The Impact of Cultural Tourism on Economic Development: the Case Study of Yogyakarta, Indonesia.

Dyah Ayu Indira HapsariStudent Number: 415150

Supervisor: Erwin van Tuijl

Bachelor Thesis Urban, Port and Transport EconomicsErasmus University Rotterdam

Abstract

Cultural tourism in Yogyakarta is a part of a continuously growing and expanding industry. This paper’s aim is to find and analyze the positive and negative effect of tourism on the economic development of Yogyakarta. A list of definitions of cultural tourism and its positive and negative impact on economic development are gathered based on literature to create a theoretical framework. The theoretical frameworks are used to analyze the empirical results of f the case study of Yogyakarta and to draw a conclusion on the positive and negative impact. Based on theoretical framework, negative effects found that match is seasonality, and the research found out that noise disturbance seems to be a problem that is not mentioned in the theoretical framework. Among the positive effects are new money into the community, increased infrastructure and added skills, with increased employment and income being the most significant. Based on these finding, this paper concludes that the positive effects are larger than the negative effects.

Keywords: cultural tourism, impact analysis, economic development, Yogyakarta, cultural villages.

Foreword

This thesis is the result of my study at the Erasmus University Rotterdam, which could not be done without the help and support of my friends and family. Therefore I would like to thank my friends and family for always supporting me throughout the process of making this thesis. I also would like to add a special thank to Ir A A Ayu Laksmidewi, MM. and Dra. Shavitri Nurmala Dewi Ma from the Sleman Cultural and Tourism Board for helping with the interview and therefore providing necessary and crucial data needed for the completion of this thesis. Lastly, I would like to thank Dr. Erwin van Tuijl as my thesis supervisor for his attentive help, guide and assistance along the process of writing this thesis, in which otherwise would be impossible to complete.

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Table of Contents

Chapter 1: Introduction 2

1.1 Background 2

1.2 Goal and Scope 3

1.3 Research Question 3

1.4 Method 4

1.5 Structure 4

Chapter 2: Cultural Tourism & Economic Development 5

2.1 Introduction 5

2.2 Cultural Tourism 5

2.3 Tourism and Economic Development 8

2.3.1 Measuring the Impact of Cultural Tourism on Economic 92.3.2 Positive Impact of Cultural Tourism on Economic Development 102.3.3 Negative Impact of Cultural Tourism on Economic Development 11

2.4 Hypothesis and Theoretical Framework14

Chapter 3: Method 15

3.1 Research Type 15

3.2 Case Study Selection 15

3.3 Data Collection Strategy 17

Chapter 4: The Case of Yogyakarta, Indonesia 18

4.1 Introduction 18

4.2 Tourism in Yogyakarta 18

4.3 The Negative Impact of Cultural Tourism in Yogyakarta21

4.4 The Positive Impact of Cultural Tourism in Yogyakarta 24

Chapter 5: Conclusion 26

5.1 Conclusion 26 5.2 Policy recommendations 26 5.3 Limitations and Further Research 27

References 28

Appendix 31

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Chapter 1: Introduction

1.1 Background

Tourism is a continuously growing and expanding industry, on its way of becoming

the world’s largest economic sectors. With globally increasing mobility, it is now

easier than ever to access previously inaccessible destinations either for leisure,

recreation, and religious or for work. According to the UNWTO (United Nations

World Tourism Organization), today the business volume of tourism has surpassed

the likely of oil exports, food products or automobiles. In statistics, cited from the

same source, tourism counts as 9% of world GDP from direct, indirect and induced

impact, 6% of the worlds export and is the source of employment of 1 in 11 people

The number of international tourists has grown in numbers from 25 million in 1950

to 1087 million in 2013, and the UNWTO is still expecting it to increase by 3.3% rate

a year from 2010 to 2030, eventually reaching 1.8 billion by 2030 (UNWTO, 2014).

While its growth has slowed down compared to previous years, the Asia and Pacific

region came as the second most visited region with 5% growth after America’s 8%

in 2014 (UNWTO, 2014). In 2012 and 2013, the South-East Asia region was the

fastest growing region in terms of tourism, with Thailand being its most famous

destination (ASEAN Tourism, 2015). This could be due to the fact that ASEAN

countries has one of the most open visa policies, making it easier for international

tourist to travel without the long process of applying for visa. And while Indonesia

only came fourth among ASEAN countries in terms of international tourist arrivals,

the number is still expected to grow (ASEAN Tourism, 2015).

Indonesia’s tourism competitiveness and appeal has improved by 20 rankings,

currently sitting at rank 50 from 141 countries, according to data from the WEF or

World Economic Forum (Razaki, 2015). And while Bali and Jakarta still stand as the

most visited destinations, Yogyakarta is starting to appeal more to both local and

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international tourists. Unlike Bali’s tropical charm with its beaches or Jakarta’s

capital-city attraction, Yogyakarta offers a more subtle Javanese cultural experience

with the keraton (palace) as the heart of the city and the Merapi volcanic mountain

visible looking on the north. Scattered around the city are historical remains of the

once fully functioning palace and various temples, the most famous being

Borobudur and Prambanan. With the growing interest of tourists in Yogyakarta and

the local government’s plan on expanding and improving tourism sites, the number

of tourist visiting Yogyakarta is expected to rise. A number of academic literatures

and journals have been done on the topic of cultural tourism, however, one has yet

to be found that analyze the case of Yogyakarta.

