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Bali's Demise by Nickel and Dime

Editorial: Why We Think the Suggestion to Fine Hotels and Villas that Violate Local Building Rules is a Truly Bad Idea.


Bali News:
Click Image to Enlarge

(8/30/2008)

In the midst of widespread and blatant violations of building and zoning laws by hotels and resorts all across Bali, the outspoken Chairman of the Provincial Chamber of Commerce for Bali (KADINDA-Bali), Gde Wiratha, has suggested rather than closing or demolishing structures built by errant developers, that, instead, developers be fined between Rp. 25 billion (US$2.7 million) and Rp. 100 billion (US$10.9 million) each.

On a superficial basis there's much to be said for such a solution. As Wiratha explained to the local press, a fining solution would offer an elegant way out to the almost countless violations to be found in Bali while producing a new source of much needed revenues for the local government. What's more, requiring operating businesses to demolish part or all of their buildings would represent a major disruption to their ongoing business activities.

At the same time and in separate forums, many local officials have defended violations of building codes, saying enforcement of the written rules would only add to the "uncertainty of law" in Indonesia and further discourage new investment.

Expediency May Not be the Best Answer

As we have said in the past, the current situation in Bali resembles a soccer match being played without aid of referees. While there are numerous rules and regulations in place, arguably sufficient to safeguard Bali's environment, developers choose to ignore the rules in the confident belief that a) local officials are reluctant to knock down buildings and structures that are already standing and b) violations can be sorted out after the fact in smoke-filled rooms during amicable meetings with regulatory officials. Sadly, the crux of the current developmental problems in Bali is the lack of enforcement and the cocky self-assurance of investors who believe that almost any problem can be sorted out through connections and money applied in the right places.

These operators consider themselves above the law by developing projects that from the very outset violate zoning regulations. Later, in an unbelievable demonstration of the height of hubris, they complain that any attempt to apply and enforce the existing rules will create an atmosphere of "legal uncertainty" detrimental to the general business climate.

Frankly, there's two things we can't stand about investors who adopt such arguments: their face. Such chutzpah is, in fact, reminiscent of the man charged with patricide who stands before a judge asking for the court's mercy because he is, after all, an orphan.

A Painful, but Necessary, Remedy Needed

With all due respect to Mr. Wiratha, money remains at the heart of the current flagrant disregard for zoning and environmental laws in Bali. Allowing violators to "buy" their way out of their violations will only serve to nurture the attitude that "money rules" and result in an Island dotted with eyesores and non-confirming structures. The numerous violations of current building and zoning regulations in Bali can almost invariably be traced to devious and premeditated attempts by developers to bypass the rules, assisted through the venal cooperation of local officials.

The Rupiah Stops Here!

The money politics must stop. Its clear that Bali's future sustainability depends on an urgent and rapid return to the rule of law on matters related to zoning, building codes and environmental regulations. The well-intentioned proposal to allow fines to be applied after the fact will only pay lip service to the existing rules, create a sense of injustice for those asked to follow the rules in the future and vindicate the existing attitude that "money can sort out all of Bali's problems."

The solution is simple, albeit painful for those who have broken the law. In keeping with international practice, developers found in violation of zoning or environmental laws who have erected buildings that do not conform with approved building permits must be absolutely required to demolish the offending structures. In the same vein, developers who start project before holding all the required permits must be required to demolish their project back to the level lot status before their building applications can even be considered by local regulatory authorities.

Costly, painful and no doubt embarrassing to government officials and developers alike – such a move would deliver the needed "shock treatment" and remind all parties that the law is the law and developers who ignore the rules must live with the constant fear that someday their violation will be uncovered and demolition required. The knowledge that in the end the rules will be applied would immediately destroy any incentive to even attempt to cajole or bribe officials into closing a blind eye to code violations.

Logic suggests that a firm application of the rules would cause an "instant revolution" on how development is carried out in Bali and establish a much needed and long overdue respect for the law. Given the sorry current state of uncontrolled development on the Island, a little revolution may be just what's needed.


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