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.
Latest News
Bahlil Lahadalia’s latest appointment as coordinating downstream and energy transition minister gives him an unusually broad mandate, as he will also retain his position as energy and mineral resources minister, though the scope of the newly established coordinating ministerial post is yet to be clearly defined in terms of authority and jurisdiction. The arrangement seems to be in line with the government’s continuing prioritization of downstream industrial development, but raises a central question: Will the new post improve coordination on Indonesia’s downstream and energy transition agenda or simply add another layer of bureaucracy?
Bahlil was installed in his new post on Oct. 1 during the seventh reshuffle of President Prabowo Subianto’s cabinet and will fulfill the duties of his new office from the energy ministry for the time being. He described the dual role as a national responsibility, saying that downstream development and the energy transition needed to be consolidated to accelerate their implementation. According to Bahlil, around 90 percent of downstream investment was in sectors overseen by the energy ministry. He has declined to say whether a new appointee would eventually replace him as energy minister.
The choice of Bahlil is not entirely unexpected. Before heading the energy ministry, he was appointed investment and downstream minister after the portfolio was expanded from investment alone. He has also led the Downstream and Energy Security Acceleration Task Force since its establishment on Jan. 3 last year under Presidential Decree No. 1/2025, which grants it broad authority, including over marine and forest areas as well as to sanction parties obstructing downstream efforts. Bahlil’s new post therefore brings together areas that he has been closely involved in already.
The government has targeted downstream development across 28 commodities, with investment projected to reach US$618 billion by 2040. The government's experience with downstream nickel projects illustrates both the scale of the agenda and the trade-offs involved. Downstream nickel development helped increase export value from $780 million in 2018 to $6.8 billion in 2023. At the same time, the rapid expansion of nickel processing contributed to the growth of captive coal capacity, which reached 15.2 gigawatts (GW) by mid-2024, complicating the country’s energy transition.
The downstream agenda also extends beyond mining and energy-intensive industries. In the poultry sector, for example, the government has sought to strengthen domestic production and local supply chains. Yet tighter import licensing under Trade Minister Regulation No. 11/2026 for soybean meal and feed wheat, both key poultry feed ingredients, contributed to supply bottlenecks and higher input costs. At the same time, weaker-than-expected demand from Prabowo’s flagship free nutritious meal (MBG) program left farmers squeezed between rising feed costs and falling egg prices, contributing to protests in Central Java, Yogyakarta and South Sulawesi in August.
The energy transition is the other major pillar of Bahlil’s expanded mandate. One of the government's most ambitious initiatives is a 100 gigawatt-peak (GWp) solar power program. Bahlil said on Sept. 22 that the government would revise state electricity firm PLN’s Electricity Supply Business Plan (RUPTL) to accommodate the program and was considering accelerating tenders for the first 25-30 GW. He also said the government could simplify the procurement process and directly appoint economically viable companies. The solar program is estimated to require $70-73 billion in investment, with its first phase of 5.5 GW already launched this year and domestic production given priority.
Critics have questioned whether creating another senior ministerial post is the best way to address coordination problems. A new institution could complicate government coordination and add to the fiscal burden, contrary to President Prabowo's efficiency agenda. Indonesia now has eight coordinating ministers and 41 ministries, while critics have pointed out that the total should range around 25-30 ministries. In comparison, Singapore has 18 ministries, China 24 and Vietnam 14.
Some also view new coordinating ministerial post as potentially serving as a mechanism for distributing political power, while warning that it could create bureaucratic inefficiencies because the energy and industry ministries already oversee much of the relevant policy areas.
Still others see potential value in the new structure. The new senior post could signal a stronger government commitment to accelerating the energy transition, downstream development and green industrialization, particularly through the 100 GWp solar program. However, its success would depend on the government's ability to resolve obstacles spanning multiple ministries.
Bahlil’s appointment could be intended to appoint a single figure with both the political authority and institutional experience to push the government’s downstream and energy transition agenda across ministerial boundaries. However, doubts still remain over whether creating a new coordinating ministerial post was necessary in the first place. Ultimately, Bahlil’s success in his new role will depend on whether he can resolve the coordination problems that existing institutions have struggled to address.
