Bali Economy to Remain Strong in 2010

(1/11/2010)

Based on projections produced by the Denpasar office of Bank Indonesia (BI), The Jakarta Post reports that Bali's economy is expected to remain robust through 2010.

Jeffrey Karipuan, a Bali-based economist with Bank Indonesia said: "We are optimistic Bali's economy for 2010 will remain strong following solid performance during 2009. Since the third quarter last year, the growth reached 4.17 percent." He cited small-medium sized enterprises (SME) as having added that SMEs have provided positive multiplying effects on the island's economy. Adding, "the SMEs also dominate bank loans, with 80 percent of total loans disbursed to the sector. They have proven to be resilient in facing crises."

Bank loans in Bali increased 20 percent over 2009, as compared to a 6% growth rate in loans nationally.

The overall loan structure in Bali is dominated by consumption and capital expenditure. "Most of the loans are spent for consumption and capital expenditure. Only small parts are channeled for investment," Jeffrey said.

The buoyancy of the SME sector was also demonstrated by the relative absence of non-performing-loans (NPL) within that sector of the economy. NPL's in Bali stood at 2 percent, a figure below the 3 percent rate for loans given to bigger businesses.

According to Bank Indonesia, economic growth in Bali is fueled by hotels and restaurants, contributing 80% of all growth on the island.

The agricultural sector continues to lag, failing to realize its hidden potential. 60-70% of the agricultural products consumed in Bali come from Java, West Nusa Tenggara and overseas.

Economists are calling on Bali's government to lend greater support to the agricultural sector by providing incentives to farmers. Only 600,000 Balinese are estimated to still work the land in Bali with many shifting their source of employment to the hotel and tourism sectors.