Indonesia to tap tourism to tackle current account deficit
Bali, Indonesia
Indonesian President Joko Widodo has vowed to handle Indonesia’s current account deficit, which has been rocketing these years. Currently the deficit is about US$25 billion. The President stated that by enhancing the revenue from tourism and reducing the overall fuel imports by increasing the use of indigenous biodiesel.
The President has met Indonesian industrialists on Tuesday, 28th August 2018 to discuss global economic volatilities that are affecting the emerging markets, including Indonesia. He also discussed with them government’s strategies to deal with these risks.
“People were worried about the impact of the trade conflicts between China and United States. Now we have the crisis in Turkey. We don’t know what could be the next cause to bring about even more uncertainties for the global economy,” said Joko in the meeting.
Recently Turkey’s currency Lira has plunged close to 40 per cent against the US dollar, which has created concerns among global investors who shifted their investments away from the emerging markets, including Indonesia.
Lake Toba in Sumatra
The widening current account deficit has led to a depreciation of the country’s currency. Indonesia’s rupiah has dropped more than 7 per cent this year against the US dollar. This has prompted Bank of Indonesia – the central bank – to raise interest rates more than three times this year, pushing up the cost of housing loans as well as affecting consumer purchasing power.
The statement also accentuated Indonesia’s increased focus on developing the tourism sector. The country is target to have 17 million foreign visitors this year, against the 14 million during 2017.
“Thailand could host around 34 million foreign visitors. Why can’t we achieve at least the same? I think we can also achieve that,” states Joko.
Indonesia have a wide range of tourism hot-spots, such as Lake Toba in Sumatra, Bali etc., but the insufficient infrastructure spending had impeded the growth of tourism to the country.
As part of that infrastructure enhancement, Joko wants to build 10 new Balis, and attract more prosperous travellers from China, which is on track to become the biggest tourist market for Indonesia.
Recently, smaller airports located close to tourist attractions has been upgraded, including the one near Lake Toba, which have increased the chances to achieve their ambitious target of to get 17 million foreign visitors this year and make it 20 million in 2019.
