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BALI UPDATE #396 - 12 April 2004

Smooth First Round of Voting in Bali
Balinese Go to the Polls Without Major Incident on April 5, 2004.

Reflecting the general situation in the nation as a whole, the first round of national elections for parliamentary posts went very smoothly on Monday, April 5, 2004.

In a multi-party teleconference between all the provincial police chiefs with the national police commander, General Drs. D'ai Bachtiar, held on Tuesday, April 6, 2004, the general security situation one day after national parliamentary elections was discussed and assessed.

Reports from the Police's regional command structure confirmed that, as reported in the international media, the first round of national elections in Indonesia went off smoothly without any significant disturbance.

While praising the security support role his police officers played in the election process, General Bachtiar said that the lion's share of the credit must go to the Indonesian people who have demonstrated a growing understanding of the democratic process.

The Situation in Bali

In reporting to Jakarta, Bali's Chief of Police, Inspector General I Made Mangku Pastika, confirmed that with the exception of minor incidents in Badung (Denpasar) and Singaraja, the Bali election process went well. The two incidents recorded by the police both involved personal altercations between competing candidates that were quickly handled by officers on assignment at polling centers.

Bali Police were pleased that tourism flows to the Island seemed unaffected by the electoral process. Arrivals via Bali's airport remained at high levels and many tourists were reported to be visiting polling areas on April 5 to view Indonesians exercising their democratic right.


Bank Dagang Bali Closed by Government
Bali-Owned Bank Declared Insolvent by Bank Indonesia.

On Thursday, April 8, 2004, Bank Indonesia formally withdrew the operating licenses of PT Bank Dagang Bali (BDB) and PT Bank Asiatic. Both banks are now in the process of liquidation after having failed to meet minimal liquidity ratios and other requirements established by the Government.

According to Bank Indonesia officials, the closure of the two banks was the "final step" after the directors and shareholders of the two banks failed to heed official warnings to shore-up their ailing balance sheets. The owners and directors of the banks were reportedly asked by Bank Indonesia to increase the capitalization of the banks, enhance the quality of their productive assets, resolve various credit transactions deemed to be fictive in nature, and replace its current directors.

BDB's closure is apparently the final chapter in the banking saga of a local business legend, Mr. I Gusti Made Oka, who labored over 5 decades to create a bank that initially got its start via small personal loans made by Oka, then a local tailor, to business associates. When the son of BDB's Oka's, married the daughter of Mr. Tong Muk Keung, the Owner of PT Bank Asiatic, a series of financial transactions commenced between the two banks that eventually led to the official closure. BDB loaned funds to PT Bank Asiatic in the form of Negotiable Certificates of Deposit that exceeded the maximum amounts allowed in inter-bank loans.

Local press reports indicate that depositors at both banks will have their funds guaranteed under a special provisionary account set up for that purpose by Bank Indonesia. According to reports in the Indonesian-language Bisnis Indonesia the Government will have to meet obligations amounting to Rp. 2.39 trillion (approximately US$ 281.2 million).

BDB operates 31 offices employing 632 employees. Meanwhile, Bank Asiatic has only 150 employees working from 16 offices.


Bali to Invest in CDMA?
Provincial Government Eyeing Investment in Fixed Wireless Access Telecommunications Network.

Bali's provincial government is reportedly considering a joint investment with Indonesian telecommunications operator Indosat to establish a fixed wireless access (FWA) system based on Code Division Multiple Access (CDMA) technology.

The CDMA system Star One is a cellular technology that competes with GSM-based systems to support cellular telephone systems. At present, over 35 countries operate CDMA systems serving more than 60 million customers.

According to Mr. Soetopo, Vice-President for Indosat in Bali and Nusa Tenggara and quoted in the Indonesian-language Bisnis Indonesia," the Bali regional government is interested in CDMA, hoping it can help accelerate the rate of development in one of the world's leading tourism destinations."

Mr. Seotopo estimated that a single line under the CDMA scheme will cost between US$ 100 - US$ 150. Some 700,000 lines using the fixed wireless access (FWA) system are scheduled to be inaugurated in Jakarta and Surabaya during the second quarter of 2004.

ASEAN Hip-Hop Pass is Back
Special Hotel and Air Discounts Offered to ASEAN Visitors.

The ASEAN Tourism Association (ASEANTA) has re-launched the ASEAN Hip-Hop Pass in order to increase travel to and among the members states of the Association of Southeast Asian Nations (ASEAN).

Initially launched in 2003, the new ASEAN Hip-Hop Pass has been expanded to include Air Pass and Hotel Pass components. The current promotion, effective from April 15, 2004, through March 31, 2005, offers an air pass component for US$ 399 valid for three flights within ASEAN with additional flight coupons available at a cost of US$ 150 each. A maximum of 6 flights can be purchased and are valid for flights on the following participating airlines: Garuda Airlines, Malaysia Airlines, Myanmar Airways, Philippine Airlines, Royal Brunei Airlines, Singapore Airlines, SilkAir, Thai Airways and Vietnam Airlines.

