Indonesia’s tourism industry has been a cornerstone of its economy, driving cultural exchange and significant economic growth. As the world adjusts to life after the pandemic and changing traveler preferences, 2025 will be an essential year for travel industry in Indonesia.
This article will examine the trends, opportunities, and challenges shaping the future of Indonesia’s leisure sector.
Tourism rebound for Indonesia
Indonesia witnessed a resurgence in international travel sector in 2024, with over 1.9 million foreign tourist arrivals in October 2024. This number marks an increase of 22.1% compared to October 2023, with tourists from Malaysia, Australia, and Singapore.
Moreover, domestic visitors also showed a notable surge, amounting to 81.3 million arrivals, a significant increase of 29.83% compared to the previous year. These figures underline Indonesia’s resilience and adaptive strategies in rebuilding its travel appeal after the COVID-19 pandemic with several new initiatives.
Key drivers of Indonesia’s tourism growth
Indonesia’s vacation market has witnessed impressive growth in recent years, fueled by several key factors contributing to its ongoing success. These factors include:
Ecotourism and Sustainable Practices
The rise in tourist interest in sustainable infrastructure destinations reflects a growing awareness of ecological issues. Travelers are now more focused on minimizing their environmental impact and supporting preserving natural resources. This trend highlights the importance of balancing travel industry with ecological conservation efforts.
Infrastructure Development
The ongoing enhancement of supporting infrastructure, such as airports, roads, and hospitality facilities, has significantly improved connectivity and amenities, contributing to a better overall travel experience.
Supportive Government Policies
The Indonesian government has implemented strategic initiatives to enhance its tourism development plan. One of these initiatives is introducing a simplified visa policy designed to facilitate easier entry for foreign tourists.
Digital Transformation
To attract more visitors to Indonesia, improving online marketing, making booking easier, and offering virtual tours is crucial. These strategies will make Indonesia’s rich cultural and natural offerings more accessible and attractive to potential visitors.
Indonesia’s tourism outlook in 2025
With its continuous increase in tourist arrivals and improved infrastructure, Indonesia offers immense tourism potential in the upcoming year. Here’s the highlight to Indonesia’s travel industry outlook in 2025:
1. Projected Growth in International Arrivals
The leisure sector in Indonesia is forecasted to experience significant growth, aiming at 16 million foreign visitors in 2025, driven by relaxed travel restrictions and increased interest in Southeast Asia.
2. Rising Popularity of Secondary Destinations
Emerging tourist spots such as Lake Toba, Mandalika, and Labuan Bajo will be continuously promoted to diversify Indonesia’s leisure destination for foreign visitors.
3. Expanding Wellness and Medical Tourism
The global shift toward wellness and medical sector has positioned Indonesia as an attractive destination for travelers seeking rejuvenation. Luxury spa retreats in serene regions continue to attract tourists with their holistic wellness services.
Read more: Start tourism investment in Bali and Lombok
Expanding Indonesia’s tourism horizons
The Indonesian government will promote Super-Priority Destinations such as Borobudur, Likupang, Mandalika, Lake Toba, and Labuan Bajo to attract high-quality tourists and expand national tourist destinations. This initiative will be implemented over the next 5 years by improving the region’s infrastructure and transportation accessibility.
Niche markets, such as Halal vacation and senior-friendly travel options, are also unlocking new demands. Indonesia is strengthening its competitive and inclusive travel hub position by diversifying its offerings to specific tourists needs.
Read more: 4 Ways to Benefit from Growing Tourism in Semarang
Challenges in Indonesia’s travel industry
Despite its thriving opportunities, Indonesia’s tourism sector poses significant challenges in 2025. Businesses must explore the obstacles to seamlessly navigate its industry’s strategic potential, with key challenges as follows:
- Overtourism: We can use several strategies to reduce challenges in popular tourist destinations. These include setting visitor limits, promoting alternative tourist spots, and encouraging travel during off-peak seasons.
- Climate Risks: Consistently promoting eco-friendly tourism can help reduce risks associated with environmental degradation and increase awareness of sustainable practices.
Simplify your tourism business entry in Indonesia
Indonesia’s travel industry is poised for significant growth in 2025, offering tremendous opportunities to tap into its dynamic tourism business landscape. InCorp can help you seize the opportunities in Indonesia’s tourism sector with simplified company registration and investor KITAS service.
Why choose InCorp?
- Seamless market entry: Our high-quality assistance will minimize the complexities of business setup and ensure smooth business operations in Indonesia.
- Comprehensive support: We provide end-to-end services to comply with local regulations and requirements.
Click the button below to start your tourism business in Indonesia.
Daris Salam
COO Indonesia at InCorp Indonesia
With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.
Frequently Asked Questions
- Import facilities
Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production. - Tax holiday
The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status. - Tax allowance
For companies in certain designated areas or regions, the government may provide the following tax concessions:
Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
Accelerated depreciation and/or amortisation deductions
An extension of tax losses carried forward for a maximum of ten years
A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
The applicant eligible has to meet high-level-criteria for the above tax facilities:
High investment value or for export purposes
High manpower absorption
High level of local content - Investment allowance
The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project. - Super deduction
This facility could be granted to certain businesses, such as:
60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.
A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.
Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.
In Indonesia, employment arrangements are categorized into temporary employment agreements (PKWT) and permanent employment agreements (PKWTT). Temporary contracts are for short-term, seasonal, or experimental work, while permanent contracts are for continuous employment.
According to the latest provision regarding Halal Product Assurance, halal certification for many consumer products in Indonesia that was previously voluntary has now been mandatory. Food and beverage products are the first Halal certified before 17 October 2024.
A foreign-owned company (PT PMA) in Indonesia is a popular choice among foreigners to set up a business. Foreign investors must check Indonesia’s Positive Investment List to see which businesses are open to foreign direct investment.
