The idea of replicating Bali’s success throughout the Indonesian archipelago through “10 New Balis“The initiative was one of the most ambitious visions of the country’s economic development when it was first launched a decade ago.
The objective was compelling: to diversify tourist flows, reduce the chronic dependence of the national economy on the island of the gods, and spread the benefits of tourism development to regions that had long remained on the margins.
Over time, however, this grand ambition collided with fiscal realities and a slower-than-expected response from private investors. The government ultimately adopted a more pragmatic approach, narrowing its focus to five destinations designated as Indonesia’s Super-Priority Tourist Destinations (SPTD): Lake Toba, Borobudur, Mandalika, Labuan Bajo and Likupang.
The shift from 10 destinations to five is officially framed as a philosophical evolution, from quantity-driven mass tourism to higher-quality tourism.
But a closer look suggests that the downsizing was also a recognition of the shortcomings of the original plan and the limitations of the state budget in financing too many large-scale infrastructure projects simultaneously.
Opening ten development fronts simultaneously without strong private sector participation would likely have produced a collection of half-finished projects that consumed public funds without generating commensurate returns.
Evidence of this substantial fiscal commitment is evident in the scale of infrastructure spending. Ministry of Public Works and Housing Indonesia reported that projects in the five super priority destinations alone received about four trillion rupiah (US$224 million) in funding.
Borobudur took the biggest share, with more than two trillion rupiah allocated for gate improvements and cultural corridor development, followed by hundreds of billions of rupiah for Lake Toba.
These huge expenses were justified on the optimistic assumption that state-led infrastructure development would attract private investment, which was initially expected to finance up to 68% of the destinations’ long-term financing requirements.
The critical question, however, is whether these trillions of rupees in public spending have really created self-sustaining tourism ecosystems or merely constructed an artificial facade of prosperity.
The evaluation of tourism policy cannot be reduced to measuring the kilometers of toll roads completed, the grandeur of race circuits or the elegance of newly built marinas from offices in Jakarta.
A rigorous assessment requires consideration of conditions on the ground, where the clash between aesthetic modernization and local socio-ecological realities often leaves behind deep structural inequalities.
Cracked reproduction model
In Lake Toba, the premium tourism megaproject centered on the Toba Caldera Resort luxury integrated development in Sigapiton has sparked significant land disputes. Native indigenous communities strongly opposed the acquisition of active agricultural land for access roads serving the resort, leading to confrontations with security forces.
The conflict exposed a darker side of development, where the livelihoods and territorial rights of communities who have inhabited the area for generations were subjugated to state-backed projects because their customary land claims lacked formal legal recognition. Residents rejected what they considered inadequate compensation, not wanting to become mere spectators on their ancestral land.
A similar contradiction can be found in Mandalika, West Nusa Tenggara. The international motorcycle racing circuit has definitely put Lombok on the global sporting map.
However, the glamor of world-class racing stands in stark contrast to the economic realities of the surrounding countryside. Efforts to strengthen locally owned tourist accommodations have been made fought to compete with the dominance of luxury resorts.
The same pattern is evident in Labuan BajoEast Nusa Tenggara, which has become a venue for high-profile international gatherings. While the urban beautification and marina redevelopment projects have been completed, ecological pressure on Komodo habitats and social tensions surrounding access to public space for local fishing communities continue to intensify.
Further north, Likupang in North Sulawesi continues to face obstacles due to outstanding permits required to connect the main access road to its tourism special economic zone.
Meanwhile, Borobudur in Central Java faces a different challenge: balancing preservation of heritage with modernization. Infrastructure improvements around the temple complex must comply with UNESCO’s strict requirements for heritage impact assessments.
These technical and regulatory hurdles show that creating world-class tourism destinations is much more complicated than simply reallocating funds from Jakarta to regional governments.
The fate of the destinations that were eventually removed from the list of super priorities is even more telling. Cape Kelayang in Bangka Belitung, for example, seems to have been left to chart its own course after losing its priority status.
