Market monitor: Indonesia

Domestic demand and global investment drive business in Indonesia

Economic overview

Indonesia outperformed most of its regional neighbors during the recent recession and has continued to weather the global financial crisis relatively well because of strong domestic consumption. Investment by both local and foreign investors also supports growth, although foreign direct investment has declined because of the economic turndown in other regions. The Indonesian economy slowed to 4.5 percent growth in 2009, but by 2010 growth had returned to a 6 percent growth rate — on par with 2007 and 2008. Retail, telecommunications, banking and insurance sectors are expected to grow in 2012.

Business travel industry insight

About 7.7 million travelers visited Indonesia in 2011, although some came to the country for leisure, rather than business. Hoteliers continue to invest in both major and secondary cities in Indonesia, expanding both international and homegrown brands.

Opportunities

  • Indonesia expects 8 million arrivals and US$8 billion in tourism receipts for the inbound market this year.
  • A growing number of low-cost carriers are connecting regional destinations with Indonesia’s secondary cities.
  • Garuda Indonesia airline plans domestic and regional expansion, which will boost traffic.
  • The middle class is growing steadily in Indonesia, boosting business and leisure travel demand.

Challenges

  • Penetration of central billing account/credit card payments is low. Most payments are on invoice systems with 30- to 60-day credit terms.
  • Domestic airlines use their own booking systems.
  • Hotels in remote areas conduct business via telephone and fax and require cash payment in advance to hold reservations.
  • Car rentals in remote areas are locally owned and often cannot comply with corporate procurement or security standards.
  • Last-minute habits persist among local travelers; most don’t plan trips in advance.
  • Visa difficulties regularly hamper outbound travelers.

When your business expands into new markets, BCD Travel can get your travelers where they need to be. Talk to your account manager about how we can support your company’s growth across the globe.

 

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