Reopening Tourism in Indonesia: Integrating Corporate Sustainability
By: Gianina Amira Zahra
Tags: Market Research, Sustainable Tourism, Tourism, Indonesia, Corporate Sustainability

Reopening Tourism in Indonesia: Integrating Corporate Sustainability

Source: Zack Noyle

Indonesia’s tourism sector has been seriously affected by the COVID-19 pandemic, as people globally are compelled to stay at home and limit travel, resulting in the collapse of tourism-related industries comprising restaurant, aviation, hotel, and other travel and hospitality businesses nationally. Fortunately, as nations are now transitioning from the large-scale social distancing measures to the new normal concept, Indonesia is the second most confident nation in Southeast Asia about reviving its tourism sector (The Jakarta Post, 2020).

Indonesia’s tourism competitiveness is boosted by its exceptional natural resources and ranked 14th of 136 countries (WEF, 2017), thanks to its five Natural UNESCO World Heritage Sites and the sheer number of its known species. However, the industry has given rise to some serious social costs and ecological impacts as many local cultures have practically lost their identity being oriented towards the industry. Indonesia’s overall competitiveness is dragged down by its dismal overall score on environmental sustainability, ranking at 131st due to change in forest cover, lack of wastewater treatment, and increase of threatened species.

It seems that Indonesia’s next homework after reopening the industry is to implement well-integrated and effective sustainable destination practices to guarantee long-term sustainability in Indonesia’s tourism. One of the core pillars of sustainable tourism is Efficient Management. This could be achieved through a suitable balance of the three pillars of Corporate Sustainability in the tourism sector: The Environmental Pillar, The Social Pillar, and The Economic Pillar.

The Challenges of Indonesia’s Tourism Sector

According to the World Economic Forum’s Travel and Tourism Competitiveness Report, Indonesia is not placing enough emphasis on environmental sustainability as only a minimal fraction of the used water is treated, rapid deforestation, and increase in endangered species.

A 2015 study by the University of Georgia has ranked Indonesia as the world’s second-worst marine polluter behind China, with 3.2 million tons of plastic waste. Following this issue, Bali as the most visited tourist destination in Indonesia produces approximately 1.6 million tons of trash per year with about 303.000 tons of plastic. Around 33.000 tons of plastic are not recycled and leak into waterways including rivers and oceans (The Bali Partnership, 2019).

Moreover, the lack of infrastructure in Indonesia is a persistent problem as it limits the smoothness of traveling for tourists making the investment climate less attractive. Most of the country’s infrastructure is inadequate, particularly in the eastern part of Indonesia where there is a shortage of ports, hotels, roads, and airports. This means that several Indonesian regions that contain large tourist potential cannot be reached easily due to a lack of island connectivity.

One of the main obstacles in developing the infrastructure is conflicts with local communities over land rights. Local communities in areas such as Lombok, Bali, and Sumatra’s Lake Toba have been forcibly displaced for tourism development projects in which the local community had little or no say. As a result, the number of land conflicts in general and related criminal prosecution of indigenous people, farmers, and activists has risen under Joko Widodo Presidency (Mangobay, 2020).

Education also forms an obstacle to the industry. In the more remote areas of Indonesia, natives have difficulty communicating with tourists. Indonesia only ranked at 74th of 100 countries and regions by fluency in the English language (EF, 2019). This language barrier has been the main reason for a portion of foreign tourists to choose Malaysia as their holiday destination instead of Indonesia.

Corporate Sustainability in Indonesia’s Tourism Sector

Integrating Corporate Sustainability

The Environmental Pillar

Integrating corporate sustainability in Indonesia’s tourism sector would be one of the ways to tackle the industry’s challenges. Here are different ways, the tourist industry could integrate the three pillars of sustainability to improve Indonesia’s growing sector and rebuild the industry for the post-pandemic era:

The environmental pillar achieved the most attention as there is a growing concern about climate change. More companies are now focused on limiting their carbon footprints, water usage, packaging waste, and the overall effect on the environment.

There is increasing individual awareness related to serious ecological issues and protecting the environment. Environmental responsibility is reflected in the tourism sector as sustainable practices are being incorporated into hotels and other hospitality businesses. For instance, a recent study by Ting, Hsieh, Chang, and Chen concluded that the environmental attitude of the consumers exhibited a significant positive effect on their desirable intention to stay in green hotels compared to the conventional ones. Moreover, research shows that guests’ attitudes are positive toward green hotel practices in Indonesia (Brian, Lemy, and Pah, 2019).

