By Tuti Sunario For Indonesia Digest 30/6/08
From January through April this year tourist arrivals to the fabled island of Bali have passed all previous records, having registered an impressive increase of 25.74% year on year. Observers estimate that as this trend promises to continue, by the end of the year Bali could welcome a total 2.1 million foreign tourist arrivals – a record figure it has never achieved before. This means that of the targeted 7 million foreign visitor arrivals for Visit Indonesia Year 2008, Bali alone will have contributed some 30% to total visitor arrivals nation-wide.
In its latest edition, balidiscovery.com further reports that foreign tourist arrivals to Bali for the month of May 2008 continued to perform in record-breaking territory achieving 159,877 visitors, a full +24.24% better than the same month in 2007 (128,693). So that on a cumulative basis for the months January-May 2008, Bali arrivals totaled 753,934 – improving +25.50% over the same period one year before (601,143).
The top 5 countries producing foreign visitors to Bali in May 2008 were Japan, Australia, Taiwan, South Korea and China, in that order.
Foreign arrivals together with the thousands of domestic tourists who have finally discovered Bali as an affordable holiday destination finds Bali attracting more and more visitors in larger numbers. In response, construction of hotels, villas, restaurants, discos and shopping centers have sprouted and are now overcrowding popular resorts such as Kuta and Sanur beach.
And, to further support Bali’s development as a world tourism destination President Yudhoyono recently inaugurated seven infrastructure projects on Bali which include beach protection systems in Nusa Dua, Sanur and Padanggalak, a sustainable irrigation system in the Buleleng and Karangasem regencies, renovation of a decentralized irrigation system in Buleleng, Karangasem and Jembrana, the Denpasar Sewerage Development Project (DSDP), a garbage sorting facility in Tukad Badung and Tukad Mati and the Lila Bhuana Sports Arena.
The projects were financed by the Indonesian and Japanese governments, along with the Bali provincial administration, at a cost of Rp 937 billion (US$100 million).
"We need to develop more infrastructure facilities throughout the country, including Bali, because the more facilities we have, the better Indonesia’s economic competitiveness, specifically that of the provinces " President Yudhoyono said at the ceremony, as reported by the Jakarta Post.
The Denpasar Sewerage Development Project (DSPD) at Suwung is Indonesia's largest sewage processing system targeted to support Bali's role as a world tourism center, as well as improve the health of the local population. The new sewerage system is able to serve 250,000 people in the Seminyak, Legian, Kuta and Sanur areas of South Bali along a piping system running 129 kilometers. The second phase is scheduled to be built in 2009 with an equivalent amount of funding required. The entire project is scheduled for completion in 2014.
Similar sewage handling systems are currently being built in other Indonesian cities including Medan on Sumatra, and Bandung, Yogyakarta, Solo and Cirebon on the island of Java, reports balidiscovery.com.
In the economy, Bali’s provincial government has reported improvements. In 2007 Bali’s economy grew by 5. 9%, up from 5.28% in 2006, while per capita income increased to Rp. 11.18 million in 2007 against Rp.10.89 million in 2006.
When tourism and the economy are doing well, why is there so much poverty and unemployment?
Despite these positive official data, however, Bali’s economists contend that Bali’s economy is far from rosy. This is because the expected economic trickle down effect from tourism has been limited, since today more than 142,000 Balinese families eke an existence below the poverty line with unemployment increasing.
Bali Post reports that although the number of tourists to the island has been on the upswing in Q1 of 2008, yet their average length of stay has declined to 3.65 days with consequently less income for the province due to present dependence on short-stay regional markets as against previous majority visitors from Europe who tended to stay longer and spend more.
