Dedicated: Travel and Tourism in Indonesia is Booming and that’s Good News for SMEs

As made evident by the recent research results presented by McKinsey, travel and tourism is growing faster than ever in Indonesia. Booking quality accommodation in Indonesia is no longer an issue thanks to websites like HotelsCombined or Skyscanner, and visiting the country itself is more lucrative and easier than ever thanks to the booming tourism that has mainly built itself around Indonesia’s beautiful beaches and brilliant natural sceneries. This has led to economic improvements in the country on multiple fronts and local SMEs are thriving under the current conditions.

One of the Fastest Emerging Markets

According to the McKinsey report, not only is Indonesia one of the fastest growing markets among the emerging nations in Asia, but it is surprisingly on its way to becoming one of the largest economies in the whole world. The firm estimates that Indonesia could potentially hold the 7th position among the biggest global economies by the year 2030. Presently, Indonesia is the 16th largest economy in the world.

The Scope of Tourism

The tourism potential in the country is tremendous and there’s plenty of reason for that once you consider that the island nation is made up of more than 18,000 islands! More than 50% of those islands are not even named or explored yet and a large portion of even the inhabited islands are still waiting to receive the boons of tourism. The handful of islands which have made the best of their stunning beaches and scenery are largely responsible for the economic growth, which the country is seeing today. Once you consider how much more potential Indonesia holds, the numbers presented by McKinsey start to make a lot of sense.

The Current State of Tourism

Even if the future is set aside for a while and we just focus on the current stats, it’s quite staggering. More than 8.7 million foreigners visited Indonesia in 2016 alone and the Indonesian government and tourism industry is hopeful that the number will cross 15 million in 2017! What this has done is create a perfect scenario for SMEs from various fields to flourish, particularly since 2015.

The Effect on SMEs and their Role in Indonesia’s GDP

In accordance with reports by CNN Indonesia, small and medium enterprises accounted for 60.34% of the country’s GDP in 2016, showing a YOY growth of 5.76% ($48.7 billion/641.8 trillion Rupiah). SMEs built around the food and beverage section made the highest contribution with $15.6 billion or 209 trillion Rupiah. All of these impressive stats were made possible due to the multitude of small companies that have opened up both online (37%) and offline (36%) in the last few years. Almost all of them are somehow related to the travelling and tourism industry either directly or indirectly.

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Even though the attention of foreign travellers is currently the focus of the Indonesian tourism department, research shows that the middle class citizens of the country are continuously gaining more disposable income with each passing year. Their contribution to the travelling industry of Indonesia is not to be ignored either and is expected to grow more significantly by the end of 2017. As for SMEs, that’s even more good news.