1.2 Goal and Scope

The aim of this research is to find and analyze the positive and negative effect of

tourism on the economic development of Yogyakarta. To specify further, the type of

tourism analyze in this research is cultural tourism. There are other types of

tourism exist in Yogyakarta, such as natural tourism and historical tourism.

However, this thesis will only focus on cultural tourism and its effect of the

economic development as cultural tourism is one of the most well-known tourism in

the city of Yogyakarta.

1.3 Research Question

The main research question of this research is: How and to what extent does cultural

tourism affect Yogyakarta’s economic development?

In order to answer this main question, several sub-questions will be answered:

1. What is cultural tourism?

2. How to measure the impact of tourism on economic development?

3. How does cultural tourism differ from other types of tourism?

4. What types of tourism activities exist in Yogyakarta?

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5. What are the positive effects of tourism for economic development in

Yogyakarta?

6. What are the negative effects of tourism for economic development in

Yogyakarta?

1.4 Method

The methods used in order to complete this research are including literature

reviews and interviews. A literature review was done in order to study and obtain

additional insight on other researches and papers done on the subject of cultural

tourism and economic development. An interview with officials involved directly

with tourism in Yogyakarta will be done to give additional insight on the actual

condition of the city.

1.5 Structure

A research question will be answered per chapter or sub-chapter. In chapter 2, the

term ‘cultural tourism’ will be defined based on academic literatures and journals

on the subject. Also in the same chapter will be described how to measure economic

development and to what extent will this paper explore the term. Those findings

will then be made into a theoretical framework to later be proved. Chapter 3 will

further explain in details the method used to complete this paper. In chapter 4, the

case study of Yogyakarta will be analyzed. Based on collected data, the negative and

positive effect of cultural tourism on Yogyakarta will be drawn. The last chapter,

chapter 5 will draw a conclusion based on the whole research as well as answering

the main research question of ‘How and to what extent does cultural tourism affect

Yogyakarta’s economic development? In the end, some suggestion will be given on

policy of tourism to further support economic development and to incite further

research.

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Chapter 2: Cultural Tourism and Economic Development

2.1 Introduction

The term ‘cultural tourism’ will be one of the focuses in this research paper. This

chapter will define the term based of several sources to later draw a conclusion of

the definition that will be used throughout this paper. This chapter will also

describe the extent of ‘economic development’ that will be affected by tourism.

2.2 Cultural Tourism

The definition of cultural tourism varies based on several resources. As Mckercher

and Du Cros (2002:3) stated, “What is cultural tourism? This seemingly simple

question is actually very difficult to answer because there are almost as many

definitions of cultural tourism as there are cultural tourists.” Different journals and

tourism organizations seemed to have acquired different focuses in defining the

term cultural tourism. Listed in table 1.1 are a few of the most commonly used and

well-known definitions.

Author Year Definition

Reisinger 1994 A genre of special interest tourism based on the search for

and participation in new and deep cultural experiences,

whether aesthetic, intellectual, emotional, or psychological.

Silberberg 1995 Visits by persons from outside the host community

motivated wholly or in part by interest in the historical,

artistic, scientific or lifestyle/heritage offerings of a

community, region, group or institution.

ICOMOS

(International

1997 Cultural tourism can be defined as that activity which

enables people to experience the different ways of life of

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Scientific

Committee on

Cultural Tourism)

other people, thereby gaining at first hand an understanding

of their customs, traditions, the physical environment, the

intellectual ideas and those places of architectural, historic,

archaeological or other cultural significance which remain

from earlier times. Cultural tourism differs from recreational

tourism in that it seeks to gain an understanding or

appreciation of the nature of the place being visited.

UNWTO (World

Tourism

Organization)

2004 (Cultural tourism) represent movements of people

motivated by cultural intents such as study tours, performing

arts, festivals, cultural events, visits to sites and monuments,

as well as travel for pilgrimages… it is also about immersion

in and enjoyment of the lifestyle of the local people, the local

area and what constitutes its identity and character.

ATLAS

(Association for

Leisure and

Tourism Educatio

n)

2009 Conceptual definition: “The movement of persons to cultural

attractions away from their normal place of residence, with

the intention to gather new information and experiences to

satisfy their cultural needs”

Technical definition: “All movements of persons to specific

cultural attractions, such as heritage sites, artistic and

cultural manifestations, arts and drama outside their normal

place of residence”

Csapó 2012 Cultural tourism is such a tourism product in which the

motivation of the tourist (providing the supply side) is

getting acquainted with new cultures, participate in cultural

events and visiting cultural attractions and the demand

side’s core element is the peculiar, unique culture of the

visited destination.

‘Interest’, ‘movement’, ‘immersion’, ‘activity’ and ‘product’ are a few keywords most

commonly used by these authors to define cultural tourism.