In the real sector, officials from the Industry and Commerce Department in Bali estimate that value of ready-to-wear clothing, one of Bali’s main exports have declined 3% during the first five months of 2008 despite a 112% increase in the volume of exports during the same period. Foreign exchange earned from ready-to-wear clothes exports from Bali for January-May 2008 totaled US$60.7 million for 35 million items. The same period in 2007 saw 16.5 million pieces of clothing worth US$62.7 million exported from Bali, the decline in income caused by fierce competition from China, Vietnam and India who, according to Antara produce better quality garments at lower prices.
In all, total exports from the island are also down 10.37%. Bank Indonesia’s statisticians have issued warning signals that economic slow downs in developed countries, such as the United States, are raising fears that Bali's export markets may be adversely affected by the ailing world economy. Further suggesting that Bali’s exports may be under threat as export figures covering the first two months of 2008 show a total value of US$47.5 million, a decline of 10.37% over the same period last year. The largest decline in exports was tracked to declining purchases by two of Bali's largest export markets, namely Japan and the United States, reports balidiscovery.com.
However, despite declining exports, Bali continues to log a very positive balance of trade. During the first two months of 2008 Bali imported US$7.42 million resulting in a positive trade balance of US$40.08 million for that period, reports balidiscovery.com
Bali’s economic growth trails behind other Indonesian provinces
In a recent seminar organized by Bali Post, economists disseminated reasons for the slow growth of Bali’s economy. Ever since the Asian economic crisis in 1997, Bali’s economy has been trailing, say economic experts Dr. I Nyoman Erawan, Prof. Dr. Sri Darma, and I.B. Udayana Putra. Despite an improved 2007 growth of 5.9%, this figure still falls short compared to the 6.3% average national economic growth. They also noted that while during the Asian crisis one decade ago, the national economy dropped by 18%, Bali’s economy was down by 4% only. This means that today Bali trails behind other Indonesian provinces in economic growth.
Prof. Erawan believes that the main reason for this slow development is because Bali’s economy has not been well managed, since benefits are sought from short term programs only. Furthermore, through the enforcement of regional autonomy to districts since 1999, the panel blames district heads now acting like “small kings”, fiercely competing with one another to attract tourism and tourism investments to their respective regions, regardless of its appropriateness or otherwise. In doing so they have marginalized or even ignored to develop the agricultural sector, where 40% of Bali’s population work the agricultural fields, causing increased unemployment in the districts and increased poverty, reports Bali Post.
This is in addition to the generally weak spending power of the people, and the high cost of money at a time when Bali’s real sector has not grown significantly. Small and medium scale companies who should be the backbone of the island’s economy have remained stagnant, while low interest credits offered by banks have not been able to penetrate down to the economically weak population, thus in turn causing the minimal growth of Bali’s economy, said Raka Suardana.
Economic growth as calculated by the local government has been mainly focused on investments in the financial stock market, and not in the real sector which should be able to provide larger numbers of jobs, which in turn should reduce poverty, added Raka Suardana
This fact is confirmed by the Head of Bank Indonesia in Denpasar, Viraguna Bagoes Oka, who noted that Bali’s economic growth has not been accompanied by a commensurate growth in the employment sector. Although he admitted that there has been a reduction in the number of unemployed in Bali, however, the ratio is not proportionate to its economic growth.
The provincial island of BALI is relatively small, covering an area of some 563,286 hectares only or is about 0.29% of the total area of the Indonesian archipelago. Prof. Sri Darma, said that through surveys that he has undertaken, it was concluded that by and large, Bali’s present economic growth has not been able to lift the welfare of the majority Balinese. Many villagers today still face continued poverty. Prof. Sri Darma found that there are still some 142,699 families in Bali who live below the poverty line.
142,000 Balinese families eke a living below the poverty line
This precarious situation was confirmed at a separate occasion by Speaker of the Karangasem District Parliament, I Wayan Karangasem, who said that of a total of the district’s 400,000 population no less that 41,750 families today here live below the poverty line, since employment opportunities are limited and the daily cost of living keeps rising, fuel is often scarce and cooking oil becomes dearer by the day. Therefore, in order to empower farmers and labourers, or even to create agro-tourism attractions, there is no other solution but to boost the agricultural sector where the majority of the population is active, and to boost small scale industries and handicraft through capital loans with very low interest rates, which must be generated by banks and the national government, he said.
