0 BI forecasts higher economic growth for Bali

Bank Indonesia (BI), the central bank, has projected higher economic growth for 2014, regardless of the extreme weather, uncertain political atmosphere and the plan to raise the price of electricity. Benny Siswanto, head of BI for Bali and Nusa Tenggara, told Bali Daily on Wednesday that economic growth for 2014 would likely stand at between 6 and 6.4 percent, or perhaps higher than that. “Bali has specific characteristics to its economic activities,” Siswanto said. 

He admitted Bali would face several challenges, such as the rising cost of liquefied petroleum gas (LPG), the upcoming elections and the government’s plan to increase the price of electricity in May. “Moreover, Bali is too dependent on food and goods being supplied from other islands, including fruit and vegetables. At the same time, the supplier islands, including Java and West Nusa Tenggara, are now suffering a series of natural disasters, such as flooding,” he said. 

In relation to the legislative and presidential elections, people are already feeling the economic impact. “The prices of food and goods, as well as services, will increase due to the political situation,” Siswanto said. The planned electricity tariff hike would certainly affect many industries, especially the tourist and hospitality industries.“Hotel room rates, among others, will increase sharply, affecting operational costs and people’s buying power,” the banker said. 

However, election activities will enhance creative industries, publishing and printing companies, clothing makers and others. The continuation of large-scale infrastructure projects under the Masterplan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) program will draw more investment to the island. “The amount of investments will be less than in 2013, but still the investments will be very significant,” he said. 

In 2013, Bali saw many large-scale infrastructure projects funded by the central government, domestic and foreign investments and the provincial administration. Among these projects were the massive renovation of Ngurah Rai International Airport, the construction of the Nusa Dua-Benoa toll road and road improvement projects. Siswanto also pointed out that the global economy was currently heading toward crucial recovery. 

“The economic conditions of export destinations and major tourism markets for Bali are now improving. Some of them have passed the critical stage, which is a blessing for Bali,” he said. Siswanto also said that the increasing number of middle-income families in Indonesia contributed to Bali’s economy. “More and more families are vacationing in Bali,” he said. Domestic tourists play an important role in boosting the island’s economy. In 2013, more than six million domestic tourists visited Bali. 

“The flood of local tourists will benefit handicraft producers, restaurants, star-rated and non-starred hotels, which in the end will be a great contribution to the island’s overall economic condition,” Siswanto said. Separately, I Wayan Gatra, head of Denpasar Industry and Trade Agency, said that the current extreme weather had affected the prices of basic commodities, such as rice, sugar, flour, coconut oil, meat, fruits and vegetables. “But the price fluctuations are still at a normal level,” Gatra said. 

Meanwhile, Ketut Wija, second assistant dealing with the economy and development at the provincial administration, said Bali’s economy still depended on external factors, as the island’s biggest economic driver was tourism. “Tourism and the hospital industry really depend on the global economy and the political situation,” Wija said. Bali welcomed 3.2 million foreign tourists in 2013. The island targets luring more than 3.5 million foreigners in 2014.

source : bali daily