Table 2.1 Definitions of Cultural Tourism

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The first few definition, dating back to the 1990s by Resinger (1994) and Silberberg

(1995) define cultural tourism by interest. Reisinger define it by the interest of ‘new

and deep’ cultural experience while Silberberg by interest in the cultural aspects of

a ‘community, region, group or institution’. These definitions therefore refer to

cultural tourism by how tourists are interested in new cultures, which is not their

own and the activity and doing of that particular culture.

Later definitions seemed to have shifted the focus of the definition. Cultural tourism

then was also defined as ‘activity’ and ‘movement’, which insinuate action. ICOMOS

(1997) define it as an acitivity, which enables the experiencing of other people’s way

of life in order to understand their customs, traditions and thinking. It is in a way an

activity of learning. ATLAS (2009) mentioned a similar purpose of cultural tourism

as to gather information of a new culture. Unlike the UNWTO (2004), however, who

while still defining it as movement, an activity, it is also motivated by the intent of

enjoying different cultures. This bears some resemblance to Silberberg’s definition

that also mention motivation by interest.

The newest definition of cultural tourism interestingly define it as a product, though

still is motivated by intents of getting acquainted with new cultures (Csapó, 2012).

Interestingly, in a way, this seemed to summarize cultural tourism as an end result

of an action, which was the definition mentioned by previous authors.

To conclude, while the definition itself vary and differ in such ways, by summarizing

common ground which all above definitions seemed to adopt, cultural tourism is

then the act of immersing or experiencing a new culture and its way of life in its own

environment and lifestyle, for the purpose of understanding and/or enjoying that

particular culture.

By understanding the definition of cultural tourism, one could differ cultural

tourism from other types of tourism. One of the most significant way it differs from

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other types of tourism such as recreational, natural, religious and historical is its

purpose and act, which is to experience a new culture by immersing in the said

culture. It involved tourists visiting the area of a culture they have previously never

experienced and learning that said culture by being involved in it. Natural tourism’s

purpose, for example is promoting the understanding and conservation of

environment by visiting pristine and relatively undisturbed natural areas while

religious tourism’s purpose is to worship and further understanding of one’s

religion through the act of pilgrimage or missionary.

2.3 Tourism and Economic Development

Tourism has been identified as one of the world’s largest industries and its fastest

growing economic sectors. The contribution of tourism to economic development is

substantial and varied. Not all of them, however, bring about the same impact.

Below, the positive and negative impact of cultural tourism will be discussed.

2.3.1 Measuring the Impact of Tourism on Economic Development

Measuring and assessing the impact that cultural tourism to economic development

can be done by separating cultural tourism from other types of tourism (natural,

historical, recreational), before measuring their economic impact. There are some

techniques that could be used for estimating the impact of tourism such as tourism

multiplier models, employment multipliers, input-output analysis and the

measurement of direct, indirect and induced impacts (Jamieson, ICOMOS, 1994).

Those methods are limited to a wider level however. To measure the impact of

tourism on a regional or local level, there are methods to be used such as the LATI

Model (Local Area Tourism Impact Model, UK), Local Tourism System (UK, Italy)

and Statistical monitoring (Plzàkovà, 2014).

On more of the qualitative side, more of analyzing than measuring, it is also possible

to see the impact of tourism on economic development. The method that is going to

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be adapted in this thesis, and will be explained further in chapter 3, is case study

research with interview and academic journals, including statistics and news

reports as the main source of data to answer the research question.

2.3.2 The Positive Impact of Cultural Tourism

Tourism has been identified as one of the world’s largest industries and its fastest

growing economic sectors. One positive impact of tourism on economic

development that is mentioned the most in most academic journals and tourism

sites is employment. Sinclair (1998) in his paper described tourism is an alternative

source of growth that a number of developing countries have turned to as they faced

problems with agricultural and manufacturing, and as air transport technology has

improved during the past years, there is an increasing demand following the

accessibility to developing countries which previously was almost unreachable. The

contribution of tourism to economic is inevitable; the act of tourism could create

employment opportunities and promote local commodities. A similar take on the

effect of tourism is one written by the UNESCO (2006) in which it stated how

tourism activity could generate both income and employment in a relatively cost

effective way by using resources of nature and culture that is previously unused.

By increasing employment opportunities, tourism activities are also able to prompt

a new source of income for the locals. As commonly mentioned by Cooper (1993)

and Ardahey (2011), in which Cooper stated how tourism could stimulate trade,

income and entrepreneurship activities. Local commodities that are specialize to a

certain region and culture could create business opportunities for the locals, either

to sell it to tourist in the area or to import it, it would generate income. Ardahey

(2011) came up with a similar conclusion, in which he found that one of the positive

effects of tourism on the economy is its ability to generate new money for the

community. As tourism attract tourists to a certain region, not only that new

businesses appear, existing business in and around the tourists area are able to

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generate more profit from the tourists while previously locals are their main source

of income.

While improving employment and income of the area, tourism could also turn the

government’s attention to the area more. The United Nation Environment

Programme (UNEP) stated how tourism could bring about the government to

improve the infrastructure of the area, therefore increasing the well being of locals

as well as facilitating incoming tourists. Improvement in facilities could include

sanitation, electricity, road access, public transport and telephone connection.

