We must think agile like a startup: Sandiaga Uno, Minister of Tourism and Creative Economy of Indonesia
Indonesia is expected to face global uncertainty due to recession, energy crisis, and geopolitical tensions that will affect various sectors. What strategy has the government prepared to deal with this phenomenon?
I am pretty certain that tourism and the digital economy possess toughness and resilience. Our digital economic growth is massive and it was targeted to reach USD 150 billion. I said that it is an event that leads to recovery. So we will organize many events this year such as the world shooting championship, ASEAN Tourism Forum (ATF), FIFA World Cup U-20 World Cup, etc.
When it comes to the digital economy, the unstoppable trends are digitalization, health, and sustainability as well as making sure the economy keeps going. I am quite convinced that the government’s policies combined with our policy mix are spot on.
I have advised all travel tech companies, first, to not “burn cash”. Because the demand is there, they have to focus on EBITDA and generating positivity. Because we already have the advantages of nature & culture, fellows in this industry must focus on the parts that can generate cash. The easing of mobility will also open up opportunities. One message of mine is how we can make local products get ahead of imported ones with the Gernas BBI movement that has achieved the target of 21 million MSMEs. Hopefully, it can reach 30 million by the end of 2023.
Our strategy, there has to be strengthening in the domestic ecosystem, for example bumping up local tourist attractions to national tourist attractions. 5 priority destinations such as Lake Toba, Borobudur, Mandalika, Labuan Bajo and Likupang have to possess charms besides Bali.
Secondly, facilities and the competency improvement of local human resources are also of importance since the digital economy surely needs digital talents. Third, strengthening the implementation of inclusive and sustainable tourism and the digital economy. Fourth, encourage equity in capital assistance.Fifth, facilitating actors in market development ranging from fundraising to marketing, especially digital economy players.
Finally, because this is the year of brands, we must aid in the registration and acquisition of Intellectual Property Rights (Hak Kekayaan Intelektual/HKI). Furthermore, this intellectual property right can be used as capital for international market penetration, and the mechanism is ruled by Government Regulation No. 24/2022. We hope that this will be a game changer, allowing our creative economy products to be used as financing objects and providing opportunities for them to grow their businesses and create jobs.
How are the government’s efforts to maintain growth momentum amidst the threat of global uncertainty?
We have to be grateful that our inflation is at 5.5%, which surpasses the target. Seeing the comparison of inflation with Europe which reached 10% and America above 7%, we should appreciate the performance of all stakeholders, not only the government but also the whole society for being able to suppress inflation, especially food and energy. I repeatedly reminded that we must strengthen the supply chain by empowering MSMEs to deal with inflation. So we prioritize local supplies facilitated by the digital economy. This is a movement that we call the Proudly Made in Indonesia National Movement (Gerakan Nasional Bangga Buatan Indonesia/Gernas BBI) which is facilitated by the digital economy.
Indonesia’s digital economy potential is expected to reach US$ 70 billion in 2021, US$ 146 billion in 2025, and US$ 360 billion in 2030. This is a growth driven primarily by e-commerce transactions. Second, startups are a factor to overcome increasingly extraordinary competition. Indonesia has 2,346 startups, the fifth highest in the world. We believe this is part of the targeted economic potential. Currently there are also 13 unicorn startups, 2 decacorn startups. This is our pride.
Once again, we can respond to inflation with programs that are right on target, beneficial, and timely. Gernas BBI in 2023 is targeted to reach 30 million MSMEs. But of course there are still many gaps in this digital transformation because digital infrastructure is still very limited and requires the support of all parties.
What are the challenges and opportunities faced in building collaboration with the private sector? What are the strategies undertaken to optimize these synergies?
Collaborations. Our mantra here is innovation, adaptation, and collaboration and it relies on the Pentahelix model. 2 main aspects of business are innovations and dare to take a risk. So this business world because they dare to take risks and innovate as well as speed in execution become a reliable partner in enhancing digital transformation steps.
Our collaboration with startups is a necessity. I convey to the Ministry of Tourism and Creative Economy colleagues that we must think like a fast-moving startup. We don’t think as a bureaucrat, who is slow and left behind because we are no longer relevant. One of our supports is regulations that are in favor of increasing the startup class and collaboration in the form of initiatives for development movements such as infrastructure. We can build this with the concept of Public Private Partnership.
There are 3 things for our digital sovereignty. First, we must have a capable data center that uses renewed energy as the source. Second, fintech and payment. Third, cyber security. Essentially, we are encouraging startups, especially those led by a younger generation, to be good at identifying opportunities. This is especially business opportunities and opens added value and creates jobs. In this digital and technological era, jobs are created faster, but if you’re not careful, they can also disappear quickly like a hurricane of layoffs in technology companies.
But, I see this as part of risk-taking. When the market turns against them, they do rightsizing. I hope they can survive and power through 2023 so that when 2024 takes off, we can see startups take over Indonesia Stock Exchange.
Reflecting on the statistics from 2011-2019, the average expenditure of foreign tourists is around US$ 1,000-1,200, while in 2020 it reached US$ 2,200. What is the Ministry of Tourism and Creative Economy strategy to repeat this?
We are grateful for the increase due to the longer duration of stay. This has an impact on increasing the local economy. Our economic strategy in 2023 is you need to stay in the game. So we give culture and nature encouragement to the things that are our strengths. We must collaborate both online and offline with the business world to maintain our strength and avoid our weaknesses.
Through the 2021-2024 Digital Indonesia Roadmap, we will accelerate the increase in the utilization of digital technology development. But we have to know what things are needed through the data. For example, the data we get shows that there is unfulfilled demand in several tourist destinations. This is our opportunity to create 2.5 million new jobs and train 600,000 digital talents.
Back again to digitization among tourism and creative economy actors, this change in trend is more to personalize, customize, localize, and smaller in size. Big online travel agents such as Traveloka and Tiket.com have moved on. They are now starting to sell affordable tour packages, healing tours, and the concept of sharing economy. Our Indonesia travel website can also offer travel ideas that reduce our carbon footprint. This is one type of tourism which gets a good point that we are not only traveling but also can save the environment by planting mangroves and pushing carbon footprint offsets.
Lastly, the metaverse. We have launched the “WonderVerse Indonesia” platform as part of the Wonderful Indonesia metaverse with all the beauty and uniqueness that we promote throughout the world digitally and metaverse. We create opportunities for industries to collaborate because the government certainly has many limitations.
Indonesia is considered successful in holding the G20, will the Ministry of Tourism and Creative Economy also focus on the MICE sector in the future?
We must take advantage of the 2023 ASEAN Summit. This is because just like the G20, there were 200-300 meetings and one of the most important was the ASEAN tourism forum in the first week of February in Yogyakarta. We see that in fact from international events such as MotoGP, we have received a direct and indirect economic impact of up to IDR 5.4 trillion in the first year. The G20 in Bali directly contributed US$ 500 million (nearly IDR 7.4 trillion rupiah) to the Ministry of Finance figures. This means that the government must move quickly to organize events to focus on bringing in international events, not just meetings but also sports tourism. So with a larger fiscal space, I am trying to encourage the efficiency of the licensing process through digitization so that it will facilitate more government funding and support for MICE events including events in the digital economy.
Currently, we are pushing the 2021-2024 Digital Indonesia Roadmap so that there is more synergy between the private sector and the government. Every international event, it is hoped, will also benefit MSMEs. In addition, 30 million MSMEs are expected to enter the digital economy. As a result, we will continue to invite MICE to Indonesia to improve digital skills through digital literacy and upskilling, reskilling, and new-skilling.
Download the EV-DCI 2023 here.