The Effect of Indonesian Cultural Diversity to its National Economic Growth
By: Hans Andrian
Tags: Economy, Diversity And Inclusion, Indonesia, Indonesia Economy, Diversity

Indonesian Diversity. Source: Shutterstock.com

John Dickinson, one of the Founding Fathers of the United States, once said, “United we stand, divided we fall”. This slogan is very popular in Indonesia, where the direct translation “Bersatu kita teguh, bercerai kita runtuh” is still widely used as a statement of unity for the country. The reason why this expression is still very relevant now is that it is well-suited to a country like Indonesia. According to Thomas R. Leinbach, Professor of Geography from the University of Kentucky, Lexington, Indonesia, as a country with 17,508 islands and a population of 267 million people, is a place where 1,300 ethnic groups live, hundreds of languages are spoken, hundreds of beliefs and six official religions are practiced, and (2020). Although Indonesia’s diversity has created some major horizontal conflicts and social problems in the past, it is undeniable that Indonesia’s heterogeneity can empower its people’s economy. If these advantages can be capitalized optimally by Indonesia’s government and stakeholders, this nation can be one of the largest economies in the world. The inevitable diversity of the Republic of Indonesia creates a considerable amount of economic potential for the nation, including but not limited to the rise of the tourist industry, the prospect of a more creative and productive workplace, and opportunity for small and middle-class businesses.

Firstly, the increasing number of tourists that come to Indonesia noticing its diversity can create a strong economic potential for Indonesians. According to a publication from the Australian organization “Future Direction”, tourism in Indonesia has grown over 200% overall in the past decade, with several sources claiming that over fifteen million tourists visited this nation in 2017 (Haan, 2018). This data clearly shows that the tourism industry is a booming industry in Indonesia, with many developments can still be done. Looking at the 200% growing rate of Indonesia’s tourism industry, it can be concluded that the trend is still an exponential growth, which most likely refer that Indonesia’s tourism is still under-utilized and there is much more development can be done by this nation’s government and stakeholders. It should also be noted that the tourism industry’s importance is pictured well in its significant contribution to Indonesian economic growth, as seen as the data from World Data Atlas, which states that travel and tourism contribution for Indonesia’s GDP was 69.8 billion US dollars, increasing from 16.5 billion US dollars in 2000 to 69.8 billion US dollars (2019). This data shows a healthy industry growth at an average annual rate of 8.24%. Knowing the significance of the tourist industry in Indonesia, this country should know how to better utilize its diversity for the growth of tourism. For this nation to invest more optimally in this industry, Indonesia’s government can try to look at the success in Bali, a beautiful historic Indonesian island where Hinduism is the religious majority, which according to Statista, welcome over 6.3 million tourists per year (2019). This means that 42% of Indonesia’s tourism come from Bali itself, which reiterate how under-utilized Indonesian tourism are aside from Bali, mainly after understanding how much potential Indonesia can be. This success has not been able to be replicated in other tourism destinations, although the cultural and economic potential is significant. Indonesia must be able to utilize its growing tourism industry potential to succeed further economically.

Bali. Source: Depositphotos.com

One of the major growing sectors of industry that can also be capitalized is Halal Tourism, which is currently growing exponentially (Haan, 2018). Halal tourism is a Muslim-friendly program designated to cater Muslims based on the guidance of this religion’s holy book, Al Qur’an. This kind of tourism has potential in this nation, mainly due to the fact of that 87% of Indonesians are Muslims, on which is making this nation a country with the most populous Muslims in the world, despite not officially being a Muslim country itself (Hirschmann, 2020). One example of cities that can utilize this potential is Aceh, one of the most western Indonesia’s cities. This city, which has been granted a special administration status to keep their Muslim law due to its culture and history, were formerly known as “Serambi Mekkah”, which means a place where Muslims do their transits before going to Mecca to do their worship to the God (Affiyah, 2020). Indonesia can utilize this special administrative status of religion and culture as a way to appeal to halal tourism for Muslims around the world, mainly understanding how respectable Aceh has been for Muslims around the world.

