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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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

November 6, 2026

Indonesia is facing mounting economic and diplomatic costs from forest and peatland fires this year as a prolonged dry season coincides with a strong El Niño and a positive Indian Ocean Dipole (IOD). The fires have caused widespread damage, placed a substantial burden on public health and economic activity and sent haze across national borders. The combined economic and health costs are estimated to have reached as much as Rp 123.1 trillion (US$6.79 billion), while the resulting pollution has strained relations with neighboring countries.

According to a study by CELIOS, economic losses from the fires in January-August 2026 are estimated to range between Rp 39.29 trillion and Rp 123.1 trillion. The upper-end figure is equivalent to 49.1 percent of the projected gross regional domestic product (GRDP) of Central Kalimantan this year, illustrating the scale of the potential damage and the economic stakes of avoiding seasonal fires from becoming an annual crisis.

The lower-end estimate comprises Rp 29.54 trillion in damage to physical assets and disruption to economic activities as well as Rp 9.75 trillion in healthcare costs. The final figure could be much higher if the fires continue to the year-end. Meanwhile, potential losses in local tax revenue are estimated at Rp 269.86 billion.

The government has allocated approximately Rp 1.2 trillion in emergency assistance to manage the fires and address related impacts, which has been distributed in two phases to affected provinces and districts. The first funding phase, worth Rp 760 billion, was disbursed on Sept. 7, followed by a second disbursement of around Rp 475 billion on Oct. 22.

The assistance is intended to support firefighting operations, evacuations, medical treatment for smoke-related illnesses, logistical supplies and postfire peatland restoration.

Industrial land clearing is a central cause of this year's fires, with environmental researchers pointing to deliberate burning for agriculture and plantations alongside decades of deforestation and peatland conversion.

Between January and July, 285,914 hectares of land burned nationwide, according to independent forest monitoring platform Nusantara Atlas. Around 23.9 percent of that area, or approximately 68,324 ha, fell within industrial concessions and includes 15,146 ha in oil palm concessions, 12,120 ha in mining concessions and 10,485 ha in pulpwood concessions.

Deliberate burning to clear land for agriculture and industry often allows fires to spiral out of control. The fires were further exacerbated by a prolonged dry season that left vegetation and peatlands unusually dry, which served as fuel for fires to spread beyond their initial land clearing sites.

Unlike surface fires, peat fires can persist below ground and reignite, requiring sustained efforts to extinguish them fully. Satellite monitoring revealed that in September, fires were burning both above and beneath the ground in peatlands, with underground fires likely to burn until sufficient rainfall returned to the country.

The fires have also become a source of diplomatic tension at a particularly sensitive time for regional cooperation, and ASEAN foreign ministers are expected to discuss transboundary haze ahead of the bloc’s annual summit in November. Smoke from the fires has spread from Indonesia into Singapore and Malaysia, exposing disagreements over the accountability of businesses operating across borders and the extent to which affected governments can intervene.

The dispute is particularly consequential for Singapore, given its close bilateral ties with Indonesia. The island country has been Indonesia's largest source of foreign investment since 2014, and its investments totaled Rp 230.46 trillion in the first nine months of this year alone.

Diplomatic friction intensified in October, when Singapore invoked its Transboundary Haze Pollution Act to hold accountable companies linked to the haze. Singapore issued preventive measure notices (PMNs) to Indonesian companies with concession areas linked to the fires, while separately requesting information from Singapore-registered businesses about corporate ties to Indonesian concession holders and their fire prevention efforts.

The two neighbors have since sought to prevent the dispute from escalating. On Oct. 27, Foreign Minister Arrmanatha Nasir and Singaporean Foreign Minister Vivian Balakrishnan met in Jakarta and agreed to establish a joint task force to share information, gather cross-border evidence and investigate companies linked to the fires. Nasir welcomed Singapore's offer to share corporate information and financial intelligence, while Balakrishnan said Singapore was prepared to pursue locally registered companies that were found responsible.

Indonesia’s recurring forest and peatland fires pose a threat not only to domestic economic activity and public health but also to its relationships with regional trading partners and investors. The substantial economic costs of the fires, combined with the risk of diplomatic friction over transboundary haze, demonstrate how environmental mismanagement can undermine investor confidence and complicate cross-border economic cooperation.

Although Indonesia’s wildfires have become a familiar feature during the dry season, their recurrence should not make them an accepted cost of doing business. Without sustained action to prevent deliberate burning to clear land, the damage risks compounding with each fire season.

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