DIS forecasts industry turnover to increase by a total of ##.## per cent from Rp. ###,### billions in #### to Rp. ###,### billions in ####. Industry turnover is expected to reach Rp. ###,### billions in ####, increasing by #.## per cent to Rp. ###,### billions in ####, and then increasing by #.## per cent to Rp. ###,### billions in ####. Turnover is then expected to increase by #.## per cent Rp. ###,### billions in ####, and then increase to Rp. ###,### billions in ####.Value Added is forecasted to reach Rp. #,### billions in ####, and then increase by #.## per cent to Rp. #,### billions in ####. In #### value added is projected to reach Rp. #,### billions, increasing to Rp. #,### billions in #### and then increasing by #.## per cent to Rp. #,### billions in ####.Technological changes, in particular the general availability of centralised reservation systems via the internet, to both businesses and households, and travel products on CD-ROM, are expected to lead to an increase in self-itinerary preparation and in the number of direct bookings with operators by individuals and companies. This will bypass the agency function altogether. This will have an impact on a number of retail travel operators, in particular, the small independent chains and individual agency operators. It is also expected to help stimulate a movement towards cost reduction and rationalization. It should be noted that in many other countries, this industry is in decline due to technology and the widespread use of the Internet. However, over the forecast period, the Travel Agent and Bureaus Industry in Indonesia is still expected to grow in line with tourism growth. Also, the projected growth of the hotel industry and airline industry is expected to further support this industry's performance. In the employment level there may eventually be some increase in casual and part-time employment. However, training and product knowledge and service to clients is vital. Many major operators are moving towards a base salary plus commission on sales employment contracts for staff. The trend for many agencies is a shortage of experienced staff and unfortunately this is expected to continue. Technology will continue to be important to increase labour productivity and profit margins. Many companies have already moved towards reducing their product range to concentrate on higher margin products and sales, particularly those products that are from preferred suppliers to agents and offer higher commission rates on sales. Fees for services may be the best way for the industry to move forward, rather than relying solely on commission income. The major barrier to the growth of this industry comes from price-based competition as well as changes in the industry's client base as to the way travel is booked. In the future, technological changes will have a dramatic effect on this industry. Growth of this industry is expected to be supported by increased international travel to Indonesia and travel by Indonesians overseas. However, the number of international travelers to Indonesia is very sensitive to the level of security concerns, as some incidents such as bombings and riots will likely affect the tourism industry. It remains to be seen whether the Indonesian government will do all it can to help facilitate easy travel by both domestic and international travelers, mainly concerning fiscal tax and visa regulations. It may also be important to note the negative reputation of immigration officials at international airports who are notorious for extorting money from new international arrivals. This practice is well known to many seasoned travelers to Indonesia. However, for those who are first timing visitors are often shocked by this first impression. Corporate travel will, in general, move in line with the business cycle.

Using the line of best fit projection analysis, industry turnover is projected to grow by ##.## per cent from Rp. ###,### billions in #### to Rp. ###,### billions in ####. Value added is also projected to grow from Rp. #,### billions in #### to Rp. #,### billions in ####. This is a total increase of ##.## per cent.

Market Size

•	Value added is estimated to have decreased by ##.## per cent to Rp. #,### billions in #### from Rp. #,### billions in the previous year
•	This industry's contribution to Indonesia's GDP is #.## per cent
•	In #### it is estimated that ###,### persons are employed by #,### establishments in this industry
•	Employment increased by approximately #.## per cent or #,### persons in #### compared to the previous year, while the number of establishments increased by ### players in the same period
•	Total wages was estimated to be Rp. #,### billions in #### decreasing from Rp. #,### billions in the previous year
•	Domestic demand calculated as revenue plus imports less exports in #### is estimated to total Rp. ###,### billions. This is a decrease of ##.# per cent compared to the previous year where domestic demand total Rp. ###,### billions

The demand determinants to this industry are:

• Leisure time, particularly the availability of holidays, and the ability and desire of workers to take time off from work.
• Business profitability and confidence levels for business and conference/seminar related travel demand.
• Consumer confidence and the level of security concerns relating to the threat of terrorist attacks and global bird-flu epidemics.
• Real household disposable income (both in Indonesia and for visitors from overseas destinations) which affects the amount of discretionary funds available to take holidays and travels.
• The exchange rate of the Indonesian rupiah relative to other currencies which makes travel to certain destinations more or less attractive, including choosing between a domestic and an international holiday destination.
• The introduction of new airline technology, especially larger jets, which is continuing and makes airfares and travel relatively cheaper.
• Changes in aviation fuel prices also affect the real cost of travel.
• Competition among airlines for the leisure market, which has seen significant decreases in domestic airfares, which may stimulate travel demand, but also transfer and attract traveler's from other transport modes - particularly buses and trains.
• General consumer trends including the demand by traveler's for packaged tours relative to free and independent travel is also a factor.
• The level of technology used is also important in terms of assisting traveler's to make direct bookings and reservations via the Internet. Operators are increasingly offering consumers the ability to book both travel and accommodation through on-line services.

The level of export is ####. The export trend is ####.

The level of import is ####.. The import trend is ####.

• Competition in this industry has become mainly price-based, that is offering customers, particularly private traveler's (as distinct from business traveler's), the best price for domestic and international travel.
• New technology such as on-line ticket prices and booking services is increasing consumer information on travel prices and introducing more price-based competition (especially for holiday travelers).
• However, there are also some other very important non-price elements in the competitive environment which include: (i) the quality of service provided (in all regards) (ii) detailed knowledge of destinations and products on offer, location (including having access to a significant number of corporate clients) and (iii) word of mouth recommendations.
• Competition is also increasing in the area of services offered in terms of on-line ticket booking and information services from airlines.

Life Cycle Stage
This industry is in the #### stage

Life Cycle Reason

• Relatively slow growth of establishments and employment.
• Slow growth of the number opf travelers with domestic and overseas destinations.

