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.

View more

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

March 20, 2026

Budget allocations for the free nutritious meal (MBG) program now dominate the education budget. A school feeding program that does not fundamentally serve a core educational purpose has instead become a primary focus within the government’s education spending framework. This shift raises significant questions about fiscal priorities and the long-term health of the nation’s pedagogical infrastructure.

According to Presidential Regulation (Perpres) No. 118/2025 on details of the 2026 state budget (APBN), total education spending is set at Rp 769.1 trillion (US$45.5 billion). This budget is distributed through three main channels, with 61.2 percent allocated to central government spending, 34.4 percent designated for transfers to regional governments and 4.4 percent managed through various financing schemes.

Under this structure, the National Nutrition Agency (BGN), which oversees the free meals program, has emerged as the institution receiving the largest single allocation from the education budget. The agency is set to receive Rp 223.56 trillion, equivalent to 29.1 percent of education spending this year. This share marks a sharp increase compared with the previous year: The 2025 state budget allocated only around 7.8 percent of the education budget to the BGN, meaning that its share has more than tripled in just 12 months.

The budget structure further highlights the free meals program's current standing as the flagship program of President Prabowo Subianto’s administration, now framed as a primary driver of education outcomes. Conceptually, however, categorizing the free meals program as an education budget item remains a point of contention in international finance standards.

The Organisation for Economic Co-operation and Development (OECD), for example, clearly distinguishes between core educational purposes and other education-related expenditure. School feeding programs fall into the latter category, as they are considered supportive social programs rather than a core component of education financing.

The allocation has garnered both support and criticism. The government insists that the new budget structure does not reduce fiscal space for education, with Cabinet Secretary Teddy Indra Wijaya insisting that no education program has been cut or discontinued due to funding the free meals program. House of Representatives Budget Committee chairman Said Abdullah, who hails from the from the Indonesian Democratic Party of Struggle (PDI-P), echoed this statement when he described the allocation as a joint decision made during budget deliberations.

While the raw budgets have technically increased for the three key ministries, the religious affairs, the primary and secondary education and the higher education ministries, the overall composition of education spending tells a different story.

Several key components have experienced declining shares over the last two budget cycles. For instance, transfers to regional administrations accounted for 47.9 percent of the education budget in 2025, but this share was decreased to 34 percent for 2026. This decline could significantly weaken the fiscal capacity of local administrations to finance infrastructure and teacher quality. Similarly, allocations for financing schemes, including the Education Endowment Fund (LPDP) for research grants and academic scholarships, decreased from 11 percent in 2025 to just 4.4 percent in 2026.

Some observers argue that including the free meals program in the education budget risks violating the constitutional obligation to allocate at least 20 percent of the state budget to education, as stipulated under Article 31. Critics argue that the definition of “education” becomes dangerously stretched when nutrition programs are used to satisfy this mandate.

This controversy has now entered the legal arena, with the Constitutional Court receiving three petitions for judicial review regarding the 2026 State Budget Law. On March 11, Chief Justice Suhartoyo noted that both the House and the government requested a postponement, citing unreadiness to defend the categorization.

Political resistance is also mounting within the House. The PDI-P has taken a critical stance despite initially accepting the 2026 budget structure, issuing a circular on Feb. 24 that instructs members to avoid businesses linked to the program. The party argues that because the free meals program is financed through reallocations from the national education budget, it must be safeguarded stringently against conflicts of interest. In a broader context, using the education budget to fund the free meals program reflects a government strategy of mobilizing resources from established sectors to support new priorities.

A similar pattern is visible in the Red and White Cooperatives (KMP) program, which draws from village funds that have served as the backbone of local empowerment for a decade.

The debate surrounding the free nutritious meal program is therefore about more than just nutrition. It has opened a fundamental discussion on the government’s fiscal priorities, the legal definition of education spending and the boundary between social welfare and education policy.

Read more
Load more