His comments were made in reaction to a call made by the Minister for Culture and Tourism, Jero Wacik, that regions should not overly depend on the national government, but should become more self-supporting.
Although poverty is caused by a number of reasons, Prof. Darma continued, there are three clear variables that cause poverty, namely the large numbers of unemployed, small incomes of families, who in many instances live below the regional minimum income, and escalating prices of essential food commodities, including of rice and cooking oil, as well as soaring fuel prices.
Since the majority of Bali’s population live from agriculture, this sector needs special attention, as most especially the planting and production of rice employs some 40% of Bali’s total population. At present, development of agriculture in Bali is expected to support the tourism sector. But can agriculture grow in such a manner as to extricate Bali from its economic problems?
Prof. Erawan explains that today 80% of total investments to Bali is contributed by the tourism sector. Therefore, to improve the agricultural sector the government must boost corporate farming to actively involve local farmers. In so doing the volume and quality of agricultural products can be guaranteed, while the local population can pride themselves through the appreciation given by markets to local produce and products.
Economists further rue the fact that regional autonomy that has been granted to districts since 1999 has in no way improved conditions. On the contrary, while the thrust of Bali’s economy today depends on districts and city authorities to increase and empower local potentials and local resources, the fact remains that regional autonomy has created wider gaps and imbalances among districts, which has triggered economic and social jealousy among regions. Districts heads now merely compete to gather the largest amounts of local taxes to show economic improvements in their regencies. However, in the long run such measure can not guarantee sustainable public welfare.
“Our greatest weakness in this era of Regional Autonomy is the fact that coordination among districts has ceased, as development programs are aimed only at pleasing the respective district leaderships, maintains Prof. Erawan.
The role of Culture, Tourism and Agriculture in Balinese Society
Meanwhile, in conjunction with the ongoing month-long Bali Cultural Festival, another seminar was held mid June to assess the effects of tourism and globalization on Bali’s society and the Balinese identity. Speakers included Prof. Dr. Mark Hobart, Prof. Dr. Adrian Vickers, Prof. Dr. Ron Jenkins and Dr Mari Nabeshima.
Bali’s social experts believe that Balinese society today is in a quandary and is confused amidst rapid changes caused by globalization and tourism. Many are concerned as local Balinese become fearful that their unique culture and special characteristics will be marginalized by the unrelenting onslaught of globalization.
In this context Prof. Dewa Ngurah Suprapta of the Agricultural Faculty of the University of Udayana in Bali underlined that Balinese culture is embedded in the agricultural environment, in particular in wet rice farming. Much of what is known as Bali’s local genius has its source in the interaction of the Balinese person with his or her natural environment, and is based on the Hindu religion and philosophy. For this very reason it is of the utmost importance that Bali develops and manages the agricultural sector well, not only to meet food needs and conserve Bali’s unique eco-system, but more importantly to sustain Bali’s unique culture and society, which are nota bene Bali’s main draw for tourists to visit the island.
Prof. Dr. Edi Sedyawati further confirms that "Balinese culture has proven to continue to remain strong because this culture is based on religious functions. This can be seen in its performances, music and dance which draw their source from the Hindu religion. Therefore, Bali’s spiritual values must be sustained, and should not disappear merely to make way for economic pursuits” she said.
Gubernatorial Candidates seek solutions in Holistic Planning and Link-and-Match between Tourism-Agriculture-Small Scale Industries
It so happens that these are campaign weeks in the run-up to gubernatorial elections in the province of Bali on 9 July. Vying for the post of Governor are Cokorda Budi Suryawan (or CBS for short), Made Mangku Pastika, and Prof. Winasa. During their campaigns, candidates were asked to expound their vision on how they plan to govern Bali during their term in office.