2.3.3 The Negative Impact of Tourism in Economic Development

While tourism undoubtedly brings positive impact on the economic development on

affected regions, it also has its negative consequences. On the economic side, the

negative impact of tourism could mostly be found in employment and income, as

one impact leads to another and it creates a vicious cycle.

Employment, while is also one of the main benefit of cultural tourism, also could

create a negative effect. As tourism becomes the main employment of an area, it

would attract more people into working in the tourism business (Cooper, 1993).

This would create a shift in employment; from other types of job the locals have

previously (agriculture, fishery, manufacturing) into tourism as people thought of

tourism as the ‘fast’ way of getting more income. In the long run, this will create a

gap in the skills of the local, which could lead to over-dependence on tourism as main

source of business.

While the employment in tourism sector is seen as more attractive to the locals, they

are possibly not much better paid from the people’s previous job either as it proved

to be mostly in the lower performance level of the employment sector to keep

salaries low (Ardahey, 2011). The locals are usually involved not much in the higher

performance level of employment as: one, it requires skill most of the locals do not

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have and two, the lower performance employment are cheaper to pay. Therefore the

higher skills and necessity are provided by outside sources, which are the tour and

travel companies.

Since the locals do not possess the means necessary to perform the service that

generate and facilitate tourist, they often make deals with tour and travel

companies. This would, unfortunately, lead to the uneven distribution of income

generated by this activity. One example is the culture of Emberá tribes, an

indigenous tribe in Panama, is one of the main drives of Panamian industry. These

tribes gave tours to tourist coming from all over the world by partnering with

outside agencies. However, since these tribes does not possess the means necessary

to arrange the tours (transportation, accommodation, communication), 80% of the

fee charged to the tourists goes to the partner. Wiggins (2011) in his article, “The

Two-Faced World of the ‘Cultural Tourism’ Industry”, wrote how companies have an

incentive to keep these communities living in poverty, because it is a significant

aspect of the cultural attraction.

UNWTO (2009) state another concerning problem concerning tourism’s effect on

economic development regarding seasonality. In developing countries where

cultural tourism is one of the main attractions, tourism activities are seasonal. These

countries have tropical climate and they are usually better performing in summer

months than in rainy months. The fluctuation in tourist activities would force hotels

and resorts to reduce employees on certain months to prevent too much cost.

And in the end, while the arrivals of tourists increases economic activity and

instigate economic development, it also creates income inequality between the

locals (UNEP). In Malaysia, a privately owned National Park employed locals up to

60% of its total employees and while their earning is not necessarily high, about

$120 per month, other locals that lived in the area but not employed at the National

Park only earn an average of about $40 per month. This inequality in income creates

tension between the locals and increased cost of everyday goods and transportation.

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And while it seems positive that the park employs mostly locals, little of the tourism

money actually stays in Malaysia and could benefit the local workers.

2.4 Hypothesis

If the local government fails to balance the employment opportunities available to

the locals, cultural tourism in Yogyakarta will lead to commercialization of the local

culture and over-dependence in the tourism business.

While cultural tourism could also act as a platform for the villagers to increase their

income, create new business and added opportunities; it also causes some negative

side effects. Bringing outside players in the tourism business could be more

damaging than it is benefiting. Inequality in performance level and income between

the locals and travel companies that manages the tourism activity in the region is a

threat to the well-being of the people and affected region. These creates not only a

negative effect of economic development, but also a moral problem of whether it is

ethical to continue exploit cultures for the purpose of tourism when the people

practicing the culture itself seems to barely benefit from it.

Listed in table 2.2 below are the summarized positive and negative impacts of

tourism on economic development as has been discussed in this chapter. This table

also served as a theoretical framework to later be compared with the result of the

result of the interview

Positive Negative

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Stimulate trade, income and entrepreneurship Seasonal fluctuations lead to irregular use in

work force

Source of growth for developing countries,

providing employment

Gap in skills which leads to over dependence

Create employment opportunities Most of fee charged to tourist goes to partner

(tour companies) instead of locals.

Improved infrastructure Employment mostly at lower performance

level, to keep salaries low.

Bring new money into the community. Income inequality

Table 2.2 The Impacts of Tourism on Economic Development

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Chapter 3: Method

3.1 Research type

This paper will use case study research as its main method. Case study is basically

an analysis of a single or a group of object(s), be it a person or a location, and its

relationship to specific phenomenon. Zainal (2007) define case study as exploring

and investigating contemporary real-life phenomenon through detailed contextual

analysis of a limited number of events or conditions, and their relationship. Another

well quoted definition of case study define it an empirical inquiry that investigates a

contemporary phenomenon within its real-life context and when the boundaries

between phenomenon and context are not clearly evident; and in which multiple

sources of evidence are used (Yin, 1984).

There are a few advantages in using case study method for this paper. Case study

allows the collection of a large amount of detail that other method would otherwise

not be able to be easily obtained. It offers variations in terms of intrinsic,

instrumental and collective approaches, allowing for both quantitative and

qualitative analyses if the data (Zainal, 2007). Case study method will enable an in-

depth study from both quantitative and qualitative source of data to be applied into

the case later on. Then also, the examination of the data is most often conducted

within context of its use (Yin, 1984). This would mean that observations are done

within the environment of the intended theme.