Life Cycle Analysis
Demand linkages and supply linkages to this industry, namely luxury hotels and air transportation of passengers and freight, are both in a growth stage. This is in addition to the increasing competition among domestic airlines, which has stimulated an increase in the number of domestic travelers. Additionally, the number of small haj (umroh) and haj pilgrimage travel has tended to increase. However in relation with natural disasters and transportation incidents, the number of travels have tended to decrease in recent period.

Product and Service Segmentation

Product/Services	% Share of Turnover
Pilgrimages to Mecca	#
MICE	##
Inbound Tour	##.#
Outbound tour	##.#

The highest share of industry turnover is outbound tours, making up ##.# percent. This is followed by inbound tours with ##.# percent. Meetings, Conventions and Exhibitions (MICE) make up ## percent while pilgrimages to Mecca make up # percent. It may also be interesting to note the emergence of ecotourism, which is nature oriented.

Major Market Segment

Market Segments	% Share of Turnover
Business	##.#
Holiday/household	##.#
Government employee and military	##.#
Education	#.#
Others	#.#

Most of the industry revenue is derived from travel activities on business purposes, holiday travel by individuals or groups, travel conducted by government employees and the military, and for education purposes such as students studying abroad. Revenue of travel agents and bureau industries can also be segmented into the domestic and export markets. Exports are defined as revenue derived from overseas tourists in Indonesia, while imports are the total expenses paid by Indonesian tourist's abroad.

Industry Concentration
The level of industry concentration is low. Turnover of the top three leading companies in this industry accounts for less than ## per cent of the total industry turnover.

Geographic Spread
Heading: Geographic Spread of Establishments

Region	Data	Percentage
Bali	#.#	Percent
Central Java	#.#	Percent
East Java	#.#	Percent
East Kalimantan	#.#	Percent
Jakarta	##.#	Percent
North Sumatra	#.#	Percent
Riau	#.#	Percent
South Sulawesi	#.#	Percent
West Java	#.#	Percent
Yogyakarta	#.#	Percent
Others	##.#	Percent

Most establishments in this industry are located in the capital city of Jakarta. This is followed by Bali which is a well-known tourist destination in Indonesia, especially for overseas tourists due its numerous tourism attractions. Consequently many tourist guides and travel agents are located in Bali.

Barriers to Entry
The barrier of entry for this industry is #### and the trend is ####

• This industry has relatively low barriers to entry. Barriers to entry into this industry are mainly regulatory.
• Capital requirements.
• The industry is labour insentive.

Analysis
This industry has relatively #### barriers to entry, mainly regulatory. However, due to its high labour intensity, there are #### training costs for new workers. Training largely involves language skills for tourist guides.

N/A

Industry Assistance
The level of industry assistance is none and the trend is steady. There is no special protection or assistance for the travel agents and bureau industry.

Regulation and Deregulation
The level of regulations is medium and the trend is decreasing. In anticipation of triangle growth between Indonesia, Malaysia, and Singapore, the Minister of Transportation issued decree No. 61, in October 1994. This decree heralded the opening of seven new points of entry for tourism. Those seven entries are located in Java, Sulawesi, and Sumatra airports:

• Adi Sumarmo, Solo, Central Java;
• Husein Sastranegara, Bandung, West Java;
• Hasanuddin, Ujung Pandang, South Sulawesi;
• Blang Bintang, DI Aceh;
• Tanjung Pandan, Belitung;
• Padang Kemiling, Bengkulu;
• Binaka, Gunung Sitoli, Nias.

It was envisaged that these new entry points would bring more overseas tourists to Indonesia. An increase in the number of tourists offers a number of potential prospects for industry operators. The new entry points may provide potential benefits to the industry if operators can encourage tourists to extend their length of stay. In order to achieve this, operators would need to provide various attractive tour packages, especially city and intercity tours. Unfortunately, visits to more remote areas has been complicated by the new visa regulations that have cut the length of visa from free-60 day to a fee based 30 day visa. According to the Tourism Constitution No. 9/1990, licences for joining this industry can be obtained from the Directorate General of Tourism (Ditjenpar) or the Capital Investment Co-ordinating Board (BKPM). Designed to support the promotion of Indonesian tourism, these licences are issued on the condition that the tourism agencies have an inbound tour program, and may not solely be involved in ticket sales.

Capital and Labour Intensity
The level of capital intensity is low with a capital to labour ratio of # : #.##. This means there is one unit of capital for #.## units of labour, or for every dollar spent on capital, #.## dollars is spent on labour. Labour costs make up ##.## per cent of value added while depreciation makes up ##.## per cent of value added in this industry.

Technology and Systems
The rate of technology change is medium for this industry. In order to expand its markets, the Indonesian travel agent and bureau industry has started to use CD-ROM services that have been introduced by Travel Vision International (TVI) Pty. Ltd., Western Australia. This CD-ROM software has been designed for marketing tourism attractions, and can be provided to selected travel agents and bureaus free of charge. Travel Vision System's software provides some of the information required by travel agents and bureaus to arrange tour packages, such as hotel prices, flights, restaurants, tourism attractions, etc. This software will be able to help those travel agents and bureaus to increase their income by preparing the right kind of tour packages for overseas tourists, based on the data provided. In addition, industry operators are also using the Computerised Reserved System (CRS). PT Abacus Indonesia provides CRS, which in turn is jointly owned by Garuda Indonesia (# percent) and Abacus Singapore (## percent). It provides information on about ### hotel chains, #,### tour packages and ## car rental agencies all over the world. CRS helps travel operators inform their customers about tickets, hotels, restaurants and tour package reservations as fast and as accurately as possible. Following a PATA Mart Adventure and eco-tourism conference in Balikpapan, in January ####, there has been a strong growth in demand for ecotourism and adventure packages. Incorporating natural conservation, it appears that ecotourism will be a very promising and increasingly important sector in the years to come.

Industry Volatility
The level of volatility is medium for this industry. Volatility measured as the average rate of change in turnover over the past five years was #.## percentage points per year.

