WASHINGTON, May 30, 2018 – More than 2.8 million Indonesians will benefit from better roads and access to basic services as a result of a new project that supports development of Indonesia’s tourism sector. The World Bank’s Board of Executive Directors today approved a US$300 million loan to improve tourism-relevant basic infrastructure and services, strengthen local economy linkages to tourism, and attract private investment.
“If planned and managed well, tourism can generate large employment and income multipliers for Indonesia. Better basic infrastructure and visitor spending can generate significant economic impacts in areas that have limited pathways to shared prosperity,” said Rodrigo A. Chaves, World Bank Country Director for Indonesia and Timor-Leste.
Sizeable domestic resources will be complemented by this financing to support the government’s integrated infrastructure development for national tourism strategic areas. Among key objectives, the Indonesia Tourism Development Project will seek to enhance the country’s institutional capacity to facilitate integrated and sustainable tourism development.
The project’s investment will start in three key destinations: Lombok island in West Nusa Tenggara province; the Borobudur-Yogyakarta-Prambanan triangle on Java Island; and Lake Toba in North Sumatra. Once developed, the three destinations are expected to boost the number of annual visitors to 27.3 million by 2041; a significant increase from the 15.3 million visitors in 2015. Annual tourist spending is also expected to increase, to US$3.3 billion in 2041 (from US$1.2 billion in 2015). And private investment in tourism is expected to increase 13-fold, to US$421 million.
The project will also seek to improve natural and cultural asset management, crucial for tourism to grow. In parallel, investments in human capital will help ensure that local communities can derive long-term benefits from tourism.
“The Project will help to improve the coordination among central, provincial and local governments, and mobilize their resources towards common objectives. These objectives are anchored in integrated tourism master plans prepared for each destination,” said Bertine Kamphuis, World Bank Senior Private Sector Specialist.
The World Bank’s support to Indonesia’s tourism development is an important component of the World Bank Group’s Country Partnership Framework for Indonesia, which focuses on government priorities that have potentially transformational impact. The Australian Government Department of Foreign Affairs and Trade (DFAT), the Swiss State Secretariat for Economic Affairs (SECO), and the Kingdom of the Netherlands supported project preparation.