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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The flash floods and landslides that ravaged Aceh, North Sumatra and West Sumatra should prompt far deeper scrutiny than they have so far received. While Cyclone Senyar intensified the rainfall, the scale of destruction reflects decades of unchecked ecological degradation that have left communities acutely exposed.
As of Dec. 10, the National Disaster Mitigation Agency (BNPB) reported 969 deaths, 262 missing persons and more than 5,000 injured. The disaster also damaged 157,900 homes and 1,200 public facilities. Economically, the Center of Economic and Law Studies (CELIOS) has placed losses at Rp 68.67 trillion (US$4.1 billion), while BNPB expects recovery costs of at least Rp 51.82 trillion.
Given these figures, it is increasingly difficult to treat the catastrophe as a purely natural event. Since the floods struck on Nov. 25, videos circulating on social media have shown neatly cut logs swept downstream, a stark indication of extensive upstream logging activity and a reminder that severe ecological degradation magnified the impact of extreme weather.
Data from the Environment Ministry, Forestry Ministry and Statistics Indonesia underscore the pattern. In 2024 alone, net deforestation reached 11,208 hectares in Aceh, 7,035 ha in North Sumatra and 6,634 ha in West Sumatra, together accounting for 24,877 ha, or 14.2 percent of Indonesia’s total net forest loss that year. Just five years earlier, the combined figure in these provinces stood at 3,926 ha, or 3.4 percent of the national total.
Not only are these provinces losing trees rapidly, they are experiencing one of the steepest upward trends in deforestation nationwide. Reforestation efforts lag far behind: over the past five years, forest rehabilitation in the affected areas has never exceeded 20 percent of the land cleared. The gap points to systemic failures in forest governance and long-standing neglect of Sumatra’s ecological vulnerabilities.
The government has acknowledged the environmental dimension of the disaster. Forestry Minister Raja Juli Antoni said at least 12 companies in North Sumatra were suspected of violating environmental regulations, and the ministry is preparing to revoke 20 Forest Utilization Business Permits (PBPH) covering 750,000 ha across the three provinces. He has also asked National Police Chief Gen. Listyo Sigit Prabowo to investigate the origins of the logs filmed drifting through towns during the floods, raising the possibility of widespread illegal logging.
In parallel, Environment Minister Hanif Faisol Nurofiq has taken action by stopping the operation of four firms accused of intensifying ecological pressures in upstream areas: PT Agincourt Resources, PTPN III, PT North Sumatera Hydro Energy and one unnamed company.
Despite these moves, President Prabowo Subianto has so far avoided linking the tragedy to deforestation. His public comments have centered on reconstruction, farmland rehabilitation and microcredit relief for smallholder farmers, priorities aligned with his administration’s food security agenda. But he has offered no indication of whether he intends to confront the environmental drivers that worsened the disaster.
The timing is politically awkward. Prabowo’s recent trip to Islamabad, where he discussed climate cooperation, coincided with growing domestic calls for environmental accountability. While climate change contributes to the severity of hydrometeorological disasters, Indonesians are demanding answers about the deforestation that directly amplified the floods’ impact. The absence of a clear presidential stance risks reinforcing perceptions that the Palace is sidestepping the issue.
Complicating matters further are renewed questions about the President’s own concession holdings. In the 2024 presidential debate, Prabowo acknowledged managing hundreds of thousands of ha in forest concessions. Reports have also linked him to PT Tusam Hutani Lestari, which holds a 97,000-ha concession in the upstream area of hard-hit Central Aceh and is currently led by former Gerindra deputy chairman Edhy Prabowo. In July, President Prabowo said that he had entrusted all of his forest concessions in Central Aceh to the World Wide Fund for Nature (WWF) for elephant conservation.
Taken together, these associations raise potential conflict-of-interest concerns that could weaken the President’s credibility in confronting Sumatra’s environmental crisis.
The scale of the tragedy should mark a turning point in Indonesia’s approach to environmental governance. As long as deforestation remains unaddressed, disasters of this magnitude will recur. Physical reconstruction may restore damaged infrastructure, but without political resolve to tackle problematic concessions, strengthen oversight and recognize the link between policy choices and ecological vulnerability, Indonesia risks being caught unprepared once again when nature exacts its next toll.
