Komodo for the prosperity of NTT

By webadmin on 10:17 pm Jan 03, 2012
Category Archive

Wijayanto

Komodo Island has been selected as one of the New Seven Wonders. This was great news for Indonesia, and especially for those who live in Nusa Tenggara Timur (NTT) province, where the island is located.

NTT, with its exotic and unique scenery, is the jewel of Indonesia. Unfortunately, despite all of the natural beauty, people in NTT are among the poorest in the country.

In 2010, NTT had per capita gross regional product (GRP) of around $500, much lower than Indonesia’s average of around $3,000. This is equivalent to several poor countries in Sub-Sahara Africa such as Uganda and Kenya.

NTT is consistently among the five poorest provinces in Indonesia, in terms of Human Development Index, GDP growth, unemployment rate, household electricity availability, access to internet and many other social indicators. NTT is an example of a complete paradox where beautiful nature exists together with poverty.

The beauty is meaningless if we don’t take advantage of it for the livelihood of the people of NTT.

Sub-optimal economic structure

Rain sometimes falls only 30 days in a year in NTT, making it one of the driest places in Indonesia. NTT’s landscape is dominated by savanna; from the air it it is colored with yellows and browns. The land is far from being fertile; consequently agriculture is not the ideal route for NTT to reach prosperity.

Unfortunately, despite this situation almost 70% of NTT people live from agricultural activities using traditional means and technologies. Agriculture productivity is very low and poverty is the obvious consequence.

It is not surprising that the poverty rate in NTT is among the highest in the nation.  In principle, people will be prosperous if they have the capability and access to participate in productive economic activities.

Most NTT people lack capability as shown by the discouraging Human Development Index and low education level. They also have limited access to productive economic activities other than agriculture. This lack of access drives many of those who have a level of capability to migrate to other places, both in as well as outside Indonesia, in search of better livelihoods, creating additional challenges for the region.

Investing in agricultural technology could help; however, considering the lack of comparative advantage of the area, the investment would probably be too expensive with meager return. A more efficient approach is needed, including shifting NTT’s economic structure.

Tourism, the way to go

Traveling has become an important part of people’s live. Information and transportation technology advances have made travel easy and affordable. Despite the global crises, the number of international tourists reached around 900 million last year with total receipts of close to $1 trillion.

Some countries take advantage of this development and become relatively prosperous. The Maldives, Vanuatu and Samoa have per capita GDP of between $3,000 and $5,000, with foreign tourism making up 55%, 28% and 20% of their economy respectively. After taking into account the multiplier effect, the economic impact is much larger. These three countries are located far from other countries, making it a challenge to visit them.

In the past, people in NTT were poor because they lacked access to productive economic activities. They have almost nothing to offer, other than bright sunshine, stunning mountains, beautiful islands, enchanting beaches, wonderful coral and unique culture. The development of the tourism industry has given people access to productive economic activities en route to better prosperity. 

Interestingly, NTT has all the beauty the Maldives, Vanuatu and Samoa could offer. In fact, NTT is more accessible to international tourists since it is close to international hubs like Bali, Singapore, Kuala Lumpur and Sydney. NTT also has Komodo Island, the new Seven Wonder. If its potential is well managed, NTT could surpass Maldives as a tourist destination.

Need for a comprehensive approach

Each year, around 6 million foreign tourists visit Indonesia, including close to 3 million in Bali, with average length of stay of eight days and spending per tourist of $1,000. If we apply a multiplier effect of 1.25, each tourist contributes $1,250 to the Indonesian economy.
This indicates how lucrative tourism is as an industry. It will become more lucrative if we can increase length of stay and spend per day.

Tourism is about experience. It is beyond beautiful views and unique cultures. Other factors such as transportation, hotel convenience, security, food quality and hygiene, toilet availability, souvenir and people-friendliness also play important roles.

In the case of NTT, a lot of planning needs to be done. The government needs to invest on a better airport to improve connectivity, better roads and ports, better schools, as well as reliable electricity supply.

The role of the private sector is also essential, especially in areas in which the government has lack of expertise, such as providing hotels, restaurants, retail outlets as well as managing tourist destinations and creating promotion programs.
This all seems quite complicated but it is worth the effort, especially for NTT where options are limited. Providing these facilities will also benefit the people and improve their quality of life.

In many countries, in addition to the economic benefit in employment creation as well as higher government tax revenue, the tourism industry helps promote nature conservation, improves public health and education, empowers women’s economic participation, reduces inequality and stimulates entrepreneurial skill.
The election of Komodo as a New Seven Wonder is great news for all Indonesians. We should ensure that it is also great news for the four million people who live in NTT.

Wijayanto is the Deputy Rector of Paramadina University and is the co-founder and managing director of Paramadina Public Policy Institute. He could be reach at wijayanto@paramadina.ac.id