3.2 Case Study Selection

The main focus of this paper is the city of Yogyakarta and its cultural tourism.

Officially named Daerah Istimewa Yogyakarta or the Special District of Yogyakarta,

Yogyakarta is the second oldest province in Indonesia. It earned its ‘special district’

title from way back when Indonesia was still under the colony of the Netherlands, as

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it is one of the city that acted as a dependent state, which means that it have the

authority to act on its own law and regulation under the watch of the Dutch East

Indies. This allowed Yogyakarta’s monarchy values and belief to stay alive even to

this day. The governor of the city is the sultan or the king of the palace that most

commonly referred to as keraton. While the city’s governance still falls under the

authority of the Indonesian government, the value and belief of the centuries old

monarch still sticks with the people of Yogyakarta. It became one of the most

popular references to the Javanese culture and the palace, being the center of the

city and followed by many of the city’s resident, still practice the Javanese culture

very closely.

This Javanese culture is especially interesting to international tourist. The head of

the Government Tourism Office of Indonesia for Object of Attraction and Tourism

Appeal, Budi Santoso, stated how international tourists are highly interested in

Yogyakarta’s native culture, especially in the daily life of its people. This interest will

lead to the arrangement and building of more cultural village, to satisfy the tourist’s

interests.

The Tourism Office of Yogyakarta counted 18 cultural villages currently in

Yogyakarta, and they are ready to build and facilitate more given more demand for

it, with the agreement of the locals.

In the center of cultural tourism of Yogyakarta are the people and villages

transformed into cultural villages that will be able to cater to the needs and interests

of tourists. The impact of the act of cultural tourism on the economic development

of Yogyakarta, especially these villages and its people, is what will be studied further

in this paper.

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3.3 Data Collection Strategy

This paper will use two types of data collection strategy: interview and secondary

data. The subject of the interview will be officials from Yogyakarta’s tourism board.

Choosing interview as the main data collection strategy would give this research

insight on what happen directly on the field, in this case cultural tourism in

Yogyakarta, how it impacted the region’s economic development and how the

cultural tourism is managed. The secondary data, which will come in the forms of

news articles, statistics and academic journals, will provide additional insight on the

subject.

The questionnaires for the interview were written based on the previously made

theoretical framework in table 2.2. The interview were done via email and chatting,

since subject of the interviews, which are the personnel of Yogyakarta’s Cultural and

Tourism Agency reside in Yogyakarta, Indonesia while this thesis will be finished in

Rotterdam, the Netherlands. There were two people interviewed. The result of those

interviews will be gathered and used to explain the current condition of tourism in

Yogyakarta, as well as answering the research questions on the positive and

negative impact of cultural tourism.

The secondary data will be gathered from academic journals on cultural tourism and

its economic impact, Indonesian and international news sites will be the source for

news articles on tourism in Yogyakarta and the statistics on tourism will be taken

from the Indonesian Central Bureau of Statistics

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Chapter 4: The Case of Yogyakarta, Indonesia

4.1 Introduction

This chapter will analyze the case of cultural tourism in Yogyakarta, and how it

affects its economic development. The condition of tourism in Yogyakarta in general

will be describe, then analyzed through the result of the interview. Later on, the

positive and negative effect of cultural tourism on economic development will be

analyzed. While the analysis will mostly refer to the interview, some outside sources

will be used as well, such as news article, statistics and academic journals to

complement the result of the interview.

4.2 Tourism in Yogyakarta

Tourism has always been a significant part of Yogyakarta. Rich in culture and

history, Yogyakarta has been getting increasingly attractive for local and

international tourists alike. In 2013, it exceeds its tourist intake expectation with 2.6

million while it only expect 2.1 million tourists for the year of 2013 and 2.3 million

for 2015 (Teristi, 2014). There are several types of tourism in Yogyakarta, with the

most well known being natural, historical, educational and cultural. Yogyakarta is

located at the South part of Central Java, with a coastline leading to the Indian Ocean

on its South and the volcanic mountain Merapi overlooking from its North. The

palace or keraton of Yogyakarta is located strategically right in the middle of it. With

the Javanese culture still thick and wildly practiced throughout the province, the

palace location being in the middle is said to bring the ruler (the king) and the

people together, as well as balancing between the power of the mountain and the

sea. Yogyakarta is divided into five districts: Bantul, Sleman, Gunung Kidul, Kulon

Progo and Yogyakarta City right in the middle.

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Having a mountain on one side and a beach line on the other, gave Yogyakarta a

wide range of natural tourism attractions. One of them is Parangtritis, also

commonly known as pantai selatan, literally translated into the South beach located

in Bantul. For the high ground, Merapi volcanic mountain is also another iconic site,

despite it still being active. A jeep tour around its slope is offered, with a volcanic

museum located further down.

Natural sites asides; Yogyakarta is also rich with history. As a former government

center with a monarchy on its own, there are historical sites scattered in and around

the city with most of them located in Yogyakarta city. The palace, located in the

center of the city still function as the residence of the Yogyakarta royal family, as

well as a museum. Near the palace are the royal bathing ground, named Taman Sari

and a former colonial military fortress, fort Vredeburg.

