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

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.