Globalisation
The level of Globalisation for this industry is low and the trend is steady.Low level of foreign ownership of less than ## percent in the industry.

Historical Performance
The performance of this industry has largely been dependent on tourism. Specifically its success is reflected in the performance of the luxury hotels, jasmine hotels and air transportation of passengers and freight industries. Tourism has become increasingly important to Indonesia as a source of foreign exchange and employment. During #### - ####, a master plan was proposed for the development of tourism and ten provinces have been singled out as important tourist destinations. These are North Sumatra, West Sumatra, Jakarta, West Java, Central Java, Yogyakarta, East Java, Bali, South Sulawesi and North Sulawesi. Between #### and ####, tourist arrivals increased by an average of # percent per year, while tourist spending increased by an average of ## percent per year. Since #### the tourism industry accelerated sharply. The government's plan to attract at least one million visitors a year was realised in #### when the number of tourists reached #.## million, bringing in foreign exchange of US$ ### million. The number of tourists visiting Indonesia increased from ###,### in #### to #.## million in ####, while tourist spending increased from US$ ###.# million to US$ #.# billion during the same period. In the following year the number of tourists was #.# million and spending US$ #.# billion. In anticipation of rapid growth in this sector, state policy guidelines were set in ####. These guidelines instruct that the development of this sector must be directed towards enhancing tourism, so that it becomes a strong sector, which is able to stimulate economic activities, including the activities of other related sectors. Growth in this sector was expected to generate employment opportunities, additional income including regional and state income, and higher foreign exchange earnings. In #### the number of tourists that arrived was #.# million spending US$ #.## billion. The following year the number of tourists reached #.# million spending an estimated US$ #.# billion. The stronger rate of economic growth over the period #### to #### saw a significant increase in domestic business travel, which had a positive effect on this industry. The holiday travel segment overall and international travel by Indonesians also increased significantly over this period. As such, the performance of the industry was relatively strong for the period. However, in ####, the rate of growth in turnover and value added declined in the second half of the year as a result of bush fires and the monetary crisis. As a result, Indonesia failed to reach the target set for foreign tourists in ####. In ####, only #.### million foreign tourists visited Indonesia, which was considerably below the target of #.# million. In addition, many Indonesians cancelled their overseas travel plans due to the depreciation of the rupiah. The domestic tourism market was also hard hit by the economic crisis. A sharp decline in household disposable income saw a dramatic fall in discretionary expenditure on luxury items such as those activities associated with domestic tourism. The industry benefited somewhat from higher demand from the SEA Games held in November ####. However, the SEA Games temporarily masked the overall situation in some areas. In consideration of the vigorous increase in competition, operators have sought to compete on the basis of price alternatives. For instance, some operators have intensified their human resource development programs with the goal of enhancing the professionalism and entrepreneurship of its employees. #### was a devastating year for the Indonesian economy. Political turmoil and social unrest, combined with an exchange rate meltdown, double-digit inflation and soaring interest rates led to huge falls in economic activity, with GDP falling by ## percent. Production, exports and domestic supply channels were disrupted, banking activities were paralysed, unemployment was rising and food prices were soaring. The rupiah hit an all time low of ##,### to the US dollar in June ####, a depreciation of ## percent since the onset of the crisis a year earlier. Domestic demand was down a total of ##% on #### levels. # percent of this fall was due to a contraction in private consumption, but the near drying-up of investment (both local and foreign) was the biggest factor in the fall. Gross Fixed Capital formation contributed -## percent to GDP growth in ####. On the positive side, a fall in imports helped the net external sector (exports less imports) contribute a positive # percent to GDP growth. In #### the Indonesian tourism industry faced huge problems arising from safety concerns on the part of international tourists in visiting the nation. Official travel notices issued by various countries served to exacerbate the problem. As a result of riots in ####, tourist arrivals declined by ##.# percent, to #.# million tourists. Although tourists came to Indonesia in that year, they comprised of mainly "backpacker" tourists who they took advantage of the depreciated currency. These tourists do not generally use travel agency services, in order to save money. The outbound international market was also affected by a government regulation (No. ##, ####), which stated that from February #, ####, any person going abroad will be subject to a tax of Rp.# million for airplane travel, Rp.###,### for travel by ship, and Rp.###,### for overland travel. This is known as 'fiscal'. This senseless tax is still currently in place and seriously influences the freedom of Indonesian traveler's abroad, especially those with large families. Not to mention the notorious unofficial fees incured by corrupt immigration officials. Under normal currency devaluation conditions, the tourism industry would be expected to benefit from the increased spending power of foreign visitors. However, adverse publicity (including warning notices from some embassies) regarding safety in Indonesia deterred many travelers. One thing that can be learned from #### is that, tourists do not only look for cheap travel prices to a country, but are mostly concerned about their own security when visiting Bankruptcy of the national flight industry and cuts in flight routes has worsened the condition of the tourism sector. The tourism sector is ## percent dependent on the accessibility of flights. In ####, the number of tourist arrivals reached only #.# million, a decline of ##.# percent from ####. Foreign exchange from tourism reached US$ #,### million. This declined in growth was due to the economic and political situation during that year. The economic crisis throughout the year caused domestic tourists to lose buying power, while foreign tourists felt it was unsafe to visit Indonesia. In ####, the tourism conditions were still devastated due to the impact of continued civil unrest. The political situation was tense before the general election. As a result, the performance of the travel agent and bureau industry decreased. As a result of an orderly general election in June ####, there were early signs of confidence and the start of an economic recovery. GDP rose by #.## percent in the third quarter of ####, or up by #.## percent compared to the same period in ####. Full-year #### GDP grew by #.## percent. In ####, the number of tourist arrivals reached #.# million or an increase of #.# percent from the previous year. The average length of stay was #.## days. Foreign exchange from tourism was around US$ #,###.# million (an increase of #.## percent from ####). Of this amount, around US$ #,### million (or ##.# percent) was from accommodation expenditure. During ####, the number of tourist arrivals totaled #.# million and increased to #.# million in the following year. The average length of stay during #### was ##.# days and declined to ##.# days in ####. In ####, most tourists came from Singapore, Japan, Malaysia and Australia, accounting for ##.# percent, ##.# percent, #.# percent and #.# percent, respectively. Industry turnover growth showed signs of recovery in ####. However, the total value was still below that of ####. The highest growth was achieved in #### as a consequence of the increased number of tourists and better conditions, both politically and economically. In the following year, however, although the number of foreign tourist increased, the industry growth increased slower than the previous year. This was due to the outbreak of widespread floods throughout big cities and the cholera epidemic in Bali. Hence, many foreign tourists, especially those from Japan, cancelled their visit to Indonesia. In ####, it was estimated that the turnover growth of the industry increased by only #.## percent over the previous year. This low increase was due to falling numbers of domestic and foreign traveler's. Foreign tourist arrivals were only #,###,### people, or a decline of #.# percent from ####. The effect of the Bali bombing in that year caused the cancellation of holiday plans by foreign tourists. Foreign income from tourism during #### amounted to only US$ #,###.# million or a decline of ##.# percent from the previous year. In the last few years, this industry has suffered as foreign tourists have reduced travel due to the September ## World Trade Center terrorist attack, the US war in Afghanistan and Iraq, the Bali bombings, SARS epidemic in Asia, the Marriott Hotel bombing/Australian Embassy bombing and most recently the outbreak of the avian bird flu. The September ## terrorist attacks in the United States and the U.S. war in Iraq have significantly raised security concerns for American citizens residing in or travelling to Indonesia. While the government of Indonesia has condemned these terrorist attacks, some radical Indonesian groups (Islamic Defenders Front FPI) have attempted to attack U.S. citizens and have threatened to attack U.S. facilities and expel American citizens from Indonesia. As a result, the Department of State has warned U.S. citizens to defer travel to Indonesia. These situations have affected tourist arrivals to Indonesia, not only American tourists but also Australian and European tourists. The bomb explosion in Bali on October ####, which killed mainly Australian tourists, has also worsened the image of Indonesia's security. Previously, Bali was considered the safest place in Indonesia as a main tourist destination. The impact of this attack was a strong decline in international tourists to Indonesia, and it was difficult to restore the safe image of the island haven, and of Indonesia. From the Bali bombing, a strong decline in international tourism to Bali has caused a drop in occupancy rates in the hotel industry. However, there has been an increase in domestic tourism in Bali. This shows that a domestic tourist is a potential market for travel agents and bureaus to target. Moreover, the government policy to establish long weekends through national holidays has improved domestic tourism, particularly in Bali. As of March of ####, the number of tourists from Europe, the Middle East and America fell due to the war in Iraq, while the decline in tourists from Asia was caused by the outbreak of the Severe Acute Respiratory Syndrome (SARS) virus. As the economic and image problems worsened during the #### year into ####, tourism in Indonesia has been severely threatened. The tourism industry also faces the threat embodied in the presidential decree, which will effectively eliminate the visa-free-on-arrival facility currently enjoyed by the citizens of ## countries. Travel bureaus run inbound and outbound tours in addition to ticketing sales, while travel agents only provide ticketing sales. To add insult to injury, Bali suffered another terrorist attack in ####, locally known as the Bali II bomb. According to ASITA (Indonesia Travel Company Association), around ## percent of its members could not operate their business as a result of the crisis. Those businesses that survived had to roster employees to avoid job losses. The largest proportion of foreign income came from the accommodation sector, about ##.# percent. In view of this, it is understandable that the biggest investment in the tourism sector has been made in accommodation facilities. Cooperation and good relationships within this sector are vital for the profitability of the travel tour agent. Through relationships, agents may receive higher commissions from flight agents, souvenir shops, restaurants or entertainment venues. Foreign Income Receipts from Foreign Visitors, 2003