The following green factors were cited as the main deciding factors for guests to stay in green hotels:

Advertisements that showcase the association of social and environmental benefits with the brand The brand is recognized for its environmental and social value The goods are made from fresh, natural, and organic ingredients The packaging of the products used are environmentally friendly

(Green Business Bureau, 2019)

If companies and industries in the tourism sector could implement this approach, they can have a beneficial impact on the planet and also have a positive financial impact. One example of this practice in Indonesia is ARTOTEL Earth that decided to focus more on environmental sustainability through collaboration with WWF-Indonesia to spread awareness of plastic pollution in the ocean. Each room occupied will automatically set aside IDR 10,000 to support the WWF maritime life preservation and waste management programs in Indonesia. The establishment also collected used linens and crafted them into reusable tote bags that can be purchased by guests (Artotel Group, 2019).

The Social Pillar

The social pillar puts importance on how a sustainable business should have the approval and support from its workers, stakeholders, and the local community it operates in. This would include treating employees fairly and being a good community member internationally and locally. Most of the companies’ projects under this pillar are also named as Corporate Social Responsibility or (CSR).

The loss of values and the effects of acculturation through tourism, as well as sexual and financial exploitation of the host population, have become one of the major social issues in the tourism sector. Yet, unsullied nature, cultural heritage, foreign cultures, beautiful landscape, and a sound infrastructure remain as the core elements of the sector’s supply side. Thus, sustainability is crucial to maintain the resources that are vital to tourism where the preference for sustainable goods and services is encouraged.

Businesses in the tourism industry could engage local communities in many ways including sponsorship, scholarships, and investment in local public projects. In line with this, the government of Indonesia could also increase the focus on the English education system in the country to increase the percentage of the population that can speak the language.

One good example of this approach is from the Bali Hotels Association that has a development program called Program for the Disabled. Partnered with Yayasan Senang Hati, this program offers opportunities for individuals to have working experience in hotels. This experience helps them to develop new skills and self-confidence in a totally different social setting as well as empower them to have career goals. Participants have been offered an extended training program as well as contract employment (Bali Hotel Association, 2020).

The Economic Pillar

The economic pillar of sustainability is where most of the businesses felt their firm ground. To be able to continue its sustainability, a business must generate profit. Thus, profit cannot undermine the other two pillars. This would include the activities of compliance, risk management, and governance.

The board of directors and management in the tourism industry should align with shareholders’ interests, end-user customers, and value chains. Corporate governance should use accurate transparent accounting methods where stakeholders are given a chance to vote on important issues.

The tourism sector is now one of Indonesia’s largest industries and one of its fastest-growing economic sectors. For many regions, tourism is seen as the core instrument for regional development because it stimulates new economic activities. Thus doing tourism in a sustainable way should be important for the country to maintain its economic growth. The inclusion of economic sustainability makes it possible for corporations to come on board with sustainability strategies and provide a counterweight to extreme measures that corporations are sometimes pushed to adopt.

As sustainable hospitality requires hotels to reduce their consumption of resources such as water and energy. This tends to lower the costs for hotels to operate. For instance, Grand Hyatt Jakarta has installed 45 photovoltaic panels that are estimated to compensate for over 170,000 liters of gasoline and reduce carbon footprint by over 400 tonnes of CO2 over 30 years. The movement also spread into the culinary division of the hotel as plastic cutleries were replaced with reusable ones (Hyatt, 2019).

Conclusion

The tourism sector remains crucial to Indonesia’s economy as it is a significant source of the country’s foreign exchange revenues. Indonesia ranked as the fastest-growing tourism sector in Southeast Asia thanks to its five Natural UNESCO World Heritage Sites. However, the industry faced serious challenges of social costs and ecological impacts including plastic pollution, lack of infrastructure, conflicts with local communities, and lack of English speaking population.

Thus, after reopening the industry, a sustainable approach needs to be taken for the tourism sector to be able to tackle the challenges and compete globally. This could be achieved through a suitable balance of the three pillars of Corporate Sustainability in the tourism sector: The Environmental Pillar, The Social Pillar, and The Economic Pillar.

First, companies and industries in the tourism sector could incorporate environmental sustainability through branding their business as environmentally friendly by using organic goods, recycling, reusable packaging, and actively involved in the local environmental movement.

Second, reducing the loss of values and the effects of acculturation through tourism, as well as sexual and financial exploitation of the host population. Businesses in the tourism industry could engage local communities in many ways, including sponsorship, scholarships, and investment in local public projects.

Third, building a business strategy should be based on sustainable ways of making profits. Some of it would include the use of water-saving devices, energy conservation, solar power, and reduced waste to help to keep the costs down.

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