JOBS OUTCOMES STORY RESULTS VISITORS WELCOME $870 million in private sector investment mobilized Infrastructure and Improved water access for 570,000 Capacity Building people Create Jobs in Indonesia’s Over 20,000 businesses with expand- ed online presence Tourism Sector Over 84,000 tourism professionals certified AT A GLANCE REGION/COUNTRY East Asia Pacific | 18,000 participants trained from Indonesia 155 tourism villages PROGRAM/PROJECT Indonesia Tourism More and better jobs for approximately Development Project (P157599) 1.2 million people in six targeted FUNDING $300 million IBRD / IDA destinations THE CHALLENGE From 2001 to 2012, Indonesia enjoyed strong economic growth, averaging 5.6 percent per annum, while the poverty rate halved to 11 percent. The employment rate reached a two-decade record high in 2019, with 67.5 percent of youth and adults in the labor force. However, growth and job cre- ation have since slowed: youth unemployment is relatively high, at 20.6 percent in 2022, and only 53.0 percent of wom- en are in the labor force. Tourism is a promising sector, with the potential for inclusive and sustainable growth and increased employment. Accord- ing to the World Travel and Tourism Council (WTTC), every $1 million of spending in travel and tourism in Indonesia sup- ports $1.7 million in GDP and around 200 jobs, of which 67 are direct jobs. Moreover, 58 percent of almost 7 million hotel and restaurant workers in Indonesia are women. Constraints to growth and competitiveness in Indonesia’s tourism sector include (i) poor government coordination and weak implementation capacity; (ii) poor access to and quality of tourism specific infrastructure; (iii) limited tour- ism workforce skills, hindering the quality and availability of services; and (iv) a weak enabling environment for private sector investment and business entry. Addressing these is key to unlocking Indonesia’s potential to develop a world- class tourism industry. . WBG APPROACH The Indonesia Tourism Development Priority Program (Program Prioritas Nasional Pembangunan Parawisata Indonesia) encourages a more comprehensive and inclusive approach to tourism development by improving tourism-relevant basic infrastructure and services, strengthening local economy linkages to tourism, and attracting private sector investment. The project comprises four components. The first is a technical assistance program to increase institutional capacity for integrated and sustainable tourism development. The second is aimed at improving transport and other tourism related infrastructure and services while preserving natural and cultural assets. The third aims to increase participation of local firms and individuals in the tourism sector. The fourth, conducted in partnership with IFC, is a technical assistance program to design and implement tourism destination-specific investment planning, including project preparation, market sounding, and monitoring. The Project focused on an initial three key tourism destinations. Once developed, the three destinations were expected to boost the number of annual visitors from 15.3 million visitors in 2015 to 27.3 million by 2041. Annual tourist spending was also expected to increase, from $1.2 billion to $3.3 billion over the same peri- od, and private investment in tourism was expected to increase 13-fold, to $421 million. By the end of 2024, the project had supported a total of six destinations in achieving key milestones: improving water access for 570,000 people, creating 542,000 m² of non-motorized space, and enhancing sanitation for 470,000 people. Over 20,000 businesses expanded their online presence, and over 84,000 tourism professionals were certified. The project also attracted over $870 million in private investment, trained 18,000 participants from 155 tour- ism villages, and helped 65 tourism villages execute their development plans and generate income and liveli- hoods. It is estimated to have driven the creation of employment or better jobs for approximately 1.2 million people – with an increase of approximately 27 percent in the accommodation, food, and beverage sectors. The overall average wage has increased in project areas by more than 15 percent. LESSONS LEARNED The project took a multi-sectoral approach to establish a long-term vision for sustainable tourism across a 25-year horizon, with a mix of soft investments like master planning, training, and certifications, and hard in- vestments like infrastructure to attract private capital and create more and better jobs. It was the World Bank Group’s largest tourism project ever, and demonstrated the ability of WBG funding to make tourism the business of all stakeholders - public and private, national and local, large and small. NEXT STEPS A new project is under development which will build on the successes of the current one. It will include such new initiatives as the establishment of an Indonesia Quality Tourism Fund (IQTF). I worked in Medan before returning to my village. As a barista, I’ve been helping start a coffee stall here. We’ve received training and support. — Indah, entrepreneur, Sibaganding Tourism Village.