ABSTRACT
A major development in the Indonesian economy since the 1980s has been the expansion of non-oil sectors and especially the tourist industry. Tourism has benefited from the government policy of deregulation which is intended to facilitate private-sector activities, particularly in the export sector (Booth 1990). Examples of deregulatory measures are tax incentives for big companies, cutting tariffs, simplifying export procedures, eliminating permits, and introducing tax holidays for newly established companies. Measures designed specifically to benefit the foreign tourist sector have included the partial abolition of visa requirements, the granting of additional landing rights to foreign airlines in the major ports of entry, the establishment of more international airports, the reduction in the number of licences required to build new hotels, and the definition of new tourist destination areas outside the islands of Java and Bali. The high priority given to tourism in national development policy generated a rapid growth in tourist arrivals and in earnings from tourism which has become a major source of foreign exchange.