Sector	Percentage Total
Accommodation	##.#
Shopping/Souvenirs	##.#
Local Transport	##.#
Domestic Tour	##.#
Meal	##.#
Entertainment	#.#
Other	#.#

Indonesian Tourism attractions by tourists' rate of interest

Tourism Objects	Rate of Interest
Beaches	I
Cultural	II
Historical	III
Mountains	IV
Others	V

Source: Department of Tourism, 2001

Revenue (Historical)
Industry turnover is estimated to decrease by an average rate of #.## per cent per annum, ranging from Rp. ###,### billions in #### to Rp. ###,### billions in #### (constant #### prices). The highest decline of ##.## per cent was reached between the #### and #### period.

Value Added (Historical)
Value added is the difference between revenue and purchases, after adjusting for stock changes. DIS estimates that value added reached Rp. #,### billions in #### making up approximately #.## per cent of revenue. This decreased #.## per cent to Rp. #,### billions the following year, and then decreased #.## per cent in #### to Rp. #,### billions. Between #### and ####, value added is estimated to decrease #.## per cent to Rp. #,### billions, making up #.## per cent of revenue.

Establishments (Historical)
The number of establishments between #### and #### is estimated to increase at an average rate of #.## per cent per annum, from #,### in #### to #,### in ####. In #### the number of establishments is estimated to be #,### units, increasing to #,### units in ####, decreasing to #,### units in ####, and then decreasing to #,### units in ####.

Employment, Wages and Salaries (Historical)
In #### employment in this industry is estimated to reach ###,### with wages and salaries totaling Rp. #,### billions and making up #.## per cent of turnover. In the following year, wages and salaries as a share of turnover decreased to #.## per cent totaling to Rp. #,### billions. From #### to #### this ratio was #.## per cent and #.## per cent respectively, showing total wages and salaries of Rp. #,### billions and Rp. #,### billions. The number of employment between #### and #### is estimated to decrease at an average rate of #.## per cent per annum, from ###,### in #### to ###,### in ####. Average turnover per employee in this industry was Rp. #.## billions per employee for the past five years.