Sustainability audits revealed that the destination failed to meet many internationally recognized criteria for sustainable tourism, mainly due to poor long-term management strategies and insufficient community participation.
In Tanjung Lesung, Banten, delays in the construction of toll roads have discouraged private investment. Meanwhile, Wakatobi in Southeast Sulawesi has suffered a sharp decline in international tourist arrivals due to the lack of direct flight connectivity in the post-pandemic period, illustrating how even outstanding natural attractions become vulnerable without reliable transport infrastructure.
impressive macro, miserable welfare
The government, of course, has a strong defense backed by impressive macroeconomic indicators.
Over the past year, international arrivals to Indonesia have increased significantly, reaching nearly 14 million. Domestic tourism has also grown, surpassing one billion trips. The tourism sector is estimated to generate billions of dollars in foreign exchange earnings, while contributing a growing share of national GDP.
Regional economic studies suggest that improving the quality and diversity of tourist attractions has a much greater economic effect than simply increasing visitor volumes.
Expanding tourism offerings has been shown to stimulate higher visitor spending and lengthen the average length of stay. In this sense, the government’s strategic shift towards quality tourism is academically sound and economically defensible.
However, these impressive aggregate figures often hide structural inequalities at the local level. In all of Indonesia’s super priority destinations, many of the jobs created remain concentrated in the informal sector and offer relatively low wages.
As luxury hotels and high-end facilities emerge, the better-paid managerial and technical positions are often filled by workers from outside the region due to the limited quality and standardization of local professional tourism education.
As a result, local communities often receive only a small share of the benefits, mostly limited to low-skilled positions, domestic work or informal street vending, which remain highly vulnerable to economic shocks.
Another irony emerges in the domestic market, which should serve as the foundation of Indonesia’s tourism resilience. Official data show that the average length of stay among domestic travelers has dropped significantly by nearly 20%, falling to just four nights.
The main reason is clear: flight domestic plane tickets, fueled by an uncompetitive aviation market structure, have weakened the purchasing power of Indonesia’s middle class.
The contradiction is striking. The state spends trillions of rupiah in taxpayer funds to spruce up destinations outside Java, while keeping airfares so high that many Indonesians find international vacations more affordable than domestic travel.
Need a better model
These structural deficiencies and growing disparities should serve as a serious warning that Indonesia’s tourism development strategy requires substantial recalibration.
A top-down development model driven primarily by the interests of large corporations must give way to an approach that treats local communities and indigenous groups as equal partners and co-owners of tourism development and not simply as policy objects or compensation recipients.
The territorial rights and cultural sovereignty of indigenous communities should not be sacrificed in pursuit of the exclusive aesthetics of premium tourism.
Environmental sustainability must also take precedence over short-term investment interests. Tanjung Kelayang’s failure to meet global sustainability standards should serve as a cautionary lesson for all super priority destinations. Physical development without strong environmental governance risks creating irreversible ecological damage.
The government should require each destination manager to implement strict environmental monitoring systems, wastewater treatment standards and visitor capacity limits to ensure that the natural assets that support tourism are not destroyed by overdevelopment and overcrowding.
Finally, regulatory coordination and transport policy require comprehensive reform. Greater synchronization between regional tourism master plans and national regulations is essential to prevent the overlap of authority between central government tourism agencies and local administrations, a problem that has often undermined legal certainty and project implementation.
At the same time, decisive intervention in Indonesia’s domestic aviation market is critical to reducing airfares to super-priority destinations. Without affordable air links for Indonesians themselves, the impressive infrastructure built with public funds and public debt risks becoming little more than silent monuments of luxury, standing amidst the persistent poverty of the communities that surround them.
Ronny P. Sasmita (PhD) IS senior analyst at Indonesia’s Institute for Strategic and Economic Action, an institute based in Jakarta.
