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Romi Bhakti Hartarto, Dyah Titis Kusuma Wardani & Wahyu Tri Wibowo
To cite this article: Romi Bhakti Hartarto, Dyah Titis Kusuma Wardani & Wahyu Tri Wibowo
(2022): Tourist arrivals to Indonesia: does religion matter?, Journal of Policy Research in Tourism,
Leisure and Events, DOI: 10.1080/19407963.2022.2137807
NOTE
Introduction
Religion and tourism are associated since many facets of daily life are governed by reli-
gious beliefs, including travelling decisions. Studies have revealed that religion is a major
determinant of tourist arrivals (Fourie et al., 2016; Hyde & Harman, 2011), especially for
Muslims since tourists from Muslim countries tend to visit tourist destinations with simi-
larities in culture and religious background (Mannaa, 2020). Islamic teachings require
their adherents to not go beyond Shariah rules and to obey religious duties such as con-
suming halal dietary and practising prayers while travelling. This draws attention for
tourism providers to cater to Muslim tourist needs, particularly concerning religious
practices (Battour et al., 2010). Lack of halal dietary and prayer facilities can obstruct
the travelling experience to non-Muslim countries for Muslims. Even, many studies
reveal that a halal diet is by far the most important consideration for Muslims while tra-
velling (Henderson, 2016; Mohsin et al., 2016; Stephenson, 2014).
A burgeoning interest in Muslim-friendly destinations from a growing number of
Muslim travellers has led to efforts of providing halal tourism products. Due to potential
profitability, many countries around the world have started to be more aware of the halal
tourism issue, particularly Asian countries, such as Japan, Korea, Singapore, and Taiwan
CONTACT Romi Bhakti romi.hartarto@umy.ac.id Department of Economics, Faculty of Economics and Business,
Universitas Muhammadiyah Yogyakarta, Yogyakarta 55183, Indonesia
© 2022 Informa UK Limited, trading as Taylor & Francis Group
2 R. BHAKTI ET AL.
(Samori et al., 2016). It has been projected that Muslim travellers would spend around
USD 300 billion annually by 2026.1 Even, the number of Muslim tourists is expected
to reach 230 million worldwide by 2030. As the fourth most populous country in the
world with the biggest Muslim population, Indonesia needs to prepare and capture
more benefits from this big potential. This is particularly relevant given that Indonesia
has so many Islamic tourist destinations, such as mosques, palaces, museums, tombs,
and culinary delights (Jaelani et al., 2016). So far, the growth of the halal tourism
market in Indonesia reached 18% in 2018, with the number of foreign tourists from
Muslim countries reaching 2.8 million, contributing around IDR 40 trillion in foreign
exchange.2
Following the opportunity, the Indonesian government and the National Sharia
Council have initiated a halal tourism policy by issuing halal certificates for hospitality
providers as a solid way to attract more Muslim tourists. The certification was given
freely to Small, Micro, and Medium Enterprises that produce meals and refreshments
with halal management training. Further, the Government of Indonesia has designated
ten halal destinations for national priority, including Aceh, West Sumatra, Riau and
Riau Islands, West Java, Jakarta, Yogyakarta, Central Java, East Java, West Nusa Tenggara
(Lombok), and South Sulawesi. This is also supported by the issuance of the Halal
Tourism Development Strategy Plan in 2019–2024 by the Ministry of Tourism. The stra-
tegic plan includes organizing integrated halal tour bundles in each designated province,
branding halal tourism through the exhibition and social media, and drafting laws and
regulations on halal tourism. Since foreign visitors are not exclusive to Muslim tourists
only, halal tourism is also targeted at non-Muslim tourists. This is because halal tourism
only adds products and services needed by practising Muslims, hence it is still deemed
acceptable by non-Muslims (El-Gohary, 2016). Currently, the Indonesian government
is still attempting to design halal tourism programmes that are appropriate both for
Muslim and non-Muslim markets.
