The tourism industry of Indonesia is one of the most important industries in terms of the nation's foreign exchange earnings. However, compared to its neighboring countries - specifically Singapore, Malaysia and Thailand - Indonesia lags behind in terms of foreign visitor arrivals. This "failure" is partly attributed to the weak state of Indonesia's infrastructure. This includes the lack of enough airports or the lack of enough aircraft and passenger handling capacity at existing airports.
The government of Indonesia has been increasing its infrastructure development budget significantly since Joko Widodo became the seventh president of Southeast Asia's largest economy in 2014. However, the government (including the state-owned companies) cannot afford to build all required infrastructure across the country, hence it welcomes the private sector to play a key role in Indonesia's infrastructure development push. Earlier it was estimated that Indonesia needs up to USD $450 billion in infrastructure development investment up to 2019.
New International Airport in Northern Bali
Bali is the number one tourist destination for foreign visitors in Indonesia. This island welcomes around 6 million foreign tourists each year, equivalent to around half of total foreign tourist arrivals in the country. Meanwhile, the number of Indonesian tourists that visit Bali every year is estimated to be higher at around 8 million individuals. Most of these tourists visit the southern part of Bali (for example Kuta or Nusa Dua) where the Ngurah Rai International Airport is located. This is currently the only international airport on Bali.
In full-year 2017 a total of 5.7 million foreign visitor arrivals entered Indonesia through Ngurah Rai International Airport. Meanwhile, about 14-15 million domestic visitors passed through this airport that year, hence the airport is currently working at full capacity. Ngurah Rai International Airport (after its recent upgrade) was designed to have an annual passenger capacity of 20 million.
Considering the number of tourists on Bali is rapidly rising, there is a need for more passenger capacity handling by either another upgrade of Ngurah Rai International Airport or by establishing a completely new airport.
Bandara Internasional Bali Utara (BIBU), a local private company, now plans to develop a new international airport in northern Bali. Interestingly enough, the airport is targeted to be constructed on an artificial island (land reclamation). This is important because it will have a less severe impact on the local environment, while the land acquisition process should be much easier (land acquisition is one of the biggest for infrastructure development projects in Indonesia).
In local media Bali Governor I Made Mangku Pastika confirmed that Indonesian President Joko Widodo is supportive of the new airport on a reclaimed island off the coast of Buleleng. However, Indonesia's Ministry of Transportation is yet to give its approval. Moreover, this ministry will need to pinpoint the exact location for the new airport.
The new airport is estimated to require USD $2 billion in investment funds. Reportedly, private investors from Canada and the Middle East will join the project. However, BIBU also encourages Indonesian investors to come on board, including the local government.
New Yogyakarta International Airport Project Update
Yogyakarta is another important center of tourism in Indonesia. Yogyakarta is not only located in the heart of Java island, but it is also the heart of Javanese culture. In - and around - Yogyakarta there are many remnants of the area's Hindu-Buddhist past (most notably the Borobudur and Prambanan temples). Moreover, similar to the Bali case, the government wants to significantly boost the number of tourists in this region and therefore the overcrowded Adisutjipto International Airport will not be enough to handle all travelers. This airport was designed to handle up to 1.5 million air passengers per year but in reality it is handling close to 7 million travelers each year. Hence, an additional international airport is needed.
Indonesia's state-owned airport operator Angkasa Pura I announced that the land acquisition process for the New Yogyakarta International Airport, to be located in Kulon Progo and scheduled to start operations in March 2019 (but we assume that this project will require more time), is expected to be completed by the end of February or the start of March 2018. As several local residents refuse to give up their land, it will require court orders to settle ongoing land disputes. Currently, nearly 86 percent of the 587.3 hectares of land targeted for the new airport has been acquired by the project developer.