Pastika’s Bold Budget Surplus Plan to Build The New Bali

DENPASAR ~ Governor I Made Mangku Pastika wants US$20 million saved from the provincial budget over the next four years to establish a government-owned enterprise – PT Bali Mandara – that will invest in business opportunities to broader the island’s economic base.

He wants to create employment and private investment growth for Balinese in areas that until now have been dominated by foreigners.

As Bali’s provincial legislature scrambled this week to make 2010 budget cuts to realise the Rp200 billion ($20 million) savings a year the governor has earmarked to establish his new investment vehicle, the plan ran into a chorus of criticism – but also won support.

Legislative Secretary Nyoman Yasa said: “Yes, it’s the governor’s policy, but I have no comment about the numbers.”

He confirmed that budgets for area work units (SKPDs) throughout the government were being axed but said the extent of achievable savings was not yet known.

“Activities that are irrelevant and out of focus will be cut,” he said. Work unit activities not proven to be effective would be trimmed, including work unit visits to other areas, he said.

Overseas travel for tourism promotion would be trimmed. Starting in 2010, tourism department heads could not automatically join overseas promotions.

Secretary Yasa, who said the GWK park on the Bukit could be sold off – he suggested to Malaysian investors – and developed as Bali’s chief convention centre, warned that some budgeted projects might need more than their allocated funds. He did not know what quantum of savings could be directed to establish PT Bali Mandara.

The consortium had not yet been formed and a detailed concept had not been presented to the legislative executive, he said.

Financial leader Ida Bagus Parwata also said did not yet know the extent of cuts that could be achieved.

The governor has said he requires budget savings of Rp200 million a year for the next four years of his term to establish the public investment and  development consortium that would result in the government owning and managing businesses now dominated by the private sector.

There was heated debate last week when the governor presented his plan to the legislature. Critics raised doubts over its potential to foster corruption and nepotism; its viability; its relevance to public welfare; and whether it is wasting public funds by using them to compete with established private enterprise.

But this week Governor Pastika moved to defuse criticism by saying the government would continue to achieve budget efficiencies over the next four years of his term and the savings should be diverted into the plan, which could eventually see the government owning and managing a hotel and a mall, among other businesses.

With the funds, he said, PT Bali Mandara would be able to develop a portfolio of investments in areas currently controlled by private parties.

As an example, he said the land occupied by the former Bali government’s administration offices at Lumingtang, Denpasar, was a government asset and a suitable location on which to build a mall.

Hotels could be developed on other sites, he said.

Legislative leader Made Arjaya said the volunteer team should only work behind the scenes and stay out of the actual business. “We don’t want to be seen to be establishing a system that benefits certain parties,” he said.

He suggested establishment of a professional team with expertise to advise the government on how proposed projects would benefit the welfare of the people.

Legislator Suryanta Putra said the companies should be professionally structured and oriented to the welfare of the people and not for the benefit of a handful of people close to the circle of power.

Another legislator, Nyoman Sugawa Korry, said it would be better to stimulate growth by forming or supporting companies that could guarantee low-interest credit for small and medium businesses and independent entrepreneurs.

Bali’s cattle breeders needed help and an organic fertiliser manufacturing company would assist in realising the island’s organic agriculture objectives – another of the governor’s proposals – he said.

Legislator I Gusti Putu Wijera said the performance of government human resources needed improvement before they could be expected to run a regional consortium of companies. “We should try first to solve performance issues before allowing people to form a new company,” he said.

Economic observer and Denpasar university professor Dr Ida Bagus Raka Suardana said the plan to form regionally owned enterprises was not relevant and the company would be redundant, especially if it functioned to organise investment in Bali.

Social observer Rutha Ady said the plan needed further study on feasibility and barriers and risked creating higher costs in the marketplace by undermining local budgets.

And university lecturer I Wayan Budi Utama and socio-cultural observers Gusti Ketut Widana agreed with the budget savings plan, as long as the funds used to prepare for the human resource challenges facing Bali and to strengthen cultural identity – not just to build more shopping malls, which already saturated Denpasar.

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One Response to “Pastika’s Bold Budget Surplus Plan to Build The New Bali”

  1. Chris Says:

    Surely not MORE hotels or Malls! How about using the saved money to build a power station? Improve water supply, drainage and sewerage systems, street lights…

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