Unrest weakens economy
Tourism, besides mining and agribusiness, should be the most promising industry in Indonesia when most other economic sectors are still suffering from depressed domestic market demand and credit crunches. As the rupiah's exchange rate against the American dollar remains low, or almost 70 percent below its level before the economic crisis hit Indonesia in August 1997, this vast archipelagic country is theoretically a paradise for foreign tourists and the most competitive supplier of minerals in the world market.
However, the recent wave of sectarian clashes on several islands in Maluku and Lombok island in West Nusa Tenggara, the separatist rebellion in Aceh, the northernmost province in Sumatra and demonstrations by thousands of villagers on Bintan island, near Singapore, have prompted governments in many countries to issue advisories warning their citizens against traveling to Indonesia. The hotel association in Lombok estimated it would take many years to restore the credibility of the island, east of Bali, as a tourist destination. All hotels on the island, which used to cater for more than 300,000 tourist arrivals a year, now look like haunted properties. The local administration said it might receive only a tiny fraction of the Rp 9 billion (US$1.2 million) in local levies it expected from hotels this year.
Unrest on the Indonesian island of Halmahera has forced Australia's Newcrest Mining Ltd. to shut its Gosowong gold mine and evacuate 300 employees to Manado, North Sulawesi.
Last week, Iluka Resources Ltd.'s 75 percent-owned PT Koba Tin unit halved its output at its operations on Bangka Island in southern Sumatra due to increasing tensions in the province. Its operations have been affected by a breakdown of law and order in the region, resulting in the uncontrolled theft of tin concentrate from production sites.
This spate of violence is showing just how readily the long- repressed tensions, so common in diverse Indonesia but checked under Soeharto's centralized authoritarian rule, are coming to the surface. Many are afraid that the simmering conflict and the breakdown of law and order in several areas might encourage local leaders elsewhere to push against the power of the central government. This momentum, if uncurbed, could grow to the point where the process will spread quickly, like an epidemic, to other areas.
Unrest or violence is especially inimical to the tourism industry as tourism is foremost an experience, a lifestyle choice one makes to escape familiar surroundings and explore different parts of the world. Everyone involved in the travel industry, from customs officers and taxi drivers to hotel receptionists, contributes to the memories visitors take away with them and plays a part in delivering total customer service, satisfaction and delight. But security conditions or the perception about the security situation is the key to tourism credibility. Nothing within the travel industry means anything without security.
Tourists will not even consider plans to visit a country where the security situation is out of control and this is especially damaging to the process of Indonesian economic recovery. Because of its multi-faceted nature, the tourism industry involves a wide variety of economic activities. Tourist arrivals immediately inject additional purchasing power into the local economy, generating additional demand for a host of services and goods, ranging from transportation, hotels, food and souvenirs. These sectors happen to be labor-intensive, the very type of economic activity the country sorely needs to create jobs from its massive pool of the unemployed.
The tourism industry is completely friendly to the environment as it feeds on local attractions such as natural beauty and the creativity of human resources to arrange cultural events and produce goods.
It is tragic that the unfavorable security conditions have lead to a situation where the country is unable to capitalize on its present highly competitive edge in the tourism industry. Even the goodwill of Singapore's Prime Minister Goh Chok Tong, who in the middle of this month committed his government to spending $1.2 million to promote Indonesia and Singapore as a joint tourist destination, will not help much. This is a great loss, as the planned joint promotion would enable Indonesia to take advantage of the more than seven million tourists annually visiting the island republic.
It is, therefore, more imperative than ever for the government to act firmly and quickly restore a strong system of law and order and strengthen local leadership in the various provinces to bring things under control. Without these preconditions, there will be no change for the better and the series of whirlwind visits President Abdurrahman Wahid has made or will make to many countries to promote Indonesia will be wasted.