'War on Iraq will cost Bali tourism US$224m'

I Wayan Juniartha, The Jakarta Post, Denpasar, Bali

The tourism industry in the famous resort island of Bali will suffer at least US$224 million in lost revenue this year if a U.S.-Iraq war erupts, industry expert Nyoman Erawan said on Thursday.

Erawan warned that a war would derail efforts to restore the industry to health following the devastating impact of the Oct. 12 terrorist bombings.

"The worst case scenario would be if a war breaks out, and instead of turning out to be a quick and decisive one, it drags on for many months," he told The Jakarta Post.

He explained that since Australia and Japan, two of Bali's biggest tourism markets, had expressed their support for a U.S. attack on Iraq, their citizens would likely be warned against traveling overseas once the war started, fearing retaliation from groups opposing the war.

He said that the Bali tourism sector would be further damaged if the war continued through June until August, traditionally the peak season for the industry.

Erawan predicted that in the event of war, foreign tourist arrivals would fall by between 9 percent and 10 percent this year.

"We will lose around 200,000 potential foreign tourists in 2003. And since the average daily tourist's expenditure is $80, the average length of stay ten days, and the multiplier effect coefficient is 1.4, then Bali's tourism industry will lose at least $224 million in revenue," he explained.

He said that such a decline in tourist arrivals would further damage the island's tourism industry, which was still struggling to recover from the bombings that killed more than 202 people, mostly foreigners.

"This would be terrible considering that the number of foreign tourist arrivals has been steadily declining by between 3 percent and 5 percent for the last five years," he said.

Erawan feared a chain reaction from the weakening industry.

He explained that tourism was the backbone of the island's economy, absorbing 38 percent of the workforce and generating 60 percent of the island's total Rp 18.9 trillion Gross Regional Domestic Product in 2001.

Erawan suggested that the industry intensify its efforts to open up new markets, instead of continuing to rely on its traditional markets of Australia, Japan, the U.S. and Europe.

He pointed out that promising new markets such as China, Taiwan, Russia and the Eastern European countries should not be overlooked.

He said that the current strategy of attracting more domestic tourists to the island was simply not enough.

It took four domestic tourists to match the level of expenditure and the length of stay contributed by one foreign tourist, he said.

Separately, the head of the Bali Tourist Authority, I Gde Pitana, stated that a war in Iraq would certainly jeopardize the tourist industry's recovery program.

So far, the program had produced promising results with the number of foreign tourist arrivals steadily increasing to between 50 percent and 60 percent of the normal level, which led Pitana to belief that the industry would regain its pre-bombing level by June.

"If a war breaks out then I don't really know what we are going to do," he said.