Two years after the bombings, Bali still suffers

The Jakarta Post, Denpasar ---------------------------------------------------------------- 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. ----------------------------------------------------------------

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.