The history of Yogyakarta is never far from its culture and art. Cultural-historical

sites located in Yogyakarta are mostly located on the outskirt of Yogyakarta city,

with the Borobudur and Prambanan temple being two of the most well known, both

having listed into the UNESCO world heritage sites. Ullen Sentalu, a Javanese history

museum, is another examply of the cultural-historical site, located in Sleman.

Culinary is also becoming increasingly attractive for tourist, with gudeg (a sweet

dish made from unripe jackfruit) and soto (traditional soup consists of meat and

vegetables) being the most famous. However it is rarely the main reasons of interest

for incoming tourists; rather it acts as a side attraction along their main interest.

Encompassing these various aspects of history, nature and culinary is the culture of

Yogyakarta itself, which is the Javanese culture. The city has met several changes

and improvements along the years, yet it never lost its thick Javanese culture as the

very base of its daily life. The government is trying to market the culture of

Yogyakarta as one of its main attraction, the focus mainly being cultural villages. A

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cultural village is described as a form of integration between attraction,

accommodation and supporting facility, presented in the form of structure and daily

live of people that is fusing with the rite and tradition practiced (of a culture)

(Nuryanti, 1993). Yogyakarta has quite a number of cultural villages, however, no

proper documentation has been made on the official number yet. In 2013, there

were 127 tourism villages recorded, with only 65 that were ready to be marketed

(Muryanto, 2013). The rough numbers of the total cultural villages in the year 2014-

2015 are estimated to be around 80-90 villages.

This number is acquired by adding the numbers individually taken from the website

of each district’s tourism board. In 2014-2015, Bantul has 34 cultural villages,

Gunung Kidul has 15 villages, Kulon Progo has 5 villages and Sleman has 38 villages.

They are mostly located away from the city of Yogyakarta. Among them, Sleman and

Bantul are two districts with the most thriving cultural tourism.

There are certain criteria to be met in order for an area to become a cultural village.

They have to be original, localized, unique and picturesque (Interview data). The

tourists that came to cultural villages are mostly domestic families on holiday

season. On non-holiday season they are mostly students on educational trips.

Foreign tourists, though small in percentage, have a quite steady number

throughout the year.

With the increasing interest in cultural tourism in Yogyakarta, cultural villages as

one of its main platform are increasing in numbers as well. The next section is going

to see the analyses of the positive and negative impact of cultural tourism to an area

and the people that live in it, in the form of cultural villages.

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4.3 The Negative Impact of Cultural Tourism in Yogyakarta

Theoretical Framework Empirical Result

Seasonal fluctuations lead to irregular use

in work force

Seasonal fluctuations happen in

holiday or non-holiday season

Gap in skills which leads to over-

dependence

Over-dependence is not seen as a threat,

the goal of cultural villages in the

dependence on tourism

Most of fee charged to tourist goes to

partner (tour companies) instead of locals

Cultural villages are government

funded; villagers manage the business

themselves.

Employment mostly at lower

performance level, to keep salaries low

Government provided training

programs to ensure that locals have

skills needed to run the business on their

own.

Income inequality Villagers in tourism and non-tourism

sectors supported each other; income

inequality is not seen as a threat as well.

- Excessive noise and disturbance to the

locals

The interview revealed that season fluctuations do happen in cultural villages. In

Yogyakarta, however, it is not in the sense of weather, but in the sense of school

holiday seasons. Indonesian schools follows a mostly uniform schedule throughout

the year, therefore they have similar holiday weeks as well. Being a tropical country,

seasonal weather change does not affect school schedule. Instead, school holiday

seasons are divided into the end of the year and middle of the year. The end-of-the-

year holiday, from December to January, is usually the shorter one: being a

Table 4.1 Negative Effects: Theories and Result Comparison

22

combination of semester break, Christmas and New Year holiday. Depending on the

educational institutes, the time range is around two to three weeks. The mid-year

holiday season, from June to August is the ‘grade promotion’ break, signaling the

end of an academic year and is usually the same time as Eid Al Fitr holiday. With

Islam being the majority of religion, Eid Al Fitr, which marks the end of the fasting

month, is a major event and most educational institutes gave a long break for their

students. The mid year break usually lasts three to six weeks.

The cultural villages got busiest around these holiday months, when it practically

brims with tourists, mostly locals and families. On the non-holiday seasons, there

are still activities on the village though less busy and smaller in number. These

visitors are mostly foreigners and school groups. To anticipate the low tourism

activity on the non-holiday season, some of the villagers shift work from the tourism

sector into the farming sector temporarily, until the holiday season comes around

again.

Overdependence, theoretically, is a real threat to the future of the village’s economic

activity. In the cultural villages of Yogyakarta, or at least Sleman district, however,

the villagers and the local tourism board do not necessarily take it as a threat. The

reason for this lies in the reason for cultural villages itself. One of the main aims of

the government and the tourism board for the cultural villages is for the

dependence of the locals on tourism in the village. It is hoped that tourism will be

the main source of income and economic activity for the residence of the villagers.

