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Abstract:
This study aims to examine the impact of exchange rate dynamics, political environment and regional openness on Indonesia's inbound tourism using panel regression approach by investigating to what extent the changes of these factors will affect Indonesia's inbound tourism from 2003 to 2013. The results suggest that regional openness has the most significant impact on the inbound tourism in Indonesia, followed by the stable political environment. The presence of the international airport in the region has a strong positive impact on the increase of inbound visitors to Indonesia. With one unit increase in the regional openness, the number of inbound visitors will increase by 3.83 units. The political stability also contributes positively to Indonesia's inbound tourism. A one unit increase in the political stability index will attract inbound visitors by 0.78 units. However, there is no evidence that exchange rate is significantly impacting on the decisions of overseas visitors to travel to Indonesia.
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