While the potential stated previously seems significant, it is undeniable that there are challenges that hinder the full utilization of the tourism industry, which is the reason why Indonesia have not reached its full potential yet. The challenge and the most common reason of the under-utilization of tourism industry in Indonesia is mostly about the lack of infrastructure (Haan, 2018). As a developing country with a lot of islands need to be covered, transportation and accessibility can be an issue. Not only that, the unreadiness of local people to welcome tourists, which includes but not limited to the inability to speak international languages, the unreadiness of accommodation, and the unpreparedness of servicing foreign tourists can also be problem. The fact that only 16% of Indonesians have ever finished college degree due to cultural and economic reasons only raises more concerns on how unprepared Indonesia is to welcome people around the world (OECD, 2017). The lack of education might create problems such as mismanagement, uncivilized practices, and lack of understanding of servicing etiquettes, that might deteriorate tourist’s experience in Indonesia. Understanding all the challenges Indonesia faces, the Indonesian government must act in the long term to improve the readiness toward tourism industry boom so that Indonesia can utilize its diversity to the nation’s economic welfare.

Another aspect in which diversity helps Indonesia grow its economy is regarding how these cultural varieties create economic opportunity to small and middle-class businesses. The diversity of the Republic of Indonesia creates a demand for micro-businesses to produce culturally unique products such as foods, souvenirs, clothes, and many other goods. One of the most prominent examples of culturally-unique products, which helps a lot of small businesses through its high demand, is a type of clothing from Java Island called “Batik”. These clothes have been used by many world leaders, such as President Bill Clinton, President Barack Obama, President Vladimir Putin, and many others, which makes Indonesians are very prideful toward “Batik” (Rustandi, 2020). Another traditional product that brings new economic opportunity for Indonesian micro-businesses are Rendang and Nasi Goreng, which were ranked as the top two of the most delicious foods in the world according to CNN (2017). Although labelling food products as “the most delicious” are subjective from person to person, this data only shows that the appreciation from foreigners to Indonesian food products is significant. International recognition like these catalyses the opportunity for cultural small businesses, creating even more chances for them to thrive.

Batik. Source: istockphoto.com

The economic opportunity for the people does not stop with Indonesian cultural products mentioned in the previous paragraph. The rise of historical trip due to the rise of historical site conservation is also creating that opportunity for them. In historical sites such as Candi Borobudur and Candi Prambanan, hundreds of small and middle-class businesses that sells various products are thriving as many people enjoying historical and religious trips (Atok et.al 2019). The fact that many of these historical sites can be a potential place for small businesses to sell their products only reiterate that national income, in which these small and middle-class businesses contribute almost 60% on, can certainly be affected positively when the advancements of historical sites has also progressed.

The last aspect that can help Indonesia grow its economy is the possibility to turn a diverse workplace into a place where ideas from a lot of backgrounds are collected and discussed in a productive manner. It is a fact that when a diversity exists within company’s workforces, what most likely will happen is the increased productivity and a more creative environment (Barak, 2016). A diverse workplace, if these companies can create an inclusive workplace environment that is comfortable for all the workers, will resulted in ideas that cater to each background within the Indonesian archipelago. For example, a Sundanese will most likely be able to understand what Sundanese people really interested in, while a Papuan will be capable to understand the concern and demand from fellow Papuans. These holistic understandings from various backgrounds of Indonesian archipelago will certainly be beneficial for Indonesia and its investors to create a more effective system so that operational effectiveness can be achieved. As a nation with the potential of almost 93 million consumers in 2050 according to McKinsey Analytics, investors and businesses in Indonesia need to find a way to create an inclusive system to make sure that their products are relevant for all consumer classes despite their backgrounds (Arief et.al 2012). One of the ways they can pursue is creating an inclusive workplace that listen to as many people as possible from every background within the Republic of Indonesia.

