SPOTLIGHT • INDONESIA QUESTION & ANSWER Flying out
China’s business travel to Indonesia will soon outpace leisure travel, says Pikri Ilham K. of Garuda Indonesia Airlines
Garuda Indonesia Airlines Shang- hai, Indonesia’s largest commercial carrier, since 2007. He spoke with China Economic Review about Indonesian aviation.
P Q
A
: What is the state of Chinese traffic to Indonesia?
: Indonesia is the biggest country in ASEAN, so it’s attracting a
lot of Chinese visitors. At the mo- ment, leisure travelers dominate the travel demand to Indonesia – Bali is the most popular destination, fol- lowed by Jakarta. Te former is espe- cially popular with Chinese tourists. Tey’re a very reliable clientele, and are already the fourth-largest source of tourism – I believe in a couple years they could be the largest.
Q A
: What about for the business travel segment?
: Tere’s been a lot of investment from China into Indonesia.
From the perspective of our location here in eastern China, the invest- ment is coming from the Shanghai region – not the city specifically, but from neighboring provinces. Even so, there’s a lot of commercial trade between Shanghai and Jakarta, so the number of business travelers going back and forth is also increasing.
Q A
44
: Who are you targeting for new customers?
: We’re looking primarily at the mining industry, and the natural
resources sector more broadly. In the coming few years we expect
China Economic Review • May 2011
significantly more investment into Indonesia from China, especially in infrastructure projects. So we are marketing to Chinese companies who are attached to those industries – companies that build roads, harbors and so on.
Q A
: What has the trend been as far as traveler numbers?
: Tere’s been a substantial increase on the Chinese side.
Indonesia is one of the top ASEAN destinations for Chinese travelers. We’ve responding by expanding our operations. All three of our China lo- cations – Shanghai, Guangzhou and Beijing – are scheduled to have direct daily flights to Jakarta by July this year. We’re also considering expand- ing into the western regions of China such as Chengdu.
Q A
: And leisure travelers make up most of the demand?
: At the moment it’s about 65- 70% leisure travelers. Ideally it
should be closer to 50% leisure trav- elers and 50% business travelers. We cannot rely 100% on leisure travelers – demand is too volatile. We need to shift our focus on to business travel- ers. Otherwise our business model will not be sustainable.
ikri Ilham K. has been general manager of Shanghai and China’s eastern provinces at
‘We need to shift our focus to business travelers, or our business model will not be sustainable’
be re-evaluated if unfair trade practices
continue. Still, Sudrajat notes there have been
some bright spots for the Indonesian tex- tile industry. Te China-ASEAN Busi- ness Council, a body set up in 2001 to facilitate trade between the two sides, has offered to help Indonesian manufacturers enter the Chinese market. “Tey’ve provided us with help par-
ticipating in local and provincial exhibi- tions in the western part of the country, which doesn’t have a textile industry,” he said. “We can compete with the Chinese industry in these areas; we can introduce our production and designs.”
To each his own
Te fiber and yarn sectors are also doing well, with exports to China up by about 65% in 2010, API says. Zhao of the China Knitting Industry
Association noted that China has a huge demand for chemical fibers in particular. “Indonesia is strong in chemical fibers or raw materials for chemical fibers. China needs more innovative, high-functional and high-performance fibers and yarns to make its own products more competitive at a cutting-edge level.” Such specialization is part of the trea-
ty’s impact. Rather than a wholesale shift of manufacturing to or from China, the industry is fragmenting and settling into niche production markets based on com- parative advantages like the cost of labor, infrastructure and regulation. “Overall, the free-trade agreement is
good,” said Sudrajat. “It means more job creation for both countries because we complement each other – in some sec- tors we are weak, in some sectors China is weak.” Win-win or win-lose, Chinese com-
petition could also be motivation for In- donesia to up its game, he added. “Te Indonesian factories, they
should learn from China how to do more ambitious work.”
Free trade bump Indonesia textile exports to China, 2006-2010
450 400 350 300 250 200 150 100 50 0
2006
2007
2008 Source: China General Administration of Customs
2009
2010
US$ million
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