Despite various efforts taken by the government and proliferating interest in halal
tourism, the number of tourist arrivals from Muslim countries in Indonesia remains
fewer than that from non-Muslim countries. The latest data from the United Nations
World Tourism Organization (UN-WTO) in 2019 suggests that tourist arrivals from
non-Muslim countries were larger than those from Muslim countries. Malaysia is the
only Muslim country in the top ten arrivals with 2.98 million arrivals. Excluding this
country, only about 437,000 tourist arrivals come from Muslim countries. In total,
there were 3.42 million tourist arrivals from Muslim countries in 2019, or 22% of total
arrivals, while 12.02 million arrivals, or 78% of total arrivals, came from non-Muslim
countries. Based on these figures, this study aims to investigate tourist arrival patterns
in Indonesia from Muslim and non-Muslim countries. A positive effect of Muslim
countries would suggest the urgency of reinforcing halal tourism efforts undertaken by
the Indonesian government for tourism sector development.
This study applied the gravity model for foreign tourist flows to inspect the Muslim
country’s effect on the number of tourist arrivals. In detail, this study uses Organization
of Islamic Cooperation (OIC) membership as a proxy for Muslim countries given that
Islam is the major religion of OIC member countries. The gravity model employed in
this study is different from that used in the prior study to examine a similar issue
(Ghani, 2016). This study included panel data from 196 countries from 2017 to 2019,
JOURNAL OF POLICY RESEARCH IN TOURISM, LEISURE AND EVENTS 3
while the previous study in Malaysia, Ghani (2016), only used cross-sectional data from
171 countries in a certain year. The use of panel data estimation improves the accuracy of
parameter estimation since the combination of cross-section and time series data enables
a higher degree of freedom compared to separated analysis of cross-section or time series
data, hence the seasonality issue and bias of eliminated variables can be controlled
(Hsiao, 2003). The use of panel data can also help control for country heterogeneity.
Further, the gravity model for international tourist flows was estimated using Ordinary
Least Squares (OLS), Fixed Effect Model (FEM), and Random Effect Model (REM).
In the case of Indonesia, this study adds to the body of literature regarding the role of
religion on tourist arrivals by looking at the issue from a macroeconomic perspective.
Specifically, this study investigates the role of religion in tourism using a panel data
approach. At the aggregated level, the panel data approach uses country-time variables
and thus offers a higher possibility of identifying the key determinants of tourist arrivals
(Fourie et al., 2015). The existing literature in this area still relies on micro-level data such
as a survey of tourists (Aji et al., 2021; Monoarfa et al., 2022; Suhartanto et al., 2022).
The rest of this study is structured as follows. Section 2 explains the data and methods
being used, followed by section 3 which presents and discusses the empirical results,
while section 4 concludes.
(1) as follows:
where i refers to the origin country, j is Indonesia, Tourij,t denotes the tourist arrivals
from country i to Indonesia in period t; δij,t is the regression intercept; αj is a dummy
indicating whether the origin country of tourists is a Muslim country, with OIC member-
ship used as a proxy; βj is a set of characteristics of country i, which includes temperature
difference between country i and Indonesia, political risk, and whether the country
receives visa-free facilities from the Indonesian government; and Xij,t is a set of covariates
(GDP per capita of country i, GDP per capita of Indonesia, the distance between country
i and Indonesia, population of country i, population of Indonesia, bilateral exchange rate
between country i and Indonesia); and εij,t is the error term. The logarithmic term allows
elasticities interpretation of the estimated parameters and reduces the magnitude differ-
ences of the variables.
Selection and proxies of the variables rely on previous studies (Ghani, 2016; Santana-
Gallego et al., 2016; Zhang et al., 2019). Following Adeola and Evans (2019), we include
standard gravity model variables such as population, income, distance, and tourism
prices as control variables. Population and income represent the economic size in the
gravity model, while distance and tourism prices reflect transport costs and destination
prices, respectively. Instead of GDP, this study uses GDP per capita to measure the
income or purchasing power of tourists given that tourism is an individual-based or
family-based activity (Ghani, 2016). Besides, the breakdown of GDP into GDP per
capita and population allows this study to estimate the effect of population size on
tourist arrivals. It is expected that countries with a greater population would have a
larger number of tourists (Fourie et al., 2015). Further, the bilateral exchange rate is
the proxy for destination prices. It is calculated from the bilateral exchange of each
origin country in terms of IDR. In line with previous studies (Adeola & Evans, 2019;
Altaf, 2021; Lorde et al., 2016), we use the distance between capital cities to proxy for
transport costs.
