 60 percent, are in the informal sector, and not covered by unions.
The ineffectiveness of the labor movement was grossly exposed when the government of president Joko “Jokowi” Widodo swiftly pushed the Job Creation Law through the House in 2023, with little opposition from labor. Despite its name, the legislation is designed to give more concessions to investors, often at labor’s expense.
Several unions have elevated themselves into political parties, but they never got far in elections. Labor is simply not popular among voters.
Their fragmentation means that not all labor groups have joined the Prabowo administration. On May 1, several groups organized a separate rally in Jakarta outside the Senayan Legislative Complex in Central Jakarta to press their demands, including repealing the Job Creation Law, ending outsourcing and better protection for workers who are laid off.
With reports of more companies planning to lay off workers, embracing the labor movement may be not such a bad idea for President Prabowo.
