The Effect of Tourism and Market Institutional Policies on Tourist Visits from ASEAN Countries

Abstract

Tourism industry has experienced a significant development. This can be seen from several indicators, such as the number of foreign and domestic tourist visits, tourist spending, employment opportunities and the tourism sector's contribution to national income (GDP). Indonesian Tourist Policy has been combined with Law No.10 of 2009 concerning Tourism, and operationalized by Government Regulation No. 50 of 2011 concerning the National Tourism Development Master Plan (RIPPARNAS). It coincides with the ASEAN liberalization policies. Previous economic tourism research has not accommodated the role of economic institutions as a determinant of foreign tourism demand in Indonesia. This study focuses on tourism demand from ASEAN countries. The model is expected to explain the optimization of tourism resources for development. This data panel study revealed that Fixed Effect Model (FEM) is the most appropriate econometrical model used to estimate tourism in Indonesia in ten years (2006-2015). This study revealed some similarities with previous studies, especially in strengthening the theory of demand. The relative cost of tourism which tends to be more efficient will increase the number of tourist visits. Access to communication infrastructure and the proportion of city residents in the country of origin will increase tourism demand to Indonesia. Liberalization of policies need not be feared by many people, because the institutional aspects of the market which include rules, regulations, fiscal strength and market openness will encourage the acceleration of tourism. However, this study found that tourism services in Indonesia are still inferior compare to those of ASEAN countries. This requires international tourism marketing that changes perceptions and develops adequate destinations to facilitate ASEAN community members. In addition, this study considers that modernization in rural areas and the strengthening of related policies are related to the implementation of tourism master plans to improve tourism optimization.

Speed of convergence in global value chains: Forward or backward linkage

“…In this study, FDI is treated as an endogenous variable that affects GVC participation [ 14 , 15 ]. In addition, the model includes institutional and infrastructure variables as control variables [ 17 , 20 , 42 , 48 ]. The pre-estimated assessment suggested that FDI inflows were not completely exogenous and required robustness checks with a two-step GMM system to address endogeneity issues in the model [ 60 , 63 , 66 , 69 ].…”

“…In all the models, the estimated coefficients are positive and statistically significant when infrastructure and institutions are controlled for, indicating that institutions and infrastructure in exporting countries significantly influence GVC participation. Recent studies on trade support the view that better institutions can encourage trade [ 17 , 42 , 70 ]. Some researchers consider certain aspects of institutions, such as contract enforcement, tariff regulations, FTAs, and openness to FDI to foster export performance [ 14 , 15 ].…”

“…Internet access needs are met by increasing information and communications technology infrastructure capabilities [ 43 ]. Several studies have shown the potential positive co-influence of infrastructure and institutions on economic growth [ [16] , [17] , [18] , 20 ].…”

“…Moreover, institutional quality and physical infrastructure assets, such as electrical grids and telecommunication networks, are central to the functioning of modern economies and critical for sustainable development [ [16] , [17] , [18] , [19] , [20] ]. Furthermore, the effect of a free trade area (FTA) on FDI is potentially significant.…”

A study on the influence of perceived distance on China’s inbound Tourism and the interaction of non-economic distance: An analysis of dynamic extended gravity model based on 61 countries’ entry data (2004–2018)

“…As the accessibility of data, most previous studies centered on the factors of inbound tourism market, such as geographical condition, social economy, culture, and climate. The institutional distance and cultural distance have been the sight of current researchers [7][8][9][10][11][12][13][14], because of the development of transportation and information technology. And the most previous studies analyzed quantitatively by Gravity Model, which is widely used to explore the factors of spatial economic flow.…”