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BALI UPDATE #493 - 20 February 2006

January – The Road to Recovery
Bali by the Numbers: January Arrivals Demonstrate a Less Severe Reaction to 2005 Bombing and Changing Market Share in Island Arrivals.

The final foreign direct arrival figures for January 2006 of 79,721 continue to sustain a feeling of optimism that Bali's recovery following the October 2005 bombing attack is underway. While January’s arrivals represented a -21.78% decline from January 2005, the gap in arrivals is narrowing markedly from just one month before which had a -36.98% gap between December 2005 and December 2004's foreign arrivals.

Bearing in mind that both Bali terror attacks occurred in the months of October (2002 & 2005), it's also worth noting that January 2006's arrivals (down -21.79% from January 2005) were substantially less depressed than January 2003 which suffered a -30.09% decline from the same month one year before (2002). These results allow the argument to be made that the impact of the most recent bombing appears perhaps less prolonged than was the case following the 2002 incident. Not only is the downturn in visitors less severe this time round, but the overall market is substantially larger with 31.04% more visitors coming to Bali in January 2006 (79,721) than was the case in January 2003 (60,836).



Changing Market Share

As presented on balidiscovery.com, the January arrival figures also show significant changes in market share.

In presenting market share anaysis from major source markets for what is arguably the more "static state" month of January 2001 as compared with the performances of January 2006 and 2005, we discover:

• Australian arrivals continue to be very depressed accounting for a shrunken 8.5% market share in 2006 as compared to a "normal" share of between 17 and 19%. When comparing both "post-bombing" Januarys, the reaction of the Australian market to both incidents are largely similar, with business declining by more than 60% in both January 2003 and January 2006.

• Despite the current decline, Japanese visitors continue to represent the largest inbound market for Bali at a 20.05% share of all visitors. Japanese arrivals are down -41.7% from just one year before in January 2005.

• Taiwan remains Bali's third largest market. Arrivals for January 2006 actually improved 20.39% over January 2005 – a month in which arrivals were possibly skewed by post-tsunami jitters.

• South Korean – Bali's 4th largest market – although down slightly, continues to perform consistently accounting for a 5.79% market share of all arrivals.

• Evidence that initiatives by the Government of Indonesia to stimulate the mainland Chinese market may be paying off is found in the strong arrivals of 4,112 PRC visitors in January 2006. Although still relatively modest, PRC arrivals represent a 10-fold improvement from arrivals recorded just 3-4 years before. Rate of growth may be more significant than current size when considering the PRC market. Potentials for future growth from mainland China's outbound tourism market are very significant.

• Malaysian arrivals are now representing a 5.18% market share, up considerably from the mere 1.32% share they held in 2001 before the advent of Air Asia.

• Greater air access and easier visa facilities are having a positive impact on Russian arrivals to Bali. The Russian market share in January reached 5.42% - substantially improved from January 2001 when Russians accounted for only 1.63% of all Bali arrivals.

• European arrivals are generally showing a slow yet steady improvement with market shares for the U.K., France, Germany , Italy and The Netherlands largely resembling "more normal" times of just 5 years before.


DestinAsian Magazine: Bali's the Best
Bali's Many Qualities Shine Through in Poll of Discerning Readers of Leading Travel & Lifestyle Magazine.

Asia's very own award-winning luxury travel and lifestyle magazine, DestinAsian, have announced the winners of its first-ever Readers’ Choice Awards.

"These awards are particularly meaningful because they reflect the views of our readers who are seasoned travelers for business and leisure," said DestinAsian Founder and Publisher, Ronald Liem.

"Our own research shows they are frequent travelers for fun and profit, that they travel extensively and have a tremendous knowledge of the Asian region," he added.

Voting for the first DestinAsian Readers’ Choice Awards was held in the latter half of last year through a survey which sought readers' opinions on their favorite destinations, hotels, and airlines in the Asia-Pacific region. Readers were required to nominate a winner in each category and provide a short explanation on the reasons for their choice.

Bali Reigns Supreme

In addition to taking overall honors as the most preferred holiday destination, three Bali hotels also earned recognition:

Best Leisure Destination – Bali. In the words of the publication: "A perennial favorite, Bali came out well ahead of other regional escapes as the island you most like to visit. Why? Despite security concerns, you continue to favor its 'laid-back feeling,' its 'never-ending beauty,' and its 'beautiful beaches,' not to mention Bali's 'people, food, culture, sights, spas... all superb.'"