Exports
Exports for the Tourism Industry is defined as revenue derived from overseas tourists in Indonesia. Export figures for the Travel Agency and Bureau Industry is a portion of the Tourism Industry. As such the Tourism export figures can be used as an indication of the Travel Agency and Bureau export figures. Arrival of Foreign Tourists in Indonesia and Revenue from International Tourists

Year	Number of People	Income in US$ (million)
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#.###
####	#.###.###	#.###
####	#.###.###	#.###

Imports
Exports for the Tourism Industry is defined as revenue derived from overseas tourists in Indonesia. Export figures for the Travel Agency and Bureau Industry is a portion of the Tourism Industry. As such the Tourism export figures can be used as an indication of the Travel Agency and Bureau export figures. Arrival of Foreign Tourists in Indonesia and Revenue from International Tourists

Year	Number of People	Income in US$ (million)
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#,###
####	#,###,###	#.###
####	#.###.###	#.###
####	#.###.###	#.###

Current Performance
The industry is particularly sensitive to any factor, which affects the level of travel by Indonesians overseas or within Indonesia as well as international visitors to Indonesia. These factors include changes in the rate of growth of real household disposable income and in the time available to travel. Other factors include, the relative price of domestic and international travel, which is linked to relative exchange rate movements and to other non-economic factors, including cultural and family links, age, and political turmoil (including terror attacks and the threat of war) etc. The travel industry is also in a period of significant competition for its share of household disposable income coming from areas of leisure and recreation. Competition is also coming from web-sites of travel operators, who encourage direct bookings. This places the travel industry as one of the least protected and most highly competitive industries in the world. The government is setting up a blueprint of the national tourism development program (Rippnas) in a bid to improve the competitiveness of Indonesian tourism sector in the international community. In ####, the government has prepared a fund of Rp.## billion to develop the five most prioritized tourism regions. Establishments in this industry can be segmented into three categories, according to their activities. These segments and their relative importance are as follows: Travel Agents and Bureaus Category

Product	Percentage of Total
Travel Bureaus	##.#
Travel Bureau Branches	##.#
Travel Agents	##.#

According to the Association of the Indonesia Tour & Travel Agencies, there are around ### listed members of travel agencies in Indonesia. Inbound Tourism The tourism sector is Indonesia's third-largest non-oil and gas sector foreign income source. The growth or decline in the total number of overseas tourists indicates this, which affects the level of foreign income earned from the non-oil and gas sector. The number of foreign visits to Indonesia during the period of 2000 - 2005 is shown in the following table: Arrival of International Tourists in Indonesia during the Period of 2000 - 2005

Year	Number of People	Average Expenditure Per Person (US $)	Average Stay In Days
2000	#,###,###	#,###.#	##
2001	#,###,###	#,###.#	##
2002	#,###,###	###.#	#
2003	#,###,###	###.#	#
2004	#,###,###	###.#	#
2005	#,###,###	###	#

Source: Department of Tourism, 2006 The share of of foreign tourist visits to Indonesia in #### includes from Singapore (##.# percent), Malaysia (##.# percent), Japan (##.# percent), Australia (#.# percent), Taiwan (#.# percent), South Korea (#.# percent), United States (#.# percent), Germany (#.# percent), United Kingdom (#.# percent) and the Netherlands (#.# percent), Other assorted countries (##.# percent). The number of visitors from the Asian region has remained as the largest contribution of foreign tourists to Indonesia, comprising of at least ##.# percent of the total number of foreign tourists. Additionally, the number of foreign tourists from the middle east region is increasing, totaling to around ##,### people in ####, in which mostly are from Saudi Arabia and Bahrain. Indonesia's beaches are the main source of interest for overseas tourists, followed by cultural and historical venues and attractions. The table above implies that tourist guides are important since the second and third favourite tourism venues are Indonesia's cultural and historical sites. Outbound Tourism Indonesian-Chinese dominates the Indonesian outbound industry, in terms of outbound agents and overseas traveler's. It is estimated that more than ## percent of Indonesians leaving Jakarta are ethnic Chinese. Australia is a major destination for Indonesia's outbound industry, with Indonesians as Australia's second largest market after Japan. A Bureau of Tourism Research shows that ## percent of Indonesians are repeat visitors to Australia, making it the highest inbound market of Australia. Australia is Indonesia's number one choice destination for education purposes. Indonesians makes up ## percent of all students studying in Australia. Indonesian package tourists to Australia spent the most compared to other tourists, including even the Japanese. Indonesian non-packaged tourists spent the second highest after Korean tourists. Around ## percent of Indonesians enter and leave Australia through Perth. Over ## percent of the outbound market is dominated by around ten large travel agents. Pilgrimage to Mecca For the ####/#### Haj season, the number of pilgrimage quota for Indonesia is set at ###,### seat, consisting of ###,### regular Haj and ##,### Special Haj (ONH Plus). By February #### the total number of seat left is at around ##,### seat. MICE Growth of Meetings, Incentives, Conventions and Exhibitions (MICE) in #### were considerably slow compared to previous years.

Revenue (Current)
In ####, the Travel Agent and Bureaus industry generated an estimated turnover of Rp. ###,### billions compared to Rp. ###,### billions in the previous year. This is an decrease of ##.## per cent.

Value Added (Current)
Value added is estimated to decrease by ##.## per cent from Rp. #,### billions in #### to Rp. #,### billions in ####.

Establishment (Current)
The number of establishment is estimated to total #,### units, an increase of #.## per cent from the previous year.

