The demand for tourism in Indonesia continues to increase every year, but the problem is that the demand for tourism in Indonesia still cannot reach the predetermined target. This problem needs to be resolved by identifying the factors that determine the demand for international tourism in Indonesia. Determination of the factors affecting tourism demand or the independent variable must be done carefully, because there is a calculation component in one variable, so that there is a potential for problems with classical assumptions, especially multicollinearity.
The selection of the independent variable is still unclear, how the model is built and which should be included in the model. The price variable is one focus that must be considered. Proxies for calculating tourism prices can use the exchange rate of the destination country against the US dollar, bilateral exchange rate, the Consumer Price Index (CPI), and the Consumer Price Index (CPI) adjusted to the exchange rate. The novelty of this research is to find a suitable proxy for tourism price for the Indonesian case study. This study also proves Lim’s hypothesis that relative prices and exchange rates are the same proxies of tourism price that have not been researched for the Indonesian case study. The purpose of this study is to provide an appropriate Indonesian tourism demand model and to analyze the determinants of tourism demand in Indonesia.
The demand for tourism in Indonesia continues to increase every year but cannot reach thepredetermined target. Studies on tourism demand have been done a lot, especially in Indonesia.The selection of the dependent variable in tourism demand is not problematic and acceptable,however, the selection of the independent variable is still unclear. This study aims to provide anappropriate Indonesian tourism demand model and analyze the determinants of tourism demandin Indonesia.
The estimation technique used is a static panel regression. This This study uses panel data with a cross-section of 5 countries, namely Malaysia, Singapore, and the Philippines (as ASEAN member countries that visit Indonesia the most) and Australia and Japan (as non-ASEAN countries that visit Indonesia the most). The time span used during 2007q1 -2017q4 so that a total of 220 observations in this study.
Based on the result, it can be concluded that combining exchange rates (both bilateral exchange rate and exchange rate against the US dollar) and relative price in one model can cause multicollinearity problems so that the results are inaccurate. The tourism demand model using relative price shows results that are not in accordance with expectations and theories but in accordance with previous research with Indonesian case studies. Relative price is the right proxy to use as tourism price because it takes into account the inflation rate, but the exchange rate can be captured by the demand model whose results are in accordance with expectations and theories. This is because tourists when travelling will pay more attention to exchange rates than relative prices. Substitution price elasticity is the most elastic, meaning that tourists from Malaysia, Singapore, Australia, Japan and the Philippines are sensitive to substitution prices. This result implies that Thailand is not a substitute country but a complementary country for Indonesian tourism.
The policy implications that can be taken by the government include continuing to monitor the economic growth (business cycle) of the origin country of tourists to anticipate fluctuations in tourist visits. A strategy that can be done is to form a special team to monitor the economy of the country of origin of the most tourists visiting Indonesia. In addition, improving the quality of Indonesian tourism must be improved, starting from public transportation, infrastructure, to facilities at tourist destinations. The development of the Wonderful Indonesia program can also be done in collaboration with Thailand for tour packagesbecause Thailand is a complementary country to Indonesia.
Penulis: Wasiaturrahma Wasiaturrahma
Link jurnal: https://journal.unnes.ac.id/sju/index.php/edaj/article/view/42078