Best Hotel, Bali – Ritz Carlton Bali Resort & Spa. Again, the words of the magazine's editors: "Ritz-Carlton, Bali Resort & Spa Earning distinction among Bali's many luxurious resorts is no mean feat; but then, the award-winning Ritz-Carlton has racked up its fair share of kudos since opening in 1997. So it's no surprise that you singled out this cliff-top retreat as your preferred holiday address on the Island of the Gods. Top marks went to its 'beautiful villas' and 'breathtaking views' of the Indian Ocean, as well as its 'excellent spa and hydrotherapy pool.'"

Best Leisure Hotel Group – Four Seasons Resort. - Voted the best overall leisure hotel management group, Four Seasons operates two hotels in Bali.

Important Links

[Ritz Carlton Bali Resort & Spa]

[Four Seasons Jimbaran Resort-Hotel]

[Four Seasons Sayan Boutique-Hotel, Ubud]



Jetstar International Bali Bound?
Qantas Budget Brand Airline Eyeing Bali as a Destination for Planned 2006 Launch.

Eager to claim its share of the budget airline market, Jetstar International the offshoot of Australia's Qantas indicates it is stepping up its launch program and now looking at a November 2006 commencement of service.

Qantas' CEO, Geoff Dixon, is busy putting the money and the aircraft into position to allow its low-cost subsidiary to take wing. "We are more and more confident that Jetstar will start this calendar year, and it's going to have four A330-200 aircraft, and we're buying another two A330-200s to put in to Jetstar's initial operation for its international flying," confirmed Dixon.

Sydney press reports suggest that Ho Chi Minh City (Saigon), Taipei, Phuket, Bali and Honolu will form the list of intiaial cities to be served by Jetstar International. Those same reports say that once the airline secures the Boeing 787s currently on order it will commence flight service to the U.S. mainland and Europe.

Qantas is already a 44.5% partner in a joint venture with Singapore Airlines in the loss-making budget carrier Jetstar Asia – Valuair.

That Indonesia and Bali are squarely in Qantas’ sights is confiremd by recent talks betyween the Australian carrier and Garuda Indonesia and separate discussions with Indonesian airline AdamAir regarding a possible financial stake. "We do have a real interest in Indonesia: 250 million people. It's growing, particularly growing in the aviation sector. And it's a close country to Australia," Said Dixon.


GWK Monument Back on Track?
President Sets Targeted Completion Date for Cultural Park of 2008.

There's renewed hope that the Garuda Wisnu Kencana Monument Park (GWK) on Bali's Ungasan Peninsula may soon pass out of its current state of limbo and enjoy a sudden surge of construction leading to a formal completion in 2008.

During a top-level visit to GWK led by President Susilo Bambang Yudhoyono on Saturday, February 18, 2006, the President labeled the inspiration behind the cultural park as "brilliant" and called on all parties to put aside any petty differences to allow the monument of lasting meaning to the world and Indonesia to be completed.

With an estimated cost of US$70.6 million, the GWK’s centerpiece will be a colossal monument standing 146 meters high and some 286 meters above sea level. With a foundation structure the equivalent of a 16 storey building, the total statue is estimated to eventually weigh 2,000 tons when completed and will resemble the imagery of the Hindu epic hero Lord Wisnu sitting stop the back of the mythical Garuda bird. The wing span of the Garuda bird will be an impressive 60 meters.

The 250 hectare project will include the monument plaza, an international trade and promotion center, landscaped gardens, a festival and water park, a 5,000 person capacity convention center, a resort complex, and a residential complex.

Leading the President through the project’s construction site, was the GWK Foundation Chairman, General Made Pastika, who embraced the President’s stated desire to see the monument complex completed in time for the 100th celebration of National Awakening Day on May 20, 2008. Pastika did not see any of the ongoing legal disputes regarding the Park's operation as impacting on ongoing discussions with Krakatau Steel and Telkomsel to provide the financial support to compete the project.


If it's Tuesday, This Must be Kuta!
Making Bali Sustainable: Saving an Island That's Losing its Identity One Strip Mall at a Time.

A growing group of community and tourism leaders in Bali are calling for more attention to be paid to central planning and local building codes that will ensure that Balinese architectural values are preserved on the quickly developing island.