To conclude, the tourism industry, the chances for small and middle-class businesses to thrive, and the prospective productivity and creativity in workplaces are some of the sample aspects which proves that national economic growth can be maximized through the blessing of Indonesian diversity. Despite many major conflicts that have happened in Indonesia in the past due to different religions, races, and backgrounds, this diversity, if utilized correctly, has a lot of potential to provide a boost toward Indonesian economic growth. Although challenges are significant to finally be able optimally utilize Indonesian heterogeneity into a stable economic growth, a steady process of improvement will impact Indonesia positively, mainly to achieve economic welfare to its people and the nation. All actors involved in Indonesian economy should realize that to achieve the full utilization of Indonesian diversity toward the nation’s growing economies, cooperation from governmental bodies, private companies, non-governmental organizations, and Indonesians in general, is much needed.

Bibliography

Afifiyah, S. (2017, December 23). Asal Mula Aceh Dijuluki Serambi Mekkah. Retrieved November 13, 2020, from https://www.tagar.id/asal-mula-aceh-dijuluki-serambi-mekkah

Atok, S., & Pradana, C. S. (2019, December). Tourism Impact on Conservation and Utilization of Borobudur Temple After Being Declared as Ten New Bali Tourist Destination in Indonesia. Retrieved November 13, 2020, from tourism Impact on Conservation and Utilization of Borobudur Temple After Being Declared as Ten New Bali Tourist Destination in Indonesia

Azam, Md. Siddique E & Abdullah, Moha & Razak, Abdul. (2019). HALAL TOURISM: DEFINITION, JUSTIFICATION, AND SCOPES TOWARDS SUSTAINABLE DEVELOPMENT.

Barak, M. E. M. (2016). Managing diversity: Toward a globally inclusive workplace. Sage Publications.

Budiman, A., Chhor, H., & Razdan, R. (2013). “Understanding the diversity of Indonesia’s consumers”. Retrieved November 13, 2020, from https://www.mckinsey.com/featured-insights/asia-pacific/understanding-the-diversity-of-indonesias-consumers

Cheung, T. (2017, July 12). Your pick: World’s 50 best foods. Retrieved November 13, 2020, from https://edition.cnn.com/travel/article/world-best-foods-readers-choice/index.html

Haan, J. D. (2018, March 22). The Indonesian Tourism Industry: A Bright Future and Opportunities for Australia. Retrieved November 13, 2020, from https://www.futuredirections.org.au/publication/indonesian-tourism-industry-bright-future-opportunities-australia/

Hirschmann, R. (2020, April 29). Indonesia: Religion breakdown population. Retrieved November 13, 2020, from https://www.statista.com/statistics/1113891/indonesia-share-of-population-by-religion/

Hirschmann, R. (2020, August 12). Indonesia: Bali direct foreign tourist arrivals leading markets 2020. Retrieved November 13, 2020, from https://www.statista.com/statistics/976916/most-direct-foreign-tourist-arrivals-by-country-to-bali-indonesia/

Leinbach, T. R. (2020, December 09). Indonesia. Retrieved December 17, 2020, from https://www.britannica.com/place/Indonesia

Luib, M. (2020, October 28). How Indonesian Batik Became a UNESCO Intangible World Heritage. Retrieved November 13, 2020, from https://go.kompas.com/read/2020/10/28/202254174/how-indonesian-batik-became-a-unesco-intangible-world-heritage?page=1

McDivitt, J. F. (2020, November 11). Indonesia. Retrieved November 13, 2020, from https://www.britannica.com/place/Indonesia

OECD. (2019). Education at a Glance: OECD Indicators. Retrieved November 13, 2020, from https://www.oecd.org/education/education-at-a-glance/EAG2019_CN_IDN.pdf

World Data Atlas. (2019). Indonesia Contribution of travel and tourism to GDP, 1995–2019. Retrieved November 13, 2020, from https://knoema.com/atlas/Indonesia/topics/Tourism/Travel-and-Tourism-Total-Contribution-to-GDP/Contribution-of-travel-and-tourism-to-GDP