Jim Della-Giacoma, Jakarta – Election violence, choking smog and regional economic turmoil have badly hit Indonesia's tourism industry this year, a government minister said on Thursday.

Tourism, Post and Telecommunications Minister Joop Ave said he expected single-digit growth in visitor arrivals for 1997 after more than 13 years of double-digit growth.

In 1996, 5.03 million tourists spent $6.3 billion on holiday in this vast tropical archipelago.

"I'll be very happy if we make three percent on top of that," Ave told reporters. "We are still very confident we will register a positive growth of arrivals as well as earnings," he said.

Officials said Indonesia had set a target of between 5.3 and 5.7 million tourist arrivals this year.

Ave said figures from the seven major computerised gateways showed total arrivals from January until the end of October this year had risen by only 2.5 percent. Tourism to the island of Bali was steady at 10 percent growth, he said.

He said the May general elections followed by the smog in the second half of the year and the current monetary turmoil all had an impact.

The campaign for Indonesia's election in May was the country's most violent yet, causing widespread cancellations among business travellers.

During the dry season from August to November – extended by the global El Nino weather phenomenon – forest and brush fires in the Sumatra and Kalimantan regions caused a blanket of smoke to drift across Southeast Asia.

Global coverage of the disaster prompted further cancellations, Ave said, even though the main tourist destinations of Yogyakarta on Java and Bali were not affected.

"There was no haze in Bali but we still had cancellations. I think we had quite a few cancellations from Europe but it is hard to get figures," he said.

Tourist arrivals from South Korea, which had shown promising growth, were now uncertain after the country's recent economic meltdown. Seoul has received a bail-out from the International Monetary Fund, as have Indonesia and Thailand, after a string of financial crises. "I think arrivals from Thailand have been effectively wiped out," Ave said.

He said there was also a significant drop in the number of Indonesians travelling abroad, given a drop of more than 50 percent in the value of the rupiah since July.

"We have reports of massive cancellations of Indonesians going abroad and we have some preliminary reports that they have booked domestic tours. That is a good thing," he said.

Ave said he doubted reports that Transport Minister Dhaniturto planned to reprimand Qantas (QAN.AX), Ansett Australia and Silk Air for selling discounted tickets to and from Indonesia.

"It is the best thing that has happened to us. If there is a lowering of prices the only thing I can say is – hallelujah," Ave said. "I am sure it is going to impact on the local airlines, okay, grow up," he said.

Qantas, Thai Airways and Ansett, jointly owned by News Corp Ltd (NCP.AX) and Air New Zealand (AIRVA.NZ), last month cut prices by around half between Jakarta and Sydney.

Silk Air has been offering free tickets to Indonesia for passengers who have flown into neighbouring Singapore with its parent Singapore Airlines.