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Storm Clouds on the Horizon for Bali?

In the Face of So Much Troubling Economic News, We Crystal Ball Gaze at What May Lay Ahead for Our Island Home of Bali. Abracadabra!

Bali News:
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The tumultuous state of the world economy has Bali feeling ill-at-ease as we waits to see how current events will unfold and learn what potentially dire consequences await Bali.

In the face of an unprecedented world-wide economic melt down, the depths of which are still to be fathomed, we rophesythize significant impacts and developments in the following areas:

Tourism Arrivals - While Bali foreign tourist arrivals are targeted to touch a record-setting 2 million by the end of 2008, the current boom could come to a sudden end as discretionary spending is severely curtailed across the globe in the wake of failed banks, devalued currencies, heightened unemployment and the resulting diminished ability to travel. Telegraphing this possibility, travel industry stocks have declined in value on exchanges across Europe in recent days.

More Reliance on Domestic and Regional Markets - Because of the lessened dependence on borrowing in Indonesia and across Asia as a whole, some financial experts predict that the impact of the current economic downturn will be felt less acutely in Asia. Look for a greater reliance on domestic and regional market by Bali tourism until the world markets rebound, a process that may take several years or longer.

Unhealthy Competition - Reduced demand and the likelihood of over-supply of inventory in rooms may see cash-pressed hotels and villa owners "get down and dirty" in pricing policies. Should this happen, expect further degradation of both product quality and the supporting tourism infrastructure as money is diverted away from maintenance and upkeep and used for day to day operations.

Unemployment to Rise - With nearly 66% of Bali's population dependent on the tourism economy, any prolonged downturn in business will predictably put many out of work. Based on World Bank studies conducted following the 2002 Bali bombing, growing unemployment will almost certainly result in children being removed from the educational system, heightened social tension and increasing crime rates.

Property Sector - While the uncertain global financial situation may somewhat curb the ability of foreign buyers to absorb the rapidly expanding number of private villas coming on sale, many Balinese without work and money may feel compelled to put ancestral lands up for sale, duplicating a tragic loss of ancesteral land that played out following Bali Bombings I & II.

Bali's Export to Decline - The uncertain U.S. economy has already impacted Bali's key sector of handicraft exports. Local shipping and export companies report that orders to the U.S. have declined 50% over the course of the past several months. Shippers generally expect orders from Europe and Japan to also decline.

Delay in Reforms - Steps by Bali's new governor to enforce zoning rules may be delayed. As Bali's economy suffers. it may prove too politically problematic for Governor Pastika to follow through on threats to close and demolish illegal villas and hotel projects.

Bargains Galore for Careful Shoppers - As Bali and other tourism destinations go looking for business, tourism becomes a "buyer's market" with great value waiting for those prepared to shop around and keep a close watch on []

”We Have to be Ready”

Speaking to Tempo Interactive last week Governor Made Mangku Pastika acknowledged that Bali will not manage to escape the fallout from the current global crisis and that the number of foreign tourists may decrease. Governor Pastika warned, "We have to be ready."

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