Another reason to not taking over dependence as a threat is the participation rate of

the villagers in the tourism business that is still fairly low, around 10% of the

population of the village.

Unequal charges that go to travel companies rather than the locals is also another

negative effect that cultural tourism might imply on the village’s economic

development. If most of the money went to travel companies, then it would not

increase the locals’ income by much or at all. Evidence from the cultural villages of

23

Sleman, however, does not show that it is the case for the locals. The cultural

villages are managed and funded by the government. The process started by finding

and selecting a village deemed potential. Then the government will, through local

tourism boards, facilitate the villages in terms of funding, training, event organizing

and networking. Outside involvement from tour and travel companies are mediated

through the government and since the villagers managed most of the businesses

themselves, there has not been a case of unequal charges.

The problem of unequal charges was one that led from employment on the lower

level in order to minimize salaries for the locals. Travel companies are the one that

spend the most facilitating tours through the cultural village, and they would try to

keep locals’ employment on the lower level to save for the cost of the facilities they

provided. In Yogyakarta, since the government manages the cultural villages,

government-funded training programs will make sure that the locals have the skills

and knowledge necessary to manage the tourism activities in the village themselves.

Since tour and travel companies’ from outside of the village do not manage the

tourism activities, the locals are fairly employed based on their acquired skill levels.

Difference in the level of income that leads to conflict does not seem to be

happening in the cultural villages of Sleman, Yogyakarta. As mentioned before, the

local participation rate in the tourism business is still fairly low and still has room

for growth. There has not been a case of conflict between the villagers that work in

the tourism business and those who are not, and they seemed to support each other.

The interview mentioned a problem that was not on the theoretical framework,

which is disturbance to local residents. Referring to table 4.1, excessive noises from

the tourism activities sometimes bother residents that live near and around the

tourism activity area, a negative effect that was not mentioned on the theoretical

framework. As tourism activities are spread through the village, a large number of

people doing various activities may cause noises that annoy residents around the

activity area. This problem seems to have been solved through understand and

24

mutual agreements by communication and coordination organized by the leaders of

the village, the head of tourism business in the village and the villagers themselves.

The negative effects of cultural tourism on the economy of these cultural villages do

exist, however not in a way that was mostly mentioned in the theoretical

framework. An additional negative effect was discovered from the result of the

interview, which was not analyzed in the theoretical framework. This could prove

that the theory on the effect of cultural tourism to economy is different in theory than

in it in practice, or the result based on theory are different in varied countries.

4.4 The Positive Impact of Cultural Tourism in Yogyakarta

Theoretical Framework Study Result

Stimulate trade, income and

entrepreneurship

Increased income and create

entrepreneurship in various forms

Source of growth for developing

countries, providing employment

Give chance for local economic

activities to grow, contribute to local

sector

Create employment opportunities Increased employment by creating

new businesses

Improved infrastructure Infrastructures improvement by

government to support tourism in the

village

Bring new money into the community Tourism activities bring more

consumers into the local business.

The main concept of cultural villages, as described by the interview partners, is the

empowerment of the locals. Its aim is to increase the income of the locals, not for

increasing outside business involvement. The cultural villages experienced

Table 4.2 Positive Effects: Theories and Result Comparison

25

increasing income with adding of skills and new business opportunities that comes

with tourism. The cultural villages also give chance for local entrepreneurs to grow,

which in turn improve the economic condition of the villagers. One example of the

most common business the local came up with is homestay for the tourist, providing

a deeper immersion experience in the local’s culture. Another example is the local

food business, transportation for the tourists, art and craft in the form of souvenirs

and cultural events. All of these activities generate incomes and are the result of the

creativity of the locals. And while new businesses benefit from tourism, existing

business are also able to generate new money from incoming tourist, in which

previously there was not any in the village.

New business opportunities catering the needs for tourists and tourism activities

has also open up a number of employment opportunities. The locals are able to

employ themselves in a more varied type of job and at the same time, it decreases

unemployment in the village. The government, through cultural villages, also targets

the young people of the villages, giving them opportunities to work within their

villages.

Another apparent positive effect of cultural tourism on the economy is the

improvement of infrastructure in the cultural villages. Improved infrastructure has

been a huge impact on the villages. With the growth of cultural villages, the

government is obligated to equip the means and tools necessary to assist and

support the growth of that cultural village. The government plans the development

and completion of infrastructure through regional planning mechanism, as so this

will lead to fund allocation. The improvements come in the forms road

building/repair, improved means of communication, building of stages for cultural

shows and clean water access. They are not, however, to the extent of changing the

layout of the village itself.

In addition, the activity of tourism sector has high potential to contribute to local

revenue. Sleman’s tourism sector alone contributes for about 15% of its total local

26

revenue and it still have potential to be increased. It was also mentioned how up

until this point, there has not been any significant negative effects of cultural

tourism on the economic development of the villages.

The positive effect of cultural tourism on Yogyakarta as analyzed through the

interview result does match the study result, though it may appear to be in a

different form, as shown by table 4.2 above. The keywords found of the study and

the theoretical frameworks show resemblances and similar results, with increased

income and employment being the most significant result monitored on the cultural

villages as an effect of tourism activity. The local government is able to balance the

employment opportunities through trainings. The dependence of the locals in

tourism business is the aim, and the government is providing the means necessary

for the locals to manage the business themselves. By that, they are preventing

commercialization by outside private companies as there are little to no

involvement from outside players.

