Bali as Jakarta’s Cash Cow

By Vyt Karazija

Bali’s popular and caring governor, I Made Mangku Pastika, is again in the news as being concerned about the effect of tourism on the island. “Tourism has been a disaster for the poor,” he said. The number of people living in poverty in Bali has jumped by 17,000 to 183,000 over the last year alone. He blames tourism for driving up the prices of basic commodities to a point where the indigent can no longer afford them. He also points to increased transmigration by non-Balinese looking for tourism-related work as putting pressure on both prices and infrastructure.

I am sure that for diplomatic reasons, Pastika didn’t mention the opportunistic price increases here ahead of Jakarta’s recently botched “phasing out” of fuel subsidies and the resulting fuel price rises. That increase didn’t eventuate, of course – the central government’s duty to responsibly manage the economy took a back seat to political popularity – but there is little doubt that that fiasco has contributed to the problem as well. Prices of just about everything went up. But when the whole rationale for these cost increases suddenly vanished, those prices… well, of course, they stayed up.

Pastika’s attempts to manage Bali’s tourism bubble without destroying the soul of the island have been laudable. His moratorium on further development in an island already over-supplied with accommodation – and underequipped with suitable infrastructure – was a genuine attempt to rescue Bali from its growing problems. We can see these every day – gridlocked streets, mountains of rubbish, collapsing road surfaces, environmental degradation, insufficient water and inadequate power supply.

And yet, despite the moratorium, new hotels and condominiums keep springing up like noxious weeds, taking over residential areas, obliterating rice fields and breaching height and setback limits with impunity. Many developers appear to commence construction without even bothering the get the required permits and don’t even attempt to comply with the 40-percent open space rule designed to catch rain to replenish a diminishing water table. And as far as the “Balinese character” required in their architectural features – well, I guess developers think that Miami or Gold Coast designs are close enough for Bali.

How can this be? I hear people blaming Pastika – after all, he is the Governor of Bali, right? He has the power to lead the way for Bali – why isn’t he enforcing his own moratorium? Why doesn’t he do something about the infrastructure?

The simple answer is that he can’t. He might be the governor of Bali – one of the 33 provinces of Indonesia – but he effectively has no power.

The real power in Indonesia is vested in the districts or regencies (kabupaten), and the cities (kota). Bali has eight regencies and one city, Denpasar.


The head of each regency, via its administration, has total authority, often bypassing the role of the provincial government in making and enforcing regulations and policies. And every regency can make its own rules. So much for consistency.

In effect, the Bali governor’s role as head of the provincial government is limited to a vaguely defined mediating role between regencies. For those familiar with the tiers of Australian government, the situation is akin to granting local municipal councils the same rights and powers as a state government, reducing that body to a symbolic and largely ceremonial role.

In Australia, such a system would result in planning chaos, with no consistency in laws, regulations, tax charges and levies, urban construction standards or anything else that provides the glue to hold civil society together. In Bali, this system results in planning chaos, with no consistency… well, you get the picture.

The genesis of this unbelievable situation came about 11 years ago. In an attempt to decentralise Jakarta’s absolute control and devolve power to Indonesia’s far-flung provinces, the Regional Autonomy policy of 2001 was implemented. It might have even been workable if the sub-national units – the provinces – were granted the power to manage their own local affairs.

But no, the post-Dili paranoia that gripped Jakarta meant that districts/regencies – not provinces – were given this power, in the fear that a genuine transfer of authority to provinces might induce them to break away from Jakarta’s grip.

Are all the eight regencies happy with this arrangement? Well, Badung is happy. A large part of Bali’s development, and hence revenue, is generated there. Gianyar, too, seems reasonably happy with its share of the cake, as is the municipality of Denpasar. But the other six regencies would be close to destitute if it wasn’t for a revenue-sharing arrangement that originally took 30 percent of Badung’s revenues (and since considerably reduced) to be redistributed to the poorer areas.

So now, we have the sad spectacle of the governor of Bali trying his best to address the problems here, but being stymied by autonomous regencies which not only compete with each other for handout money but whose very survival is dependent on funds from development licences, fees and taxes – and, of course, the eternal bribe windfalls from granting inappropriate development permits. “Moratorium?” they ask – “What moratorium?” A “permits for sale” mentality rules, and Bali disappears under yet more towers.

Adding to the volatile mix of greed versus sustainability is a set of central guidelines which don’t even address the role of tourism or handicrafts – two of Bali’s critical ingredients. It’s a recipe for chaos. I sympathise with the governor, and I can understand why he oversimplifies the formula so that it reads “Tourism = A Disaster for the Poor.” That’s just politics, although it does make for a fine soundbite.

The reality is that to improve the lot of the Balinese people requires a radical rethink of all the complex components of the situation. Bali generates more than 50 percent of Indonesia’s US$7 billion+ tourist-related revenue. Does Bali get to keep what it generates? No. Does Bali get any of the huge Visa on Arrival windfall collected from its tourists? Not a rupiah. Retaining a fair share of this money would go a long way to implementing poverty-reduction programmes in Bali – but it won’t happen as long as Jakarta keeps seeing Bali as a cash cow.

On top of the huge discrepancy between the money generated and money retained is the ludicrous situation of having a provincial government with no real power, no clout, no mandate to plan and basically no voice in the affairs of Bali itself. These functions are being undertaken by competing regencies to the detriment of the whole province.

While Bali may not yet be ready for Bali Merdeka – true independence (nor would Jakarta’s nationalistic powerbrokers ever permit it) – it certainly is ready to push for special autonomy status, with the provincial government assuming its rightful place as the strategic seat of planning and power. It’s time that the dog wagged the tail.

When it does, listen for the screaming of the regents, especially those who have been putting their local interests ahead of those of Bali. They will provide the soundtrack for the birth of a new, mature Bali, one with a proper, hierarchical government structure instead of a chaotic set of divided fiefdoms.

I just hope that someone of Governor Pastika’s calibre, and possessing his vision, will be at the helm when that happens.


Filed under: Vyt's Line

2 Responses to “Bali as Jakarta’s Cash Cow”

  1. henry Says:

    Great reading as always from this man…I applaud all his comments….and I would like to add my simple view…..Bali will shoot itself in the foot if not already…selfishness,greed,money….all recipes for disaster.

  2. dave Says:

    Well said brother;im in full agreement here…read my comment on Bali to get 2nd airport…

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