Results
- $870 million in private sector investment mobilized
- Improved water access for 570,000 people
- Over 20,000 businesses with expanded online presence
- Over 84,000 tourism professionals certified
- 18,000 participants trained from 155 tourism villages
- More and better jobs for approximately 1.2 million people in six targeted destinations
The Challenge
From 2001 to 2012, Indonesia enjoyed strong economic growth, averaging 5.6 percent per annum, while the poverty rate halved to 11 percent. The employment rate reached a two-decade record high in 2019, with 67.5 percent of youth and adults in the labor force. However, growth and job creation have since slowed: youth unemployment is relatively high, at 20.6 percent in 2022, and only 53.0 percent of women are in the labor force.
Tourism is a promising sector, with the potential for inclusive and sustainable growth and increased employment. According to the World Travel and Tourism Council (WTTC), every $1 million of spending in travel and tourism in Indonesia supports $1.7 million in GDP and around 200 jobs, of which 67 are direct jobs. Moreover, 58 percent of almost 7 million hotel and restaurant workers in Indonesia are women.
Constraints to growth and competitiveness in Indonesia’s tourism sector include (i) poor government coordination and weak implementation capacity; (ii) poor access to and quality of tourism specific infrastructure; (iii) limited tourism workforce skills, hindering the quality and availability of services; and (iv) a weak enabling environment for private sector investment and business entry. Addressing these is key to unlocking Indonesia’s potential to develop a world-class tourism industry.
WBG Approach
The Indonesia Tourism Development Priority Program (Program Prioritas Nasional Pembangunan Parawisata Indonesia) encourages a more comprehensive and inclusive approach to tourism development by improving tourism-relevant basic infrastructure and services, strengthening local economy linkages to tourism, and attracting private sector investment.
The project comprises four components. The first is a technical assistance program to increase institutional capacity for integrated and sustainable tourism development. The second is aimed at improving transport and other tourism related infrastructure and services while preserving natural and cultural assets. The third aims to increase participation of local firms and individuals in the tourism sector. The fourth, conducted in partnership with IFC, is a technical assistance program to design and implement tourism destination-specific investment planning, including project preparation, market sounding, and monitoring.
The Project focused on an initial three key tourism destinations. Once developed, the three destinations were expected to boost the number of annual visitors from 15.3 million visitors in 2015 to 27.3 million by 2041. Annual tourist spending was also expected to increase, from $1.2 billion to $3.3 billion over the same period, and private investment in tourism was expected to increase 13-fold, to $421 million. By the end of 2024, the project had supported a total of six destinations in achieving key milestones: improving water access for 570,000 people, creating 542,000 m² of non-motorized space, and enhancing sanitation for 470,000 people. Over 20,000 businesses expanded their online presence, and over 84,000 tourism professionals were certified.
The project also attracted over $870 million in private investment, trained 18,000 participants from 155 tourism villages, and helped 65 tourism villages execute their development plans and generate income and livelihoods. It is estimated to have driven the creation of employment or better jobs for approximately 1.2 million people – with an increase of approximately 27 percent in the accommodation, food, and beverage sectors. The overall average wage has increased in project areas by more than 15 percent.