19 Oct 2002

Nightmare on dream island

Bali's economy has been battered, writes Eric Ellis in Kuta

STEVE Palmer is defiant. The pioneer of the surfing industry in Bali, Sydney-born Palmer has lived and worked on the island for 28 years and no terrorist is going to push him off it, nor John Howard's warnings to Australians for that matter.
He is nevertheless worried about the coming year for his $10 million-a-year surfwear and accessories operation that spans 80 shops throughout Indonesia, based out of Bali.
"We are now budgeting business to drop off 80-90 per cent in the new few months, and 60 per cent over six months," the Quiksilver franchisor said. "A year from now? Barring any further outrages, I reckon we'll be almost back to normal."
As earthmovers clear the bombsite on Jalan Legian and scores of dead Australians lie unidentified and, indeed, unidentifiable in Denpasar's grim Sanglah Hospital, it's hard to see anyone wanting come to Bali in a hurry.
But Palmer is optimistic for Bali's longer-term ability to bounce back from the Kuta bombings. This week, he led an ad hoc group of foreign investors and leaders of the Bali tourist industry to issue a defiant message that they're here to stay.
Still, there have been economic victims. A proposed start-up airline, Air Paradise, owned by the same syndicate that owned the Padi Bar that was devastated along with the Sari Club has postponed its arrival, probably for ever. It was planning services from Denpasar to Australia and regional centres.
But Palmer's attitude cheers Indonesia's tourism czar Setyanto Sentoso, who confronted a baying media on the day after the blast to assure the world that Bali and Indonesia was safe and welcoming.
"We will pull through this," he says. "We in Bali have had big challenges in the past and we will overcome this terrible situation."
The response by the tourist industry, Bali's lifeblood and as much as ten per cent of the Indonesian economy, has so far been impressive. Indonesian officialdom can be a shambles at the best of times but enlightened policies about information flow has helped smooth one of the most difficult times the country has ever faced.
Just hours after the blast, Setyanto had drafted in a professional foreign-owned crisis management consultancy from Jakarta and Singapore to manage information. The intent is to limit the fallout, and not make it any worse than it already, horribly, is.
But the world is going to be hard to convince. Governments across the Western world have declared Bali and Indonesia a no-go area. They will remain that way until the West is assured Indonesia is no longer a terrorist hotbed.
Corporate Indonesia has taken a big hit. Jakarta shares dropped 10 per cent in the blast aftermath, hitting four-year lows, and the already suffering rupiah tumbled by five per cent. Big US investment bank JP Morgan has warned investors away from buying Indonesian assets due to high risk.
Morgan says Indonesia risks losing more than $5 billion in tourism revenue this year, shaving about 1.5 per cent of GDP.
That's probably enough to tip Indonesia, which had been slowly struggling out of the mid-90s financial crisis, back into recession.
Tourism is Indonesia's second biggest industry after resources, accounting for as much as 10 per cent of the still stricken wider economy. And Bali is the draw, from the wealthy spa set to the backpacker types who were killed last Saturday.
As Indonesia has burned in ethnic and religious civil wars in recent years, Bali has effectively divorced itself from Indonesia. Its been a calculated marketing policy - Bali sells, Indonesia doesn't. And its been so successful that Bali has enjoyed a relative boom while the rest of Indonesia wallows in massive unemployment and stagnation.
Bali's success has made it a magnet for outsiders. Non-Balinese Indonesians have poured onto the island for jobs to the point where the average tourist is probably not having the Balinese experience he or she thinks he is.
The waiter might be wearing traditional Balinese clothes, but he's just as likely a Christian from Flores, or a Muslim from Sulawesi.
President Megawati is part-Balinese, and there are rumours about associates of her husband Taufik Kiemas developing business interests on the island, such as a planned Formula One circuit and a controversial casino project. Such projects have rankled Balinese nationalists who see external influences as "cultural pollution".
The island's nationalists complain that Bali's resources are at bursting point, and that Bali plays host to too many foreign tourists.
They'd like the bulehs (foreigners) to leave and take their drugs and louche ways with them. And now they might have got their wish - but they, and Indonesia, will be poorer for it.