The Great Villa Crackdown: Deadline Looms

By William J. Furney
Managing Editor
The Bali Times
With staff reporters Rian Dewanto and Arga Sagitarini

SEMINYAK ~ Well over half of Bali’s hundreds of villas could be closed down by the authorities as a grace-period deadline for illegal establishments to register looms.

The government has given until August 29 for the under-the-radar villas to report to the authorities and become legal entities, saying it is losing vast amounts of tax revenues that are required to improve the island’s infrastructure as key earner tourism grows at a robust pace.

Illegal villas – which operate without permits required to run a tourism business – are also damaging the environment, the government says, as most do not have adequate waste-disposal systems.

Other environmental concerns include flooding, according to the head of the Badung planning committee, I Wayan Sudiana, who says some villas are constructed without any permits.

“Many of the developments have transformed wetlands into areas with a great deal of buildings on them, causing an expansion of slum areas in South Kuta and adding more flood points,” Sudiana said.

Uncontrolled development had created less absorptive land and therefore reduced water supply, he said.

Currently there are 711 villas in tourism-heavy Badung Regency, 63.2 percent of which do not have government permits to operate, data from the Badung Tourism Office show.

The head of the office, I Made Subawa, said the government would give until August 29 for villa owners to complete the necessary paperwork or the properties would be sealed.

“The regency is responsible for granting permits for all villas, which cannot be built in Green Belt areas,” he said, adding that taxes from legally run villas provided a significant contribution to the government’s revenue.

Badung Regency is targeting total revenues including taxes for 2008 at a higher Rp1 trillion (US$109 million), largely due to increased business at hotels and restaurants, it says.

Separately, the head of the Buleleng Tourism Office, Bagus Puja Erawan, has called for a regional law to be drawn up to deal with illegal villas, as his regency is losing tax revenue.

He said many small budget hotels escaped inspectors’ notice and should be forced to become legitimate so that they would have to start paying taxes – or be closed.

“Therefore we propose a regional rule that governs [small] hotels, bar and restaurants,” he said.

Based on the proposal, he said, a villa with less than five bedrooms would be categorized as an inn, whereas those with more than five bedrooms would be referred as a melati, or budget, hotel. Cafes would be given the option to choose between restaurant or bar.

According to Agung Gede Raka Yuda, head of communications of the Badung Government, the high number of illegal villas in Bali was inevitable, as it was fueled by a rapid rise in tourism over the years.

“The government originally made a regulation referring to tourist accommodation in tourist areas alone. But when a lot of tourists came, especially to more isolated areas, a lot of villas started to be built and rented. We don’t have any regulations for those establishments,” he told The Bali Times.

Reports from the regent’s office show that the villas were built using permits to build houses but were then commercially rented as tourist accommodation, freeing them from having to pay taxes to the government.

“This drew complaints from hotel and other villa owners, who said that their occupancy was decreasing although more tourists are arriving. On the other hand, the government is also losing significant revenue from these (illegal) villas,” he said.

Meanwhile, The Bali Tourism Office is targeting seven million visitors to Bali by 2009, as part of a major promotional push, far ahead of the current over one million foreign tourists that arrive here each year.

As part of the promotional push ahead of Visit Indonesia Year 2008, the local government is also working on improving existing infrastructure.


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