Chapter 5: Conclusion

27

5.1 Conclusion

The aim of this research was to find and analyze the positive and negative effect if

tourism on the economic development of Yogyakarta. This was done by first

building a theoretical framework of the negative and positive effects based on

literature and academic study. This framework then served as based of comparison

on the case of Yogyakarta, which was obtained through interview and desk research.

Using cultural villages as one of the main platform of cultural tourism in Yogyakarta,

the research found how cultural tourism creates employment and increases income

in the villages. The activity of tourism in these villages also creates opportunity of

new business and entrepreneurship, as well as bringing new money into the

community. With the increasing interest in the villages, the government is paying

more attention on infrastructures and its improvement to cater the needs of the

tourist. The theoretical framework repeatedly mentioned increased employment

and income as the positive effects of tourism on economy, and it seems to be the

most apparent effect on the economy of the cultural villages of Yogyakarta. So is the

case with infrastructure and new money into the community. There appear to be no

significant differences from the theoretical framework and the results of the

findings in the case of Yogyakarta.

On the negative effect of cultural tourism to economic development however, there

appear to be a large difference between the theoretical framework and the case of

Yogyakarta. Over-dependence, employment at lower performance level, income

inequality that leads to conflicts and unequal fee charges does not seems to be

happening in the cultural villages of Yogyakarta. This could be due to the fact that

the cultural villages are government funded, and therefore are not dependent on

private companies from outside of the villages. The government-funded training

also gave the residence skills needed to work in the tourism sector without having

to depend on outside resources. And in the case of cultural villages of Yogyakarta,

the dependence on tourism served as a goal rather than a threat to the village’s

28

employment sector. The interview also found a negative effect that was not

mentioned in the theoretical framework, which is the noise disturbance from the

activity of the tourism to the local residence.

The only resemblance between the theoretical framework and the case of

Yogyakarta’s cultural villages seems to be the case of seasonality, in which it

happens between holiday and non-holiday season. The villagers however, seems to

have found a solution to this with the way they shift work to farming on non-holiday

season to prevent unemployment.

5.2 Policy recommendations

Policy makers could use the result of this research paper to manage the cultural

villages in a way that would lead to it having a more positive effect on the village’s

economy. The positive and negative framework comparison could serve as list of

what to avoid and what to do in the creation and managing of a cultural village. They

have to keep in mind though, that these results might not apply to all type of cultural

villages in different cultures and area and might have to adjust when needed.

5.2 Limitations and Further Research

This paper analyses the impact of cultural tourism on economic development in a

quantitative method based on desk research, literature review and interview, a

quantitative approach on this subject may meet with different results. The interview

results are mostly representing Sleman, which while it is a part of Yogyakarta; it

might not reflect the condition of the whole province of Yogyakarta. By only taking

account of cultural village as a platform of analyses on the effect of cultural tourism

on economic development, this paper might neglect other existing platform of

analyzing that could lead to a different result. Further research on the subject of

cultural tourism on economic development could use a quantitative approach based

29

on statistical data on the cultural villages in Yogyakarta, then applied the result on

improving the management of the cultural villages to achieve a better performance.

While this research only focuses on the economic impact of cultural tourism, further

research in other aspects if impact in cultural tourism is highly possible.

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Appendix

Interview Question(s)

1. What types of tourism exist in Yogyakarta beside cultural tourism?

2. How many cultural villages operate in Yogyakarta and how have their

numbers changed over the years?

3. What types of tourists are interested in cultural tourism?

4. Have the number of employment and entrepreneurs in the area increase?

If yes, in what way and can you give an example?

5. Are the villagers managing the tourism activities on their own or are there

any tour and travel companies from outside involved? If there are travel

companies involved, how does the deal go between them?

6. Does cultural tourism stimulate trade in the local commodities? How does it

affect business of the locals and can you give an example of the commodity?

7. Is the local employment more focused on cultural tourism since its

introduction? If it were, would you say that in the future, it could lead to

over-dependence on tourism as the main source of employment?

8. Have the infrastructure of the villages improved with tourism activities in

the area? If yes, in what way? If no, can you explain the reason why?

9. How much of the locals are involved in the tourism business as we speak?

Would the number increase or decrease over the years?

34

10. Is there any difference in the number of tourists between different seasons?

If yes, how does the local deal with it?

11. Is there conflict between the locals that are involved in the tourism business

and those that are not? If yes, can you give an example? If no, do you know

the reason why?

12. Other than those mentioned above, are there any more positive or negative

impact of cultural tourism on the economic development of Yogyakarta that

you could mention?

13. In the future, what are the city and the agency’s plan to improve cultural

tourism in Yogyakarta?

Interview Partner(s)

Ir A A Ayu Laksmidewi, MM./ Head of Sleman Cultural and Tourism Board

Dra. Shavitri Nurmala Dewi Ma / Head of Tourism Development Board,

Sleman Cultural and Tourism Board

35