Two Bali community leaders, Kuta's I Made Wendra and Legian's I Nyoman Rutha Ady, recently joined voices calling on the Badung Regency Government to be more consistent in its approach to the issuance of building permits and licenses.

Insisting that rules stipulating Balinese architectural characteristics be included in every new building already exist, Wendra was quoted in the Indonesian language DenPost asking, "if there are owners who are building in violation of zoning and refusing to use required architectural styles, are we just going to allow such construction to continue?"

Ratha Ady, speaking separately, echoed Wendra's sentiments saying: "The impression of being in a foreign locale is real. Not only are buildings no longer reflecting a Balinese style, but also the names of businesses, streets and other factors suggest that Kuta is no longer a part of Bali or Indonesia." Ratha Ady saw two main causes for Kuta's cultural decline: inconsistency in the application of existing codes and regulations and the fact that many of Kuta's business owners have no Bali connection.

A Problem that Goes Beyond Kuta

A local politician and Bali Parliament member, Drs. Nyoman Sujastra, recently complained that the road connecting Kuta to Nusa Dua is almost completely devoid of buildings with any Balinese nuances.

Sujastra called on the Government to renew its building codes, re-emphasizing Balinese architectural values.


The Low Down on a Bali High
Sentences in Bali 9 Trial Affirm, Once Again, That Only Dopes Bring Drugs to Bali.

9 young Australians arrested in Bali on April 17, 2005, in connection with their attempt to smuggle over 8 kilograms of heroin out of the Country all learned their fate last week when judges handed down sentences at the end of a lengthy trial that had captured international media attention.

The judges at the Bali District Court meted out the following punishments to the now infamous "Bali Nine":

Renae Lawrence, 28, the only female charged, was sentenced to life imprisonment. Prosecutors had sought a 20 year sentence.

Scott Anthony Rush, 21, matching the penalty demanded by Prosecutors, was sentenced to life imprisonment.

Andrew Chan, 22, arrested on board an Australian-bound flight prior to take-off and charged by Prosecutors with being a ringleader. was sentenced to death before a firing squad.

Myuran Sukumaran, 24, arrested at a hotel in Kuta, was charged with acting a ringleader in the crime and sentenced to death before a firing squad, as requested by Prosecutors.

Michael W. Czugaj, 20, arrested at Bali's airport in possession of heroin was sentenced to life in prison, as requested by Prosecutors.

Martin Erick Stephens, 29, arrested at Bali's airport in possession of heroin was sentenced to life in prison, as requested by Prosecutors.

Tan Duc Thanh Nguyen, 23, arrested at a Kuta hotel and charged with acting as a ringleader he was sentenced to life in prison, as requested by Prosecutors.

Si Ti Chen, 20, arrested at a Kuta hotel and charged with being a courier was sentenced to life in prison, as requested by Prosecutors.

Matthew James Norman, 20, arrested at a Kuta hotel and charged with being a courier was sentenced to life in prison, as requested by Prosecutors.

The convicted felons have one week to file a formal appeal of their sentence; weighing carefully the possibility that the Appeal Court could choose to reject, reduce, affirm or even increase the penalty imposed at the end of the first file.

When Shapelle Corby, a Queensland native convicted of smuggling over 4 kilograms of marijuana, recently appealed her 15 year sentence the appeals court increased her penalty to 20 years.

The Low Down on a Bali High

9 young Australians have discovered, albeit too late, that a holiday in Bali built around a drug theme can result in a life-long holiday in hell.

Alas, the Bali accommodation provider with the longest average length of stay is not the hotel of choice for most people visiting Bali's Kerobokan area. By all accounts, conditions at Bali's main prison are cramped and its facilities as compared with other Bali hotels are sorely lacking.


A Presidential Domain
A Connected Presidency – President Yuhoyono Launches his Own Web Site.

Further underlining his reputation as a "man of the people" President Susilo Bambang Yudhoyono has launched an official web site detailing the activities and thoughts of Indonesia's Chief Executive on a daily basis.

Found at [ www.presidensby.info], the site was developed at an estimated cost of US$9.032 and will cost the Palace an additional Rp. 44 million (approximately US$4,630) each month to rent a server, pay technicians and employ writers.

The site also includes an English language sub-section.



The Coming Crackdown on Villas in Bali?
Chairman of BTB estimates US$1.875 M in Tax Revenue are Lost Every Month.

Bali's continuing slump in visitors is causing various sectors of the community to take a closer, harder look at Bali's villa industry.