Employment, Wages and Salaries (Current)
In #### it is estimated that ###,### persons are employed by #,### establishments in this industry. Employment increased by #.## per cent or #,### persons compared to the previous year.Total wages was estimated to be Rp. #,### billions in #### decreasing from Rp. #,### billions in the previous year

Key Sensitivities
The key sensitivities affecting the performance of this industry include:

• Growth (GDP) & Inflation
  The industry is affected by business and corporate travel patterns and trends, which are determined by changes in the rate of economic growth.
• Real Household Disposable Income
  The industry is affected by trends in real household disposable income from which personal travel (either in Indonesia or overseas) is financed. In turn this is affected by changes in tax and interest rates and the rate of growth of employment.
• Systems and Technology - by Industry
  The industry is increasingly being affected by direct online and Internet booking and reservation systems being offered by accommodation and travel operators. It will also be affected by the worldwide trend towards operators seeking not to pay commissions on sales but for agents to charge a fee for service to travelers.
• Tourism - Visitor Nights
  The industry is affected by growth in total nights spent away by domestic and foreign tourists in Indonesia or overseas. To some extent, the total nights spent by international visitors in Indonesia could be pre-booked overseas, hence they do not use services by Indonesian domestic travel agents.

Key Success Factors

• Being part of a group buying, promoting and marketing scheme. This is important to develop links with hotels, airline operators and tour wholesalers.
• Proximity to key markets. To be located in an area with a high level of activity from both tourists and business traveler's is crucial.
• Access to the latest available and most efficient technology and techniques. To have a computerised information, reservations and bookings system.
• Having a loyal customer base. To provide professional service to clients so as to generate repeat customers by providing quality and hospitable service to maintain a base of satisfied clients and, where applicable, corporate accounts.

Stock Rise in Tourism Sector: www.inilah.com, 9 July 2008
The acceleration of the Jakarta Composite Index continues to vary. Aside from increase in mining, energy, plantation and banking, the stock of the tourism sector also underwent increases as exhibited by the listing of PT. Destinasi Tirta Nusantara (PDES). PDES shares rose by ## percent, from Rp.### to Rp.###. PDES is a travel bureau headquartered in Jakarta, Bali and Lombok. PDES is a subsidiary of PT. Panorama Sentrawisata (WEHA), an inbound tourism company. Panorama Sentrawisata dominates approximately ## percent of PDES' shares.

Representative Offices Abroad to be reopened: Kompas, 13 February 2007, page 18
This year, the Culture and Tourism Department will reopen ## Indonesian Representative Offices in a number of foreign countries to support the #-million-foreign-tourist growth targets. Hence, this year, the targeted quota is # million and # million in ####. For the last decade, the average number of tourists only reached # million per year.

Government Asked to create the 2007 Tourism Planning: Bisnis Indonesia, 6 September 2006, page 5
The Indonesian Hotel and Restaurant Association (PHRI) demands that the government immediately create the country's #### tourism plan to facilitate synchronization in order to revitalize tourism at least before the end of the year. The planning has to comprise of targets, such as image building by the government, number of seats prepared by airlines and target of hotel occupation level. In addition, the plan must also include ways to improve the condition of the tourism spots and foreign tourist specification (trends, lifestyle, shopping habits and interests). Currently, the government has prepared a fund of Rp.## billion to develop the five most prioritized tourism regions.

Tourism Bureau Pushes Implementation of BSP: Bisnis Indonesia, 22 August 2006, page 5
Four tourism associations have asked domestic airlines to implement the billing statement plan (BSP) for ticket sales to facilitate better tax control within the sector. BSP has been implemented in more than ### countries. So far, the only domestic airline that has implemented the system is Garuda Indonesia. Currently, most domestic airlines in Indonesia implement the direct individual reservation system.

Visit by Foreign Tourists Rises by 0.89 Percent: Bisnis Indonesia, 4 July 2006, page 5
Per May ####, the number of foreign tourists visiting to Indonesia through ## gateways increased by #.## percent to reach ###,### visitors. The slight increase indicated development within the industry. The gateways that indicated increases are: Juanda (##.## percent), Tanjung Priok (##.## percent), Polonia (#.## percent), Soekarno-Hatta (#.# percent), Entikong (#.## percent) and Batam (##.## percent). Gateways that showed decline are: Adi Sumarmo (##.## percent), Sam Ratulangi (##.## percent), Minangkabau (#.## percent), Mataram (#.## percent), Tanjung Pinang (#.## percent) and Ngurah Rai (#.## percent). In Bali, a well-known tourism venue, the number of foreign tourists declined #.## percent from ###,### people to ###.## people. It I speculated that the figure for tourism in general will rise during the peak season.

Number of Visitors to South East Asian Countries Continues to Rise: Kompas, 28 June 2006, page 21
Although the avian influenza issue still haunts the region, the number of foreign tourists to Southeast Asian countries is predicted to increase. The Tourism Association of ASEAN (Association of Southeast Asian Nations) predicted to rise to reach ## percent. Some Middle Eastern tourists have shifted their visit from Europe to ASEAN countries. In addition, as the summer break approaches, more tourists from Europe will also visit the region. In ####, ASEAN countries was visited by more than ## million tourists (#.# percent higher than ####). Indonesia's tourism, in specific, is in a not very advantageous state due to safety issues. In general, however, tourism in ASEAN will stay positive. As a strategy to promote tourism in the region, ASEANTA (Tourism Association of ASEA) launched www.VisitAsean.travel.

Panorama Will Not Share Dividends: Bisnis Indonesia, 26 June 2006, page B2
In the general meeting of shareholders for PT Panorama Sentrawisata, it was agreed that its net profit of #### would not be shared. Instead, the net profit amounting to Rp.### million will be allocated as reserve funds. In ####, the company's net profit dropped ##.# percent compared to ####'s Rp.### million. The drop was caused by the increase of operating expenses, which rose from Rp.##.## billion in #### to Rp.##.## billion in ####. The company's income in #### reached Rp.###.## billion, up ##.## percent compared to ####.

Anta Express Optimistic to Obtain Rp.10 Billion Net Profit: Bisnis Indonesia, 17 June 2006, page B2
PT Anta Express Tour & Travel Service Tbk predicts that it will be able to fulfil its Rp.## billion net profit target this year. The company also its income to rise to Rp.#.# trillion from the Rp.#.# trillion last year. On ## July ####, the company plans to share Rp.#.## billion dividends (Rp # per share) to its shareholders. In ####, Anta Express booked a net income of Rp.#.## trillion, comprising of Rp.#.## trillion from airline ticket sales, Rp.###.## billion from the tour business and Rp.##.## billion from other sectors.