In his campaign Cokorda Budi Suryawan confirmed that he is committed to develop Bali’s culture-based tourism to attract more visitors to the island, since culture and agriculture are Bali’s main draws. When elected, CBS will ensure to continue developing tourism and agriculture in their broadest sense, reports balipost.com.
Bali started to seriously develop its tourism industry in the 1980’s, CBS said. By 1990 Tourism had become Bali’s leading development sector, however, this pushed agriculture to a secondary sector and was even marginalized. But, at the outbreak of the Gulf War, and in the aftermath of terrorist attacks on Bali, and SARS epidemic in Asia, the Bali government began to review its plans and aimed to boost agriculture to help recover Bali from its economic doldrums. However, much of what was then said remained mere slogans and nothing much was actually done to improve this sector.
Additionally, as Bali’s population increased rapidly, exacerbated by migration from other islands, environmental problems arose. Slum areas appeared in cities, traffic became congested, and industrial waste began to pollute rivers and seas. People started to build on green belts as little alternative land was available. Rice fields were sacrificed to make way for settlements or were converted into tourist facilities. Clearly spatial development in Bali has become an issue.
Lately, 5.2% of Bali’s agricultural land is converted yearly into housing and urban development, while destruction of forests increases by 2% annually, resulting in degradation of the quality of water on the island. When things continue this way, said CBS, then Bali’s condition in the next 2 decades will be critical. And as farmers sell their lands in order to work in the services sector or in small scale industries, Bali’s traditionally prime irrigation network, known as the “subak” system, will be neglected and with it the agricultural sector will suffer even more.
To correct this situation, CBS aims to revitalize the Balinese philosophical concept of Tri Hita Karana, namely that in order to maintain balance in the universe, man must keep proper relations with the Almighty, with his fellow human beings and with his environment. This CBS plans to spread through the empowerment of Bali’s traditional village communities. This plan will also include experts and tight coordination among the various sectors, to be developed in a holistic system, says CBS.
Separately, in a talk-show on metrotv, replying to the question how Candidate Made Mangku Pastika thought to develop Bali’s economy especially encompassing the tourism and the agricultural sectors, Pastika conceded that for Bali, Tourism is the economic locomotive which must be able to pull the other sectors to improve their productivity. The expected trickle down effect of tourism must be actively planned and should not just be taken for granted. For this purpose, there must be a program of link and match between Tourism, the Agricultural Sector and Small and Medium Scale industries.
When elected governor, Mangku Pastika plans to activate the Bali Security Council to coordinate all stakeholders. Bali’s traditional village communities and Bali’s famed “subak” rice irrigation system must be conserved, he said, to ensure sustainability of Bali’s unique culture and tradition, since Tourism in Bali can thrive only because of Bali’s unique culture.
Indeed one of the problems facing Bali is the fact that tourist facilities are concentrated mainly in the south of the island (particularly in the districts of Badung, Denpasar and Gianyar), Pastika said, where income is counted in terms of dollars, whilst the remainder of the island can only watch with envy. (Bali has 8 autonomous districts/city). Therefore, Pastika plans to build a more balanced development between the south and other districts on Bali.
Agriculture in Bali must be built in tandem and in synergy with Tourism so that tourism benefits can be felt in cities as well as by the rural population, where agriculture must meet the needs of tourism in a more effective manner. Furthermore, Pastika plans to build a more congenial relationship between tourism and agriculture, by, for example, pushing Bali hotels to buy more of Bali’s home grown fruits, flowers, vegetables and meats, which until now are supplied either from Java or from overseas. In so doing, Pastika hopes that Bali farmers will be encouraged to continue to till the land rather than sell their rice fields to be converted into housing or tourist facilities. (Sources: Balipost.com, balidiscovery.com. metrotv)
By Tuti Sunario 
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