The Badung Regency Tourism Office estimates that there are some 5,000 commercial villa rooms now in operation in Bali spread across some 500 villas. While most of these villas were built under the pretext of private residences, many are, in fact, now being operated as rental units without possessing the required environmental and building permits or business licenses required of commercial accommodation providers. A recent survey conducted by Bali's Udayana University, in fact, suggested that as much as 22% of the people now visiting Bali are using villa-style accommodation.

The Chairman of the Bali Tourism Board (BTB), Bagus Sudibya, has estimated that, based on current estimates, the government of Bali may be losing as much as US$ 1.875 million in Hotel & Restaurant taxes every month due to illegal commercial villa operations.

Sudibya's discontent, mirrors the frustration of many Balinese hoteliers who are suffering a prolonged drought of visitors. Many hoteliers complain that the Government must institute a crackdown on villas operating illegally, claiming that they are losing guests to the unfair competition of villa operators who are unfettered by licensing, environmental controls, minimum wage requirements, payroll taxes and other social costs and controls imposed on legally registered accommodation businesses.

Sudibya, quoted in the Indonesian language BisnisBali, called on prosecutors, Bali tourism officials, the police and tax officers to quickly move against villas operating illegally as commercial enterprises. The Chairman of the BTB said that it's impossible for villas to hide their commercial activities in Bali and that a coordinated response could see illegal villas brought into commercial compliance or closed within three month's time.

Local press reports indicate that local officials are in the process of accumulating data on villas operating across Bali in preparation for a coming enforcement drive.



Garuda: The Road to Recovery
Minister Denies that Airline is For Sale But Stesses Urgent Need for Strategic Alliance with Another Major Carrier.

Indonesia's Minister for State Owned Enterprises, Sugiharto, has affirmed that the Government has no desire to sell its share in National Carrier Garuda Indonesia but, instead, to force the Airline to urgently seek an international business partner.

"Garuda will not be sold, but be pushed to transform itself via a synergistic relationship with a foreign airline," explained Sugiharto. "This must be done soon due to the ongoing international global competition," he added, in comments quoted by the Indonesian-language Kompas.

Four Main Targets

According to Sugiharto, there are four short-term targets that the Government has for Garuda, namely:

• Transforming the business of Garuda.

• Transforming the employee culture of Garuda.

• Repairing the Company’s synergy.

• And, seeking a strategic business partner for the Airline.

In his comments, Sugiharto confirmed that Garuda has commenced preliminary discussions with the German carrier Lufthansa as a possible candidate with which to form a business alliance. The minister indicated that Garuda’s rescheduled debt will be addressed through financial obligations which can be issued on the capital market once a viable strategic partner is in place.

A Growing Morale Problem Among Pilots

Meanwhile, Garuda's continuing financial uncertainty is taking a toll on morale in the cockpit.

According to the Chairman of the Garuda Pilot's Association (APG), Stephanus Gerardus, 144 pilots have resigned at over the past two years with another 14 resignations now being processed. Gerardus claims that his fellow pilots at Garuda have lost their pride and motivation, with the Indonesian pilots now accepting overseas flying appointments.



Presidential Summit in Bali
President Yudhoyono and President Xanana Gusmao Meet in Bali to Mend Fences and Strengthen Relations Between Indonesia and East Timor.

Bali's Presidential hill-top retreat at Tampaksiring was the scene for a meeting between Indonesia’s President Susilo Bambang Yudhoyono and East Timor’s President Xanana Gusmao on Friday, February 17, 2006.

During the meeting the two leaders met with representatives of the international Truth and Friendship Commission (KKP) - established by both men to explore and document atrocities committed during the 25 year long East Timor Independence struggle.

The meeting was also an opportunity for both leaders to mend fences following the recent killing of Indonesians killed by East Timorese officials along the border separating the two countries.

The 2,500-page KKP report, compiled by a blue ribbon team of 8 Indonesians and 8 East Timorese, carried wide-ranging findings, including allegations that the Indonesian military used napalm and widespread use of torture, rape and sexual abuse as a means of oppressing pro-independence supporters.

Eager to put historical difficulties in the past, Gusmao, a former guerilla fighter, had initially sought to prevent publishing the report critical of Indonesia, preferring to focus on better relations with his Indonesian neighbors in the future.

