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Monopolizing the Situation

Bali Provincial Leaders Warned that Plans to Standardize Hotel Rates May Violate Anti-Monopoly Laws

(3/31/2013) As reported by Balidiscovery.com, [Prices to be Fixed for Bali Hotels?]  the provincial government of Bali is weighing punitive taxation measures for hotels found to be discounting ther prices andparticipating in the current rate war.

Plans announced by the Province to standardize hotel prices in Bali have brought a swift rebuke and a warning from the National Competitive Council (KPPU), who warn that the proposed measure announced by governor Made Mangku Pastika may violate the Anti-Monopoly Law of 1999 (Law No. 5 of 1999).

As reported by Bisnis Bali, Ahmad Junaidi of the KPPU has held meetings with the provincial government of Bali and issued a preliminary warning. In describing his meeting with provincial officials, Junaidi said: “In addition to trying to obtain an explanation of the proposed policy, we also advised the potential that (the price standardization measures) may violate UU No.5/1999, specifically paragraphs 5 and 11 regarding price-fixing and the operation of cartels.”

Saying that the KPPU’s input was well received by the provincial administration, Junaidi continued, “The provincial government of Bali wishes that we (KPPU) can provide recommendations from the perspective of competitiveness in dealing with business problems in the province.”

Meanwhile, the Bali chapter of the Indonesian Hotel and Restaurant Association (PHRI-Bali)  asmits he regulation of hotel prices is problematic. At particular times hotels will sell their rooms at low prices as part of a special promotion. There are also hotels able to sell rooms at lower prices because of the overall efficiency of their operations, The chairman of PHRI-Bali, Tjok. Oka Artha Ardhana Sukawati, said: “It very difficult if we try to standardize the price of hotels. This is a business issue.”

It is estimated that the number of hotels rooms in Bali has reached 75,000 – a number far in excess of current demand resulting in an average occupancy rate of 62% in 2012. The actual number of accommodation rooms being sold in Bali is almost impossible to calculate if illegal villas and condotels are included in the calculations.

Photo: Tjok. Oka Artha Ardhana Sukawati, chairman of PHRI-Bali.