Hotel Components

Special hotel rates are also offered under the ASEAN Hip-Hop Pass. Hotel rates of US$ 35, US$ 50 and US$ 70 for 3 star, 4 star and 5 star hotels, respectively, are available as part of the program. A maximum stay of seven nights is allowed in any single hotel at the specified rate per single/double room per night which includes breakfast, taxes and service charge. Selected hotels from Brunei, Indonesia, Myanmar, Malaysia, Philippines, Singapore and Thailand are participating in this ASEAN Hip-Hop Pass promotion. Only holders of the ASEAN Air Pass are eligible to purchase the Hotel Pass.

ASEAN Air Pass is purchasable only in ASEAN from an authorized travel agent or participating airline partners.


Tourism Investors Bullish on Indonesia
New Hotel Projects Cited as Proof that Tourism Headed for Full Recovery in 2005.

Foreign and domestic investments in new Indonesian hotel and convention centers are being viewed by the Government as evidence that tourism business players feel certain that their sector of the economy will fully recover by 2005.

Mr. Udin Saefuddin, Deputy Director of Marketing for the Ministry of Culture and Tourism, recently revealed that as many as seven new properties will commence operations in Indonesia by next year. "The quantity of property development now underway shows the confidence investors have in recovery of the tourism sector. They (the investors) are investing their funds after careful calculations," said Mr. Saefuddin.

According to the Ministry of Culture and Tourism, as many as seven hotel projects are being built, with the largest number located in Bali. In Bali there is the US$ 60 million Conrad Resort; the luxury boutique Bulgari Hotel; and Caddy Villas. The Nation's capital, Jakarta, is the site of a new hotel-shopping center operated by Ritz Carlton located across from the Marriot. In Bangka Belitung, a 600-room hotel is being constructed, while in Kalimantan an Australian investor is constructing the Kalimantan Meeting Center. In Batam, ten Indonesian provinces from the island of Sumatra are joing forces to create the Sumatra Promotion Center intended to promote economic development on their nearby island.


Ardika: Tourism Arrivals to Grow 18% in Q1 2004
Minister Optimistic that Targeted 5 Million Visitors for 2004 Will be Achieved.

Indonesia's Minister of Culture and Tourism, Mr. I Gede Ardika, remains confident that the country will achieve its targeted goal of 5 million visitors, improving from the 4.4 million recorded in 2003.

According to Minister Ardika, he expects foreign tourist arrival statistics to show an increase of 18% as compared to 2003, during the first three months of this year. Quoted in the English-language Jakarta Post, the Minister said, "there has been a significant increase in the number of tourist arrivals lately despite fears of an unfavorable environment as painted by many analysts and several industry players." He credited the country successful handling of the security and political situation during the current election process as making a major contribution to growing tourism numbers.

Despite earlier predictions that the visa-on-arrival would reduce tourist arrivals, the Minister said that there appears to be no significant impact from the new policy on people's desire to visit Indonesia.


Well Deserved Status for Wayang
UNESCO Bestows World Heritage Status on Indonesia's Wayang Puppets.

UNESCO The United Nations's Educational, Scientific and Cultural Organization will formally bestow World Heritage Status on Indonesia's Wayang tradition in an April 21, 2004, ceremony in Paris. The award will be received on behalf of Indonesia by Mr. Solikin, the National Secretary of the Indonesian Puppet Performance Association (Senawangi).

The Wayang tradition of Indonesia encompasses a range of puppets made from leather and wood with performances by skilled puppet masters often running from sunset to the following day's sunrise.

Wayang traditions also continue to thrive in Bali with performances on offer as part of village festivals or cultural presentations for the public.

When visiting Bali contact Bali Discovery Tours to obtain information on current Wayang performances or to organize a private showing for your group.


Swiss-Belhotel Int'l to Add Bali Property
156-Key Apartment Complex in Mumbal Scheduled to Open in 2006.

Swiss-Belhotel International - a Hong Kong-based hotel management company, have announced that they will open their 6th Indonesian property in 2006, on the Mumbal peninsula just north of Nusa Dua.

A total investment estimated at US$ 17.6 million will include 158 rooms and 43 villas on a 3.5 hectare lot. Construction is scheduled to commence in September of 2004 and be completed in June 2006. Operating as the Swiss-Belhotel Bayview, the property will feature two and three bedroom apartments and private villas ranging between 300 and 600 square meters. The apartments will be sold to the public at between US$ 120,000 US$ 200,000 while the villas will be sold at between US$ 180,000 -US$ 470,000.

Prospective apartment or villa owners will have to sign a management agreement with Swiss-Belhotel International allowing the company to manage and lease their units for 6 years from the time of purchase. The company is offering guaranteed income levels during period of the management contract.

Swiss-Belhotel International currently manages properties in Jakarta, Semarang, Banjarmasin, Nusa Dua and Jimbaran.


Hope in Paradise
Highly-Acclaimed Balinese Documentary to be Screened in New York on April 25, 2004.

The 55-minute documentary film by Jane Walters, Hope in Paradise, is traveling to New York.