Sharing a similar view, East Timor's Foreign Minister, Ramos Horta, has rejected suggestions in the report that East Timor seek compensation from Australia and the United States for both active and passive support of alleged Indonesian militia violence in East Timor. Horta termed the report's recommendation as "outlandish," asking: "How on earth could a leader from East Timor, or the foreign minister, go to Australia and ask for compensation when I know that without Australian leadership in 1999 and in the following years of its commitment to East Timor, East Timor would not be safe today?"

Both President Yudhoyono and his East Timorese counterpart Gusmao enjoy a strong personal rapport. During the Bali meeting, East Timor said it endorsed Indonesia's desire for membership in the United Nations Security Council and recent suggestions that Indonesia's President be nomiated to receive the Nobel Peace Prize. Also attending the Bali bi-lateral meetings were Indonesia's Coordinating Minister for Political, Legal and Security Affairs Widodo AS; Minister of Foreign Affairs Wirajudha; Minister for State Secretary Yusril Ihza Mahendra; Cabinet Secretary Sudi Silalahi; National Police Chief Gen. Sutanto; and incoming Indonesian Defense Forces Commander Air Marshal Djoko Suyanto.



Adam Air Offers Surprise Bonus Destinations
Indonesian Budget Carrier Adam Air Under Intense Official Scrutiny After a Series of High Profile Safety Breeches.

Indonesia's budget carrier Adam Air is receiving some unwanted scrutiny from law enforcement agencies and Indonesian Air Transportation officials following a series of technical and safety incidents that have received front-page publicity across the nation.

The Airline – which positions itself as uncompromising on issues of flight safety – saw an entire airplane with 145 passenger and crew go missing for nearly four hours on Saturday, February 11, 2006, during a scheduled early morning flight from Jakarta to Makassar. On that day, DHI-728, flying in what was reported as clear visibility and piloted by Tri Nusiyogo, left Jakarta's Soekarno-Hatta airport at 6:20 a.m. bound for Makasar when it reportedly experiences a failure of all its navigation and radio equipment some 20 minutes into the flight.

Experiencing the equipment failure over the Central Javanese city of Semarang where the Makassar plane should have changed bearing to the northeast, the pilot continued on a southeasterly bearing passing over almost the entire length of Java, Bali's north coast, the island of Lombok, and bisecting Sumbawa island north to south, before making an emergency landing at Tambolaka on West Sumba island. Short on fuel and with its pilot not sure of his location for nearly four hours, the airplane made its emergency landing some 800 miles south of its intended destination. The Boeing 737-300 miraculously managed to land without any injury to its passengers on the 1,600 meter long runway, considerably shorter than the 2,200 meter specification set by the aircraft's manufacturer. According to a report in the Indonesian-language Kompas, however, all the aircraft's tires exploded during the emergency landing.

The incident caused Indonesia's Transportation Minister to promise a complete and thorough investigation within the context of his Department's crackdown on commercial air safety standards.

Formal sanctions are expected to be imposed on the Airline following an analysis of the planes flight data recorder. A report in The Jakarta Post quoted a Transportation Ministry official as indicating that the Pilot's license might be revoked and the Airline receive heavy penalties for failed safety protocols and a subsequent decision to remove the aircraft from Sumba before obtaining the required safety clearances from the Ministry. Another local paper suggested that criminal prosecutions of both the pilot and the Airline cannot be ruled out in connection with the incident.

Adam Air currently operates a fleet of nine-teen Boeing 737 aircraft.


Cathay Pacific: Bullish on Bali
Certain that Bali is on the Comeback Trail, Cathay Pacific (CX) Planning on Four More Flights to Bali Starting by Mid-2006.

The Hong Kong-based carrier Cathay Pacific (CX) have announced their intentions to increase from 7 to 11 times each week the number of times they fly from Hong Kong to Bali.

Comments made to the Press by CX's country manager for Indonesia, Richard Reed, indicate that the airline is confident that tourist numbers to Bali will continue to improve over the coming months allowing the supplemental services to be introduced sometime between July and October of 2006.

Speaking to the Jakarta Post Reed said: "Although the increase in frequency is still a plan, our sales teams from Japan and Korea assure us that so far things are looking positive."

"Last month, we were 14 to 15 percent above our revenue target in Indonesia . . . We are currently the third-most profitable airline in the world despite being ranked 32nd in terms of most passengers carried," Reed said.

Cx also operates flights between Jakarta and Surabaya to Hong Kong, the hub of its operations supported by 95 aircraft.



 
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Bali Update #263
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