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Rupiahís Rapid Decline

Decline in Rupiah is a Double-Edged Sword for Baliís Tourism Economy

(9/1/2013) The rapid decline in the value of the Indonesian Rupiah against the U.S. Dollar and a host of other currencies is presenting a myriad of challenges to Bali and its tourism industry.

 
That most of the starred hotels in Bali are priced in U.S. dollars is a double-edged sword. On the one hand, hotels pricing in dollar will enjoy something of a windfall in income against their Rupiah-based expenses. While, on the other hand, Bali hotels will generally become more expensive to the vast majority of their customers who do not earn their income in U.S. dollars.
 
Quoted in The Bali Daily (The Jakarta Post), Ida Bagus Ngurah Wijaya, head of the Indonesian Tourism Industry Association for Bali (GIPI-Bali), acknowledge the potential boost in hotel incomes from a strengthening dollars, but also warned that the cost of imported goods used by hotels and restaurants would also certainly increase.
 
The head of the Bali Chapter of the Bali Hotel and Restaurant Association (PHRI-Bali), Tjokorda Oka Artha Ardana Sukawati (Cok Ace), spoke of the many “bitter pills” that Bali’s tourism industry has had to swallow in recent months in the form of increased fuel and energy costs. He also highlighted the coming 2014 election for the presidency of Indonesia and House of Representatives, saying the national economic condition will be largely dictated by the developing political condition.
 
In the light of all this uncertainty, Cok Ace outlined the course ahead, saying: “What we need to do is to strengthen our promotional activities, improve our tourism products and also upgrade facilities at our tourism sites.” 
 
Dwi Pranoto, the head of Bank Indonesia’s Bali Office foresees the strengthening dollar as having a positive impact on Bali’s exports as well as tourism. Said Pranoto: “It can be considered as a blessing for exporters and the tourism sector. But for the island’s general economy,  that will slightly slow its usually robust growth.” 
 
Bank Indonesia predicts Bali would end the current year with a growth rate of between 6.6 to 7.1%. Advising a more cautious approach, Pranoto said, “We have had to evaluate and lower the economic growth forecast to between 6 and 6.5 percent.” 
 
IThe Bank Indonesia executive, Pranoto, said: “However, we must be optimistic, hoping that the island’s tourism sector will remain a powerful catalyst for its economy.”