Indonesia Tourism Report Q2 2008

Latest Tourism Arrivals Figures The number of tourists visiting Indonesia in 2007 rose by 13% year on year (y-o-y), to 5.51 mn, according to figures released by the Central Bureau of Statistics in February 2008. This increase was very much in line with BMI's own expectations of a 15% annual rise. Bali continued to experience a resurgence in visitor numbers, with some 1.74mn tourist arrivals representing a 31.1% annual increase.

Foreign tourism receipts came to some US$5.3bn, an increase of 20.5% y-o-y.

Visit Indonesia 2008 Campaign Launched In late December 2007, the government officially launched Visit Indonesia 2008. The aims of this US$15mn domestic and international marketing campaign are to attract some 7mn foreign tourists to Indonesia and generate some US$6.4bn in foreign tourism receipts. There will also be over 100 international events and cultural festivals held around the archipelago to raise Indonesia's international profile.

The campaign marks the first time since 1991 that the government has held an international Visit Indonesia marketing campaign. The last campaign was not particularly successful, but this was carried out during a time of global economic slowdown.

This year's launch also got off to an inauspicious start when it was revealed that the tourism ministry's English slogan 'Celebrating 100 years of nation's awakening' was incorrect and had to be changed to '100 years of national awakening'. This gaffe forced Garuda Indonesia to repaint 10 planes that had already been tagged with the slogan.

Although we welcome the launch of this tourism marketing campaign as a way of bringing tourists back to the country, BMI does not believe that the 7mn target can be reached, as this would represent a massive 27% increase y-o-y. We believe that our long-held target of 6.35mn visitors for 2008 can be reached, provided of course the security situation does not deteriorate. This would still represent strong annual growth of over 15%.

Bird Flu Update Bird flu remains a real danger to the health of humans in Asia, despite the stockpiling of vaccines and the fact that Asian countries are now better prepared to react to any future outbreaks, according to comments from the World Health Organisation (WHO) in early March 2008. Takeshi Kasai, the WHO's regional advisor on communicable diseases, said that the bird flu virus is 'firmly entrenched' in the region, with the risk of a human pandemic possible. Indonesia has been the worst-affected country, with 11 deaths so far this year and some 105 in total.

In a more positive development, bird flu samples sent by Indonesia in February 2008 to the US Centre for Disease Control and Prevention (CDC) have shown no signs of mutation, according to the Ministry of Health. This good news followed a six-month period where Jakarta would not share its virus samples with other nations, until it had received guarantees that its people would have access to affordable vaccines in the event of a future pandemic.

Oil Prices A Worry For Airlines Oil prices have once again been making record highs in March 2008, with the price of oil in the US hitting over US$100/b. BMI's economic analysts believe that oil prices will remain in elevated territory well into 2008, which will see fuel costs once more becoming a headache for international airlines.

To that end, it is clear that Indonesian airlines may now have to consider ways that they will be able to offset this higher cost of jet fuel over the years ahead. Options include levying a fuel surcharge on all passengers or looking at other areas where costs can be cut to help ease the burden of fuel charges on their bottom line. Already, several leading US airlines have started to increase their fuel levies, and it is to be expected that other airlines around the world will follow suit.