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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Strengthening national defense has long been a priority for President Prabowo Subianto and dates back to his tenure as defense minister. There is no doubt about his administration’s focus on defense, given that the country has yet to achieve its 2009-2024 Minimum Essential Force (MEF) target. Yet the public continues to question whether the government’s efforts are genuinely aimed at safeguarding Indonesia’s sovereignty or attempts to extend military authority into civilian domains.
Defense spending has remained relatively high despite the administration’s budget efficiency policy. This year, the Defense Ministry received a whopping Rp 187.1 trillion (US$10.5 billion) from the state budget, making defense the second largest expenditure after the free nutritious meal program. The 2026 defense budget reflects a steady increase over the past five years. According to the Central Government Financial Report (LKPP), the Defense Ministry had a budget of Rp 125.9 trillion in 2021. This had grown to Rp 190.5 trillion by 2024, and its estimated realization stood at Rp 247.5 trillion for 2025.
As a symbolic demonstration of this defense strengthening strategy, on May 18 President Prabowo handed over six Rafale fighter jets, four Dassault Falcon 8X, one Thales mobile long-range radar and one Airbus A400M Atlas military transport aircraft to Indonesian Military (TNI) commander Gen. Agus Subiyanto during a ceremony at the Halim Perdanakusuma Air Force Base in East Jakarta. The handover came four years after Indonesia signed an $8.1 billion procurement agreement with France for 42 Rafale fighter jets, when Prabowo was defense minister.
Despite these historic hikes in nominal spending, Indonesia's defense budget remains chronically constrained when measured against total economic output, hovering at below 0.8 percent of gross domestic product. This lags considerably behind regional peers such as Singapore and Vietnam. This funding shortfall makes the military's expansion into nonconventional roles in domestic affairs particularly controversial, raising concerns among critics who view it as reminiscent of the New Order era, when the military controlled both the social and political spheres.
One notable example of this military shift is the government’s commitment to establish "territorial development battalions" across the country’s 514 regencies and municipalities. As of April, 155 of these battalions had been established. This initiative also has necessitated a significant increase in military recruitment, with around 24,000 enlisted soldiers (tamtama) to serve primarily in noncombat roles. The new battalions are tasked with supporting flagship government initiatives, including the free meals program, the Red and White Cooperatives, food security programs and local infrastructure development.
During a meeting on May 19 with House of Representatives Commission I, Defense Minister Sjafrie Sjamsoeddin said the members of territorial development battalions would also contribute to the social and religious life of surrounding communities. He explained that each battalion of approximately 1,190 troops included recruits with diverse backgrounds, from graduates of pesantren (Islamic boarding schools) to individuals trained in interfaith services.
Military involvement in civilian affairs is also creeping into local law enforcement. During a press conference at the Jakarta Police headquarters on May 22, authorities announced that the Jakarta Military Command would be actively involved in hunting down gangs of begal (street robbers) that were spreading fear across Greater Jakarta. While this might appear to be decisive response to public anxiety, mobilizing the TNI in a traditional policing role risks blurring constitutional boundaries and increasing potential human rights abuses.
Furthermore, the TNI is expected to extend its influence into higher education through the Finance Ministry’s Education Endowment Fund (LPDP), where soldiers will reportedly help instill nationalism among scholarship recipients.
Against this backdrop, the questions surrounding the steady increase in defense spending become harder to ignore. As the TNI increasingly extends its influence on civilian affairs despite limited resources, its future trajectory has emerged not merely as a rhetorical inquiry but also as a pressing national concern.
