Developing Indonesia’s Cruise Industry: Challenges and Potentials

By Maria Renata Hutagalung, Nooman Effendy, Rio Budi Rahmanto, S. Sayoga C. A. Kadarisman, Yuni Suryati.

 

The global cruise industry generated revenue of 37.1 billion US dollars in 2014, a figure which was expected to increase to approximately 39.6 billion by the end of 2016.[i] The industry made significant recovery after revenue fell below 25 billion during the 2009 global recession. The number of passengers carried by the cruise industry has grown year-on-year and is expected to exceed 25 million in 2019.[ii]

Despite data showing encouraging figures for worldwide cruise industry, Indonesia’s potential in the cruise industry has yet to be developed to its full potential. Indonesia, with its more than 17,000 islands, provides many excellent opportunities for cruise tourism. In this regard, the Indonesian Government has taken several measures to boost the tourism industry, including cruise tourism. One of them is related to the cabotage rules. The government of Indonesia has relaxed its cabotage rules imposed on cruise industry and allowed foreign-flagged cruise ships to stop over in five of the country’s largest ports in an effort to boost tourism, namely Tanjung Priok in Jakarta; Tanjung Perak in Surabaya, East Java; Belawan in Medan, North Sumatra; Makassar in South Sulawesi; and Benoa in Bali.

However, this industry still faces other challenges; such as poor facilities and securities as well as domestic ports that have not reached international standard. This article further examines how Indonesia develops tourism industry to capitalize on the emerging cruise markets and eventually increase the growth of foreign tourists to visit Indonesia.

Marine tourism is a focal point for Indonesia accounting for 35% of the targeted development of the industry by 2019. Cruise is one of seven tourism sectors that is being developed to better promote its tourism. Indonesia’s vast archipelago which offers rich culture, heritage and scenery are supporting factors in the development of this industry. As such, this industry continues to grow.

In 2013, around 160,000 passengers arrived in Indonesia by cruise. Up until September 2015, data from the Tourism and Creative Economy Ministry states that around 106, 000 tourists have arrived on 61 cruise ships, while over 900 yachts have brought in around 10,000 tourists. In terms of port calls, in 2013 there were over 300 port calls, which was a 44% increase compared to 2012.

Large cruise ships have contributed significantly to the development of main tourist destinations in Indonesia. Medium-size vessels also play a part in developing the industry, particularly in spreading the benefits of tourism. According to the Ministry, expedition vessels account to over 100 calls in 2013.

These developments are due to a number of factors. First, Indonesia’s attendance in major international sea-trade exhibitions had impacted in cruise liners stopping off in Indonesia. Indonesia is also a member of the Cruise Down Under Association which has benefited in the promotion of Indonesia in Australia, New Zealand and other countries across the Oceania Pacific region.

Income generated from this sector would also impact positively on the economy. According to PT Pelabuhan Indonesia (Pelindo III), a cruise ship would pay US$60,000 to make one stop in Benoa, Bali.[iii]

Meanwhile, efforts to expand ports to attract more cruisers are in place to cater to large vessels. In Banten, developers are looking towards building cruise infrastructure which will feature 300 docks for private yachts and 300 for public use.[iv] Bali is seen as a prospective area to be turned into a turn-around port where cruise passengers can start and end their journey.[v]

In line with Indonesia’s efforts to strengthen its cruise industry, there are several policy options that can be considered to promote Indonesia as cruise destinations.

First, Indonesia should seriously develop an environment to support competitive tourist services in the surrounding port areas in which cruise ships can dock. The main complaint of foreign tourists includes the lack of high-quality tourism services in tourist destinations and lack of hygiene and adequate public facilities (e.g. clean rest room, public transportation). These complaints are in line with the Travel and Tourism Competitiveness Report 2015 by World Economic Forum that found Indonesia lacks competitiveness in tourism service infrastructure as well as health and hygiene.

Second, Indonesia should be able to fasten immigration process of cruise ship passengers, possibly using information and communication technology. Although security matters should remain the priority, Indonesia should be able to better accommodate the special characteristic of cruise ships passengers.

Third, Indonesian ports that are targeted for cruise destinations should be enhanced to accommodate large and medium-size cruise ships. There are only few locations in Indonesian in which large and medium-size cruise ships can directly port while the majority of ports in Indonesia’s tourist destinations cannot. This is a missed opportunity for Indonesia considering the benefits Indonesia could gain from cruise ships. The challenge of course is developing infrastructure and ports are capital intensive and would need high technical know-how.

Taking account the above options, it is suggested that Indonesia pursues the first and third options as priorities. The infrastructures that could accommodate large and medium cruise ships are very important because it can boost the number of tourist visiting, therefore, Indonesia will gain a lots of benefit from the tourism sectors. The availability of facilities with high-quality standard of services will also be more attractive for tourists to visit Indonesian tourism destination.

Jakarta, 24 October 2016.

References:

[i] https://www.statista.com/statistics/270605/cruise-passengers-worldwide/
[ii] ibid.,
[iii] http://www.thejakartapost.com/news/2013/12/04/indonesia-s-cruise-tourism-sees-record-growth.html
[iv] http://www.aseancruising.com/country-report-indonesia/
[v] http://www.aseancruising.com/country-report-indonesia/
Image courtesy of: http://www.topindonesiaholidays.com/

Advertisements

Your Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s