Middle East 6 Tour Operator Sneaks A Peak at Indonesia's Market: Bisnis Indonesia, 11 April 2006, page 5
The Indonesian tourism industry has invited # tour operators from the Middle East to study tourism products in Jakarta and Bandung for # days last week. Indonesia hopes that by doing this, the Middle East will sell Indonesian tourism destinations in its areas. Indonesia's chance to obtain tourists from the Middle East is quite big because, for example, Saudi Arabians have already had a long historical connection.

Tourism to Become A Disciplined Science: Bisnis Indonesia, 11 April 2006, page 5
The Minister of Culture and Tourism, Jero Wacik, requests that tourism should be acknowledged as a disciplined science and able to produce human resources in the first strata. Graduates in this field should be able to earn a bachelor's degree.

Yogyakarta's Declaration to Encourage Prosperity: Kompas, 10 February 2006, page 18
Delegates from 31 countries included in the United Nation World Tourism Organisation (UNTWO) have made the Yogyakarta Declaration as an effort to overcome poverty. Through cultural tourism based on the local people, prosperity could eventually be achieved.

The Coordinating Minister of Public Welfare, Aburizal Bakrie, stated that the government is planning to hold a Tourism Summit Conference in November 2006 to encourage the growth of the tourism industry.

Tourism in 2006 Still Sensitive: Kompas, 3 January 2006, page 18
Indonesian tourism is still sensitive regarding the issue of safety. Therefore, objective information regarding the act of terrorism needs to be implemented firmly. Based on the estimation in ####, its # million tourist target was not reached because of the second Bali bombing and the avian flu. The act of terrorism, which has discredited Indonesia, will eventually have an effect on the tourism industry in ####. The total number of foreign tourists from January-November #### adds up to only #.## million people, down #.## percent compared to ####'s #.## million people. The key to promoting tourism in Indonesia is safety. The Ministry of Culture and Tourism has difficulty in promoting because their promotion budget only adds up to US$ # million.

Asita: Travel Bureau Business Still Weak in 2006: Bisnis Indonesia, 27 December 2005, page T2
The travel bureau business in #### is predicted to still be under pressure, as it was in ####, because of the change in ticket sales mechanism and the fierce competition among airline operators. Other factors that effect the weakening of the industry include Indonesia's condition of the tourism industry, which has not fully healed yet, neither domestic nor international. Indonesian citizen's travels abroad to Malaysia and Singapore have also decreased.

Domestic tourism is also experiencing problems. For example, during the Christmas and new years vacation, there is only a ## percent hotel occupancy rate. Out of the ##,### travel bureau agencies here in Indonesia, around ## - ## percent are forced to close down.

6 Million Foreign Tourist Target Not Reached: Kompas, 5 September 2005, page 18
Until July ####, the number of foreign tourists went down #.## percent to #.## million people compared to the same period of time last year. Therefore, the target to attract up to # million foreign tourists this year will be difficult to reach. If in seven months only #.## million tourists come, then the most tourists coming by the end of the year will be around #.# million people. In July ####, the number of foreign tourists rose #.## percent compared to June as much as ###,### people. However, compared to the year before in July, it has dropped #.## percent.

The peak season in December will not have much of an impact. Ironically, the weakening of the value of the rupiah towards the USD could not attract foreign tourists to Indonesia, despite the cheap travelling packages offered such as sleeping in a five star hotel for only US$ ## - US$ ##.

The main causes in the lack of tourists this year include the travel warnings stated by several countries, the large number of fraud cases, and the avian flu. Another factor is the lack of promotion caused by the limited budget. Although US$ ## million was proposed, only US$ ## million has been realized. In Malaysia and Thailand, the promotion budget for tourism is goes over US$ ### million.

This year, it has been estimated that the tourism income will be less than US$ # billion. In ####, the tourism income reached US$ #.# billion.

Travel Agencies Concerned: Kompas, 26 August 2005, page 17
Travel agencies are worried that the number of tourists will decrease this year as a result of the weakening of the value of the rupiah. This is a problem because to greet the high season of the next # - # months, they have to deposit at least US$ ### - ### per person to the airlines. Almost all airlines require travel agencies to deposit a minimum of at least one group of ## people. Ironically, the numbers of these people are unpredictable. If the deposit is not made, the airline will not reserve a seat for the travel agency's client. Therefore, a seat has to booked long before even though the value of rupiah is now Rp.##,### per US dollar.

At the present, Garuda Indonesia has not applied a fuel surcharge increase. A while ago, when the price of aviation turbo fuel went up to Rp.#,### per liter, a fuel surcharge at an average of US$ ## - ## was applied.

Panorama Tours Works on Java and Bali: www.republika.co.id, 26 August 2005
As Bali and Java have become main tourist destinations in Indonesia, Panorama Tours now offers a holiday package called Jawa-Bali Overland. The package includes a trip that starts in Jakarta, continues to Bandung, Wonosobo, Pangandaran, Malang, Kali Baru, Bromo Mountain, Surabaya and ends in a 5 to 6 day stay in Bali. Panorama Tours has received a Superbrands award for the Travel and Leisure category.

IT and Regional Autonomy Threaten Travel Bureau: Bisnis Indonesia, 24 August 2005, page 5
The development of information technology and the presence of regional autonomy is a threat to travel agencies if no new development is made. Therefore, the Association of Travel Bureau Entrepreneurs (Asita) of West Java needs to determine their position from now to the future and find new strategies to pull in tourists. A report from Singapore Airlines stated that from April until June #### there had been an increase in the number of tourists travelling from West Java to Singapore of #,### people in April, #,### in May, and #,### in June. Based on that, ### members of Asita West Java will prepare a sure strategy to pull in foreign tourists, especially from Singapore.