The film depicts the heroic work of Sri Kebon in providing humanitarian aid to the widows and children following the October 12, 2002, Bali bombing tragedy. Selected to be included in this year's New York Independent Film Festival, the film is narrated by Discovery Channel's Ashe Grill with music contributed by Sting.

Single New York Screening

A single New York screening of Hope in Paradise is scheduled for Sunday, April 25, 2004, at The Village East Cinemas located at 182 2nd Avenue at 12th Street in New York City. The film will be shown at 4 p.m. with a special ticket price of US$ 10.

For more information and tickets visit the website of the New York Film and Video Festival or telephone 1-866-468-7619.



Dynasty Resorts Brand Launched
'Dynasty Resort' To Be Sub Brand of Prime Plaza Hotel & Resorts.

Bali's 312-room Bali Dynasty Resort has formally announced its cooperate link-up with Prime Plaza Hotel and Resorts with its re-branding under the Dynasty Resorts brand. The Dynasty brand will operate alongside the existing Plaza Hotels brand, which currently operates properties in Surabaya, Kota Bukit Indah, Yogyakarta and Bali. These hotels were formerly operated under the Radisson Hotel brand in Indonesia.

Commenting on the adoption of a new logo and re-branding, Mr. Robert Kelsall, General Manager of the Bali Dynasty Resort commented, "it is perfect timing for us to join as it coincides with the completion of our multi-million dollar renovations and assists to promote our new upgraded image."

He added, "We are changing our logo to that of our new brand and image, however, our name, friendliness of the staff and the reasons that we are a very successful resort will remain the same."

In adopting the Dynasty Resorts standard the popular South Kuta hotel will differentiate itself from its sister Plaza Hotels by virtue of its location in a prime resort area and its operational focus on the domestic and international leisure markets. Conversely, Plaza Hotels has built their strength on domestic corporate and meeting market.

Mr Franz Bonang, President Director of the Prime Plaza Hotels and Resorts Group said, "It is a pleasure to welcome Bali Dynasty Resort to our group. We are looking forward to expanding the Dynasty brand and taking advantage of the already renowned Dynasty reputation."

The group has a Jakarta Sales Office and new projects include the opening of the Balikapapan Plaza Hotel in July 2005 and future projects in Bali, Bandung and Batam.

Bali Dynasty Resort is a four-star property located in Tuban, South Kuta close to Bali's airport, shopping, restaurants and Kuta's nightlife. It has 312 rooms and suites, 5 bars and restaurants, 3 swimming pools, Spa Villa and conference facilities.



Role of Foreign Airlines in Tourism's Recovery
MPI's Pontjo Sutowo Underlines Tourism Industry's Dependence on Flight Access.

Mr. Pontjo Sutowo, the Chairman of the Indonesian Tourism Think Tank (MPI) has declared that the country must seek the cooperation and support of foreign air carriers to help develop tourism.

Quoted in the Indonesian-language Bisnis Indonesia, Mr. Sutowo cited the recent introduction of AirAsia, a discount carrier operated by a Malaysian company, which is quickly expanding the number of cities it flies to in Indonesia, as an example of the need for expanded air access.

According to Mr. Sutowo, "the introduction of foreign carriers, such as AirAsia, have to be used by the national tourism industry in order that they bring additional tourists into Indonesia instead of allowing them to merely concentrate on bringing Indonesian tourists abroad." To achieve this end he recommended that hotels, travel agents, and attractions in Indonesia must construct packages in cooperation with foreign airlines to increase tourist arrival totals.

Competition with National Carriers

Mr. Sutowo acknowledged that the entry of new discount carriers will affect the fortunes of national carriers through the intense competition they bring to the marketplace. At the same time, he reminded that such competition will also act as a stimulus for Indonesian airlines to increase their corporate efficiencies and rationalize their operations.

"The increase in tourist arrivals (from foreign discount airlines) will bring a larger share of profit to other industries; such as hotels, resorts, entertainment venues, restaurants, and the handicraft sector. Because of this don't obstruct access by these new airlines with the justification of protecting domestic airlines," cautioned Mr. Sutowo.

Mr. Sutowo, who is also a major hotel owner in Indonesia, said that millions of jobs will be saved through increased tourist arrivals and help address growing unemployment problems.


Electing Not to Fly
Parliamentary Elections Cause Flight Disruptions at Bali's Airport.

Indonesia's national parliamentary elections held on Monday, April 5, 2004, caused a disruption in a large number of domestic flight services to and from Bali's Ngurah Rai International Airport.

Declared a national holiday by the Central Government to facilitate the polling process, Monday saw airplanes sit idle on airport aprons across the nation as passengers and crew alike stayed home to exercise their democratic right to vote.

Four smaller domestic Indonesian air-carriers cancelled all flights operating on election day while other airlines, including Garuda, Merpati, Bouraq, Mandala and Lion Air postponed services until later on Monday to avoid conflicts with polling hours.

Bali Affected

According to Bali airport authorities at least 44 flights operating to or from the island were cancelled on election day.

Airlines uniformly reported that load factors were sufficiently low to make operations non-viable on election day, causing the carriers to rebook passengers on the following day's flight.
 
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