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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PT Nations Petroleum, an oil and gas company linked to businessman Hashim Djojohadikusumo, President Prabowo Subianto ’s younger brother and special climate and energy envoy, has committed US$103.3 million to three years of work on the Natuna D-Alpha block, prompting questions over why the relatively new player is willing to take on such an ambitious bet.
One of Indonesia’s largest undeveloped gas resources that has eluded development for decades, the block presents formidable technical and commercial challenges, including gas containing more than 70 percent carbon dioxide (CO2).
The scale of Nations Petroleum’s commitment is striking, not only because of the block’s complexity but also because the company lacks the track record of the major international oil companies that have previously sought to develop it.
Industry players describe Nations Petroleum as a new and unproven player that would likely need a major international partner to provide the technology and financing required to develop D-Alpha. This raises questions about the company’s financial and technical capacity to take on the block, as well as speculation over why it is willing to commit so much to a project that has defeated previous development attempts.
The block’s history dates back to 1980, when Pertamina and ExxonMobil subsidiary Esso Natuna signed a production sharing contract (PSC). Pertamina and Esso Natuna initially held equal 50 percent shares but in 1996, Pertamina transferred a 26 percent interest to ExxonMobil’s Mobil Natuna, leaving the United States major with a 76 percent stake and Pertamina with 24 percent.
The contract was eventually terminated after the contractor failed to submit a feasibility study demonstrating D-Alpha’s commercial viability per the agreed deadline.
The government handed responsibility for the block to Pertamina in 2008, seeking to revive its development with international partners. In 2010, Pertamina formed a consortium with ExxonMobil, France’s Total and Malaysia’s Petronas.
Petronas was replaced by Thailand’s PTT Exploration and Production (PTTEP) in 2012 and then Total subsequently withdrew, leaving behind a trio. By 2017 ExxonMobil and PTTEP had also withdrawn, bringing the consortium to an end and leaving Pertamina as the sole party.
The contrast with Nations Petroleum is considerable: ExxonMobil, Total, Petronas and PTTEP were all established international energy companies with extensive upstream operations and experience in technically challenging projects, yet they were unable to develop D-Alpha for commercial production.
The entity with the closest relevant experience within Hashim’s Arsari Group is PT Nations Natuna Barat, which is acquiring a 75 percent non-operated working interest in the Duyung PSC, which is developing the Mako gas field in the West Natuna basic. But that experience is both indirect and considerably smaller in scale than what D-Alpha requires.
The scope of the challenge also helps explain another view among industry players: that Nations Petroleum’s role in the block could primarily be as a source of capital rather than as the lead in its development. This has in turn fueled questions about the company’s ability to develop the block without a major international partner.
Hashim’s blood ties to Prabowo and his standing as a longtime political ally has added another layer of scrutiny, leading to speculation that political considerations may have played a role in awarding the block to Nations Petroleum.
Nevertheless, Pertamina cannot be expected to develop Natuna D-Alpha alone. The block presents an unusually difficult development proposition, while Indonesia has a strong interest in bringing its large undeveloped gas resources into production as domestic energy demand rises and oil and gas output remains under pressure.
Increasing domestic production is also an important part of the government’s broader energy security agenda, making D-Alpha strategically important despite the challenges involved.
The scale of the potential development is reflected in a 2010 estimate from the Energy and Mineral Resources Ministry pointing to a required investment of around $52 billion. This estimate, released before the doomed four-way consortium attempted to advance the project, indicates the formidable technical and commercial challenges involved, including the field’s roughly 70 percent CO2 content.
For now, Nations Petroleum’s involvement remains focused on exploration and early-stage appraisal. The company will conduct geological and geophysical surveys and process 3D seismic data covering 591 square kilometers of the Natuna D-Alpha block. It will then carry out additional exploration studies, including drilling an appraisal well and an exploration well.
The results of this preliminary work will help determine whether Nations Petroleum can develop D-Alpha beyond the cycle of failed attempts that has defined the block for decades.