RI Most Populer in World Expo 2005: Bisnis Indonesia, 24 August 2005, page 5
Indonesia's cultural and tourism pavilion in the World Expo ####, held in Aichi, Japan, was categorized the most popular among the hundreds of the other pavilions from ### other countries. This category was given based on the rising number of visitors to the Indonesian pavilion starting at ##,### people per day in the beginning of the expo, to ##,### people per day, and then finally to ##,### people per day. There were a total of over # million people who visited Indonesia's pavilion.

Limited Budget Blocks Tourist Target: Kompas, 18 August 2005, page 18
The budget for tourism promotion in #### is only Rp.###,### billion. This is considered inadequate and causes the concern that it wills not fulfill the target to attract tourists to Indonesia. Plus, there are other circumstances that repel tourists from coming such as the dangers of avian flu and terrorist attacks. From January until June ####, tourists entering through the ## international gates have only reached #.## million people. Compared to the same period of time in ####, the number has dropped #.## percent from #.### million people. The target for is # million and for #### it is # million. However, that target has been proven difficult to achieve. If the targets are not achieved, then the targeted state income will also be impossible to receive. The state income target of #### is US$ # billion.

Promotion for Chinese Tourists: Kompas, 6 August 2005, page 24
The Ministry of Culture and Tourism encourages Chinese tourists to come to Indonesia by applying a visa on arrival. Also by creating relationships among Chinese and Indonesian cities such as Medan, Semarang, and Surabaya. Out of all the population of China (#.# billion people), ## percent (around ### million people) of them are from the middle to upper class. These are the people who need to travel.

The Chinese usually spend their vacation time going to Singapore. In ####, ###,### Chinese tourists went to Singapore. In #### it has been predicted to reach a million people.

Other than the Chinese, the visa on arrival will also be available to Indian tourists.

Increased Visitor Arrivals Boost Hotel Occupancy Rate: The Jakarta Post, 5 August 2005, page 13
Despite the issuance of travel warnings by several countries against Indonesia, the number of foreign tourists staying in star-rated hotels in the capital increased in the first semester. Occupancy rates at three, four, and five-star hotels in Jakarta increased by between # percent and # percent in the first six months ending June ##. The occupancy rate at three-star hotels raised by # percent compared to the same period last year, while at four-star hotels it increased by # percent and five-star hotels by # percent.

The number of foreign tourists contributed to the increase in hotel occupancy rate. Soekarno-Hatta International Airport recorded #.# million foreign arrivals in the first trimester. The arrivals increased from January to May by ##.# percent, of which ## percent to ## percent were tourists.

The increasing number of foreign businesspeople to the city also boosted occupancy rates at star-rated hotels in Jakarta's Central Business District (CBD). Some #,### rooms out of ##,### rooms in ## star rated hotels are located in the CBD. Out of those #,### rooms, ## percent are in five-star hotels.

The number of star rated hotel rooms have increased with the additional ## rooms at the Ritz-Carlton Hotel in Mega Kuningan and ## at the Grand flora in Kemang available this year. The operation at the ritz-Carlton (since May #) partly contributed to the decreasing occupancy rate at five-star hotels to ## percent from ## percent in May and June.

Overall, the hotel market in Jakarta was still promising as the economy was improving, as was security. Some additional #,### rooms have been anticipated to come from Novotel Mangga Dua, Ritz-Carlton-SCBD, Hotel Mega Anggrek, and others.

Number of Tourists Rise: Koran Tempo, 3 August 2005, page A22
The number of foreign tourists that came to Indonesia through ## entry ways in June #### have risen #.## percent to ###,### people compared to May #### of ###,### people. The largest percentage of entry was at the Hasanuddin Airport gateway (##.## percent), then Entikong (##.## percent), and Nguruh Rai (##.## percent). In total, the number of tourists visiting Indonesia in the first trimester of #### has gone down #.## percent from #.## million people in the first trimester of ####, to #.## million people.

Rp.35 Billions for International Promotion: Indonesia Travel Journal: 1 February 2005, page 13
The Department of Culture and Tourism was allocated with Rp.### billion for marketing and promotional programs. It plans to allocate Rp.## billion for international promotion and between Rp.## billion to Rp.## billion for domestic promotions.

Arrival Target Achievable BPS Says: Indonesia Travel Journal: 1 January 2005, page 15
The Central Bureau of Statistics (BPS) estimates that # million arrivals can be achieved this year. From January to September ####, a total of #,###,### arrivals were recorded. This was an increase of ##.## percent compared to the same period the previous year. In ####, Indonesia reached #,###,### arrivals.

MICE Business in 2005: Indonesia Travel Journal, 1 January 2005, page 30
Meetings, Incentives, Conventions and Exhibitions (MICE) are expected to be healthier in 2005. In 2004, MICE business was considerably slow compared to 2003.

Domestic Passengers Increased by 6 percent: Bisnis Indonesia, 3 August 2004
Total domestic air passengers reached #.## million persons in June ####, increasing #.## percent compared to May ####. At the same time, international passengers reached ###,### persons, an increase of ##.## percent compared to the previous month. In the first half of #### domestic passengers' total ##.## million persons, which is an increase of ##.## percent compared to the first half of ####. In the same period, international passengers increased ##.## percent to #.## million persons compared to the same period in the previous year. Of the domestic passengers, ###,### were serviced at Soekarno-Hatta Airport, an increase of ##.## percent. Juanda Airport in Surabaya serviced ###,### persons, an increase of ##.## percent compared to the previous year. Other airport also increased its services. Ngurah Rai Bali increased by ##.## percent, Soekarno-Hatta (#.## percent), Polonia Medan (#.## percent), Juanda Surabaya (#.## percent), and Hasanudin (#.## percent). Of the ##.## million domestic passengers, Soekarno-Hatta serviced #.## million persons and Juanda serviced #.## million. Of international passengers, Soekarno-Hatta serviced ###,### persons followed by Ngurah Rai Bali with ###,### persons. Increases in passengers were as follows: Juanda (##.## percent), Soekarno-Hatta (##.# percent), Ngurah Rai (##.## percent), and Polonia (#.## percent).