Economic outlook strong on tourism: BI

Spurred by its robust tourism and small-scale industries, the island of Bali is expected to experience a very positive economic growth of between 6 and 6.2 percent in 2011.

Bank Indonesia’s (BI) Bali chapter head Jeffrey Kairupan said in a discussion titled “Bali Economic Outlook” here that this high economic growth could be achieved provided there were no fuel or electricity price hikes.

“Tourism will continue to stand strong as one of the island’s economic backbones as reflected in the significant increase of foreign tourist arrivals, hotels’ high occupancy rates and conducive security conditions,” Jeffrey said.

“I am positive that in 2011 the tourism industry will get better.”

Bali received 2.1 million foreign tourists and approximately 4 million domestic tourists this year as of October.

The Bali Statistics Agency has forecast that the island would surpass its 2010 target of attracting between 2.3 million and 2.5 million foreign tourists.

Kairupan said that in the fourth quarter of 2010 the island’s economic growth was estimated to rise to 6.5 percent on the back of the year-end holiday season, which brought sharply increased demand for hotels, transportation, food and beverages.He said inflation was forecast to reach from 5.8 to 6.6 percent in 2011, and year-on-year inflation in 2010 to reach 7.5 percent.

Kairupan said the island’s banking sector also forecast higher growth next year.

He said that shared banks’ assets would reach Rp 55.29 trillion (US$6.14 billion), bank loans would hit Rp 29.73 trillion and third-party funds would reach Rp 45.85 trillion.

However, around 75 percent of the shared banks’ assets were still concentrated in the provincial capital of Denpasar, he added.

He said banks’ non-performing loans remained lower than 2 percent, the lowest figure in Indonesia.

Bali economic and development agency assistant Ketut Wija said the island’s economy was fueled by three sectors; tourism, agriculture and small-scale enterprises, including domestic handicraft and garment producers.

Bali exports textiles and garment products, handicrafts, canned food, coffee, cocoa and marine products to Japan, the United States, the EU, Taiwan and China.

Separately, Bali Chamber of Commerce and Industry chairman Gede Sumarjaya Linggih said he regretted that Bali’s economic development was so heavily concentrated in the southern part of the island, particularly Denpasar and Badung regencies.

“The economic development is so uneven. Most of the profits go to large-scale investors and businesses coming from outside Bali,” Linggih said.

Most Balinese work for small and medium enterprises (about 99 percent).

Local economist I Ketut Rahyuda said the economic growth benefited only wealthy investors from Jakarta and other countries.Bali’s authorities must be selective in issuing new permits to tourist-related construction projects. “They [government officials] have to consider the real demands of those facilities and the island’s environmental capacities.”

“The economy will be stagnant with a high inflation rate. The tourism industry is booming but the money goes to big businesses, while the agricultural sector is still being cornered and it needs more incentives and pro-farmer policies,” he said.