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 moreTourism
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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As Indonesia continues to grapple with spreading wildfires and recurring haze, scrutiny has increasingly shifted toward corporate culpability, driven by investigative reports linking vast networks of foreign investors and multinational firms to the blazes. With Jakarta’s domestic response perceived as largely muted, neighboring ASEAN member states have begun mounting diplomatic pressure and pursuing independent investigations into the entities allegedly responsible for the transboundary haze choking the region.
Much of the recent attention stems from an investigation published by the Indonesian Forum for the Environment (Walhi), which identified nine corporations directly tied to major wildfire hot spots: PT Kayung Agro Lestari, PT Panca Surya Agrindo, PT Arjuna Utama Sawit, PT Sumber Mardhika Graha, PT Finnantara Intiga, PT Hutan Ketapang Industri, PT Mayawana Persada, PT Hermes Sugar Indonesia and PT Globalindo Alam Perkasa.
Walhi’s findings reveal that all nine maintain parent companies or principal shareholders based primarily in Singapore, Malaysia and Hong Kong, alongside additional financial links to the British Virgin Islands, Samoa and India. Given that Singapore and Malaysia bear the brunt of the cross-border haze outside Indonesia, these commercial ties are especially consequential.
Beyond these nine entities, an estimated 93 companies affiliated with Malaysian and Singaporean palm oil conglomerates have been implicated in the fires. Of these, 66 are linked to Singapore-headquartered giants - most notably Sinar Mas and Wilmar, which account for the largest shares - while the remaining 27 trace back to Malaysian conglomerates, specifically Sime Darby and Genting Group. These complex, cross-border ownership structures significantly complicate efforts to hold individual firms accountable, deepening regional frustration with Indonesia’s management of the perennial crisis.
Singapore, for its part, has escalated unilateral enforcement. Authorities have identified seven companies operating in Indonesia suspected of responsibility for the blazes, including PT Bumi Andalas Permai, PT Bumi Mekar Hijau and PT Paramitra Mulia Langgeng. The Singaporean government announced that these firms will receive preventive measures notices requiring them to deploy firefighting teams, halt all burning, refrain from igniting new fires, and submit formal action plans to Singapore’s National Environment Agency (NEA).
Domestically, amid persistent criticism over strategic shortcomings, the Forestry Ministry announced administrative sanctions against 32 companies accused of igniting concession fires. The penalties range from operational suspensions to outright license revocations and mandatory ecosystem restoration within affected concessions. However, transparency remains a hurdle, as the government has yet to release the names of the penalized firms.
Beyond immediate enforcement, the deeper structural drivers demand scrutiny. Today’s fires and resultant haze are the cumulative legacy of decades of peatland drainage and forest conversion - practices, as Walhi Executive Director Boy Jerry Even Sembiring emphasized, systematically enabled by state-issued concession permits.
Successive administrations have confronted this recurring crisis with varying degrees of resolve. During the presidency of Susilo Bambang Yudhoyono (2004–2014), massive fires in 2006 blanketed Malaysia and Singapore in severe haze and cost the country three million hectares of forest cover. A subsequent outbreak in 2013 prompted Indonesia to finally ratify the ASEAN Agreement on Transboundary Haze Pollution (AATHP) in 2014, following a rare public apology from Yudhoyono to neighboring nations.
Joko “Jokowi” Widodo’s tenure (2014–2024) saw catastrophic fires in 2015 that consumed roughly 2.6 million hectares - predominantly across Central Kalimantan - blanketing the region in toxic haze for months, followed by another severe outbreak in 2019 that burned 850,000 hectares. In response, Jokowi institutionalized a more centralized prevention framework, establishing the Peatland Restoration Agency and issuing Presidential Instruction No. 5/2019, which enacted a permanent moratorium on new concession permits across primary natural forests and peatlands.
Under President Prabowo Subianto, crisis management has thus far leaned heavily on operational interventions, such as mobilizing joint ground and aerial task forces and conducting cloud-seeding weather modification operations. Prabowo has also authorized the acceptance of foreign technical assistance, though the timeline and operational parameters of that deployment remain undefined.
Long-term resolution hinges on confronting the structural governance issues driving deforestation, particularly the entrenched link between concession fires and commercial plantation expansion. Between 2004 and 2017 under Yudhoyono, approximately 2.4 million ha of state forest land were released for commercial estate development, dominated overwhelmingly by oil palm. Under Jokowi, nearly 700,000 hectares of land were converted to oil palm cultivation.
While definitive conversion figures have yet to be established for the Prabowo administration, concerns over policy direction have already surfaced. Special Envoy for Climate and Energy Hashim Djojohadikusumo, who is Prabowo’s brother, recently proposed utilizing 12.7 million ha of "degraded forest" for expanded oil palm cultivation to meet the administration's aggressive B50 and B100 biodiesel mandates - a strategy that critics warn could further exacerbate concession-driven fire risks.