In addition, country-specific variables such as institution and temperature are
included. Several studies mentioned that institutional variables such as political risk
are a pivotal factor for tourism (Balli et al., 2020; Bramwell, 2011; Vietze, 2012; Xu
et al., 2019; Xu et al., 2022). The higher the political risk, the lower the tourist flows
would be. According to prior studies, this variable is measured using the average of six
indicators, namely political stability and absence of terrorism/violence, voice and
accountability, regulatory quality, rule of law and government, control of corruption,
and government effectiveness to construct political risk (Adeola & Evans, 2019; Altaf,
2021). The higher the average value, the better the governance outcomes of the
country, hence attracting tourist flows. Regarding the temperature, it is expected that
tourists from colder countries prefer warmer country of destinations (Fourie et al.,
2015). Finally, a variable measuring the effect of visa-free facilities on tourism is also con-
sidered. Generally, tourists prefer countries that do not require a visa to enter given that
the visa application process is costly and requires a long waiting time (Lawson & Roy-
choudhury, 2016).
JOURNAL OF POLICY RESEARCH IN TOURISM, LEISURE AND EVENTS 5
The empirical model in equation (1) was estimated using three basic methods in the
panel data approach, namely ordinary least squares (OLS), Fixed Effect Model (FEM),
and Random Effect Model (REM), to check the robustness of the results. Generally,
empirical research using the gravity model performs estimation using pooled OLS.
However, this technique may lead to inconsistent and inefficient estimates if unobserved
heterogeneity exists. Therefore, one way to overcome this problem is to estimate using
Fixed Effect Model and Random Effect Model. The Fixed Effect Model can be estimated
by adding country-specific and year-fixed effects to control for unobserved heterogeneity,
while the Random Effect Model can be estimated by generalized least squares (GLS) esti-
mator. Specifically, the GLS method jointly estimates the fixed-effect coefficients and
residual variance-covariance matrix. Finally, we use the Hausman test to compare the
estimates between fixed effect and random effect and to verify which specification is
more suitable in the panel data.
statistic is 8.87 with the probability of chi-square more than 0.05 significance level, hence
we cannot reject the null hypothesis and conclude that the random effect is present in the
model. In line with prior studies (Altaf, 2021; Barman & Nath, 2019; Xu et al., 2019), the
standard gravity variables have the expected sign and significance. As measured by the
GDP per capita, the income of the origin countries has a significant and positive effect
on tourist arrivals, implying that economic size has a positive effect on tourism. The
wealthier the origin countries are, the higher the tourist flow to the destination
country would be. Specifically, the estimated elasticity of tourist arrivals to the GDP
per capita of the origin country is 0.50, indicating that tourism demand in Indonesia
is income inelastic. A 1% increase in GDP per capita would only attract international
tourist arrivals of less than 1%, which is 0.5%. Similarly, the population turns out signifi-
cantly increase tourist arrivals to Indonesia where a 1% rise in population would enhance
tourist arrivals by 0.93%.
Conclusions
Religion is one important factor that explains the behaviour of the tourist regarding des-
tination choice. Taking note of this rationale, the Indonesian government has
implemented halal tourism initiatives to attract more tourists from Muslim countries
because tourism activities are influenced by religion, while Indonesia itself is a predomi-
nantly Muslim country. Nonetheless, tourists from non-Muslim countries still outnum-
bered those from Muslim countries and this brings into question the effectiveness of halal
tourism initiatives in Indonesia. Using a standard gravity model for bilateral tourism
flows, we show that similarity in religion is not a significant factor in explaining
tourist arrivals in Indonesia. Instead, our findings reveal that visa-free facilities from
the Indonesian government are an important determinant for tourist arrivals in Indone-
sia. This provides new evidence that international tourists prefer to visit Indonesia
because of visa-free facilities rather than religious reasons. Thus, the government
should grant visa-free facilities to Muslim countries in addition to the halal tourism
policy.
Notes
1. Global Muslim Travel Index, 2017.
2. Cabinet Secretariat of the Republic of Indonesia, 2019.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Funding
This work was supported by Majelis Diktilitbang Muhammadiyah: [Grant Number 0784/I.3/D/
2021].
ORCID
Romi Bhakti Hartarto http://orcid.org/0000-0002-1270-7471
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Appendix