New Ways to Speed Up Financing of Indonesia’s Priority Tourism Destinations

According to reports from Indonesia’s daily the Jakarta Post, Indonesia’s Financial Services Authority ( OJK ) is considering seeking alternative funding sources, including the use of regional bonds, to help finance the government’s plan to upgrade its 11 new priority destinations. OJK chairman Muliaman D. Hadad said the current budget allocation of Rp 100 trillion (US$755.5 million ) from the state budget for the projects was far from sufficient to finance massive infrastructure development and drive promotion.

“We need more funds to build roads, hotels and cottages. We hope capital market instruments will be among solutions,” Muliaman said on Tuesday to reporters. OJK chairman looks now at the issuance of regional debt papers as well as limited participation mutual funds. The developed projects would then be considered as underlying assets.

Muliaman admitted however that there were currently no regional ratings available to support the issuance of such debt papers by regional administrations. “This will be part of our work in the near future,” he said.

The 11 new priority destinations are Lake Toba, Belitung, Tanjung Lesung, Thousand Islands, Borobudur temple, Mount Bromo, Mandalika, Lombok, Komodo Island, Wakatobi National Park and Morotai.

The government has allocated Rp 100 trillion for the development of infrastructure and basic facilities for the mentioned destinations.

Tourism Minister Arief Yahya said earlier that while the government had allocated Rp.100 trillion for the projects, financial support is estimated at Rp200 trillion  (US$1.5 billion) to fully develop the destinations.

Indonesia, according to Arief, needs an additional 120,000 hotel rooms, 15,000 restaurants, 100 recreational parks, 100 diving operators, 100 marinas and 100 special economic zones to be able to welcome 20 million of international travellers by the end of the decade.

The Jakarta Post reminds that the government considers tourism to be a leading sector in the economy because of its contribution to national economic growth and foreign exchange earnings. President Joko “Jokowi” Widodo expects tourism to contribute 15 percent to the gross domestic product ( GDP ), generate foreign exchange of Rp 240 trillion, and create jobs for 13 million people.

(Source: Jakarta Post)