An advertising industry chief has claimed that the business in Bali is unfairly dominated by foreign-owned companies, many of them operating without the necessary licenses.
Chairman of the Bali branch of the Indonesia Advertising Agency Association (PPPI) Roy Wicaksono said that while advertising spends in Bali were growing due to expansion of the tourism sector, the main beneficiaries were not locally owned companies.
“The growth of tourism has caused a very significant increase in advertising spending in Bali. However, the ones who are getting much of the benefit are the foreign-owned companies operating without licenses. We estimate they’re taking about 40 percent of the market share at the moment,” Wicaksono said, adding that unlicensed companies did not meet their tax obligations.
Wicaksono, who is with Mitra Advertising in Denpasar, said that hotels and villas owned or managed by foreigners usually used foreign-owned agencies for their advertising.
“Maybe this is an issue of skin colour and hair colour. They feel more comfortable with other foreigners,” Wicaksono said, adding that this in itself was not a problem, but that issues arose when the foreign advertisement agencies were not properly licensed.
“They often work with not much more than a laptop and a few staff, but they don’t stick to local rules, and they probably don’t pay taxes,” he said.
However, Yoke Darmawan, managing director of local agency Darmawan and Associates, said that local companies needed to do more than complain against foreign competitors. A general improvement of competence and quality was needed to improve competitiveness, she said.
“Advertising is not just about design; it’s about the content, and the expectations of a mature market,” Darmawan said, adding that while locally produced advertising was often of high quality, the working practices of many local agencies were less professional than those of their foreign competitors.
“The questions of accuracy and taste are also a consideration for clients and most of the owners of hospitality properties in Bali are also foreigners,” she said. According to Darmawan foreign-run agencies generally provided accurate copy-writing and delivered adverts on schedule according to their clients’ expectations.
“This is one of their strengths in attracting foreign and local clients in Bali,” she said.
Wicaksono, meanwhile, said that although he agreed that local agencies needed to improve their standards, the authorities should crack down on unlicensed foreign companies.
“The potential for advertising growth in Bali is wide open, because the real-estate business is still vibrant, and the entertainment and tourism sectors are still growing,” he said.
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