Two years after the bombings, Bali still suffers

Two years after the bombings, Bali still suffers

The Jakarta Post, Denpasar

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The Oct. 12, 2001 terrorist attack in Bali came as a horrible
shock to the international community. Beyond the tragic loss of
lives, the tragedy has affected the livelihoods of many on and
outside Bali.

On Monday (Oct. 13), the World Bank, the United Nations
Development Program (UNDP), and the United States Agency for
International Development (USAID), revealed their most recent
studies on the economic condition of post Oct. 12 Bali and
Indonesia. The following is an excerpt from the report entitled
Bali, Beyond the Tragedy- Impact and Challenges for Tourism-led
Development in Indonesia.
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One year after the bombings, the worst of the impact may have
passed, but is unlikely to be over. Bali with its 3.4 million
population is still suffering.

The studies emphasize on the impacts of the bombings on
tourism, income, employment rates, small and medium enterprises
(SMEs) as well as a number of social impacts such as the
increasing number of school dropouts.

Especially in some impoverished regencies and possible social
tension caused by economic and security pressures.

In the tourism sector, Bali, once Indonesia's major tourist
destination suffered the most. In the past two decades, tourism
has been the island's main engine for economic growth. As a
result, Bali's poverty rate before the tragedy was only 4 percent
in 2002 compared to 16 percent for Indonesia as a whole. Tourism
had brought to a high-level prosperity to Bali.

But the Oct. 12 bombing has significantly affected the
island's socio-economic impact especially during the first half
of 2003.

The Bali bombings cut sharply into direct international
arrivals. Right after the crisis, these were barely a third of
normal levels, and after a brief recovery in tourism early 2003.
The effects of the Iraq war and the outbreak of SARS, which
affected tourism throughout the region, compounded the effects of
the bombing.

While, the direct international tourism arrivals provide only
a partial picture of tourism flows to Bali, a comprehensive view
of all foreign and domestic visitors must rely on hotel occupancy
data. After the bombing, Bali's star hotels saw occupancies
collapsed to below 20 percent. Compared to between 60 to 70
percent in the previous months in 2002. These hotels managed to
stabilize their occupancy rates to 40 percent between December
2002 and March 2003, partly due to competitive offerings.

The crisis has also witnessed some changes in the composition
of foreign tourists. The biggest losses were initially due to
Australians and visitors from Europe ceasing travel to the
region. The one-three star hotels, however, only managed to get
17 percent of occupancy rates at the average.

Vulnerabilities on and beyond Bali soon became apparent as
tourism demand slumped. In Bali, 94 percent of district level key
respondents observed income declines in their communities between
October 2002 and May 2003, with an average income decline of 43
percent across the island.

Highest average declines were recorded in Karangasem regency
in East Bali (49 percent) and Gianyar, South Bali (47 percent),
Buleleng, North Bali (39.6 percent), whereas 20 percent of
people were reported to have lost their job as a result of the
bombing.

The sustained failure of demand over the last eight months has
led to reported declines in turnover of over 60 percent in some
occupations including market traders, beach vendors and taxi
drivers.

The adverse impacts on incomes and employment also had
ramifications in the education sector. These effects range from
difficulties in the payment of school fees to full-fledged
dropouts during the school years or failure to embark on a new
school year. In many circumstances, children might be forced to
migrate to other schools, often in poorer home regions of their
extended families.

However, compared to other provinces in Indonesia, in which an
estimated 4 percent of primary students dropped out schools, Bali
only sees less than 1 percent (805 out of 113,096 students)
school dropouts in 2001 and 2002 school period.

In addition to education, the bombing incident was initially
feared to trigger social tensions such as ethnic and religious
conflicts. On the contrary, social tension has remained limited.
According to the study, social cohesion within various
ethnicities on the island has even improved during the first nine
months of 2003, with some exception in a few sub-districts in
Buleleng and Karangasem regencies with particularly severe
economic pressures, social issues, youth and unemployment.

Village heads, traditional village leaders and the police were
identified as the main actors who properly managed social
tensions within the community.

The impacts of the Bali blast were actually far more diffuse.
The tragedy also affected handicraft producers with reported
income decline of around 50 percent, lack of employment
opportunity for migrant workers from the neighboring island of
Lombok, West Nusa Tenggara.

Aside from Lombok, other neighboring province of East Java
also tasted bitter economic and social impacts because of the
tragedy.

Despite its little impact on East Java's macroeconomic terms,
some cities, villages that have tight economic linkage with Bali
really suffered the most. Handicraft, silver and wood industries
in Pasuruan, Banyuwangi experienced more than 50 percent
reductions in their turnover.