The Ministry of Tourism and Creative Economy is currently reviewing policies regarding a proposed moratorium on new hotel developments in Bali, particularly in the southern region, as reported by Kompas.com.
Meanwhile according to Bisnis.com, Erwin Soeriadimadja, the head of Bank Indonesia’s Bali Representative Office, explains that investment in Bali remains heavily reliant on the tourism sector. Data from 2017 to 2023 indicates that domestic investment is predominantly concentrated in the tertiary sector, which includes hotels and restaurants, construction, and utilities such as electricity and gas.
In this period, the highest level of investment in the tertiary sector occurred in 2019, with domestic investment exceeding IDR 7 trillion, representing 84.64% of total domestic investment. By 2023, this figure reached the same level. In contrast, investments in the primary and secondary sectors averaged below IDR 1 trillion (6.36%) and IDR 2 trillion (9%), respectively.
Within the tertiary sector, investments in hotels and restaurants accounted for 43.9%, followed by trade and repair at 13.9%, electricity and gas at 14.9%, and investments in housing, industrial estates, and office spaces at 12.4%.
Foreign investment trends mirror domestic investments, with 97.37% of foreign funds—averaging around US$600 million per year since 2017—flowing into the tertiary sector. In this context, hotel and restaurant investments made up 27%, while housing and industrial estates accounted for 43%.
Given this data, investment in sectors unrelated to tourism remains minimal. According to Erwin, Bali has significant potential in sectors like agriculture and digital innovation, which could benefit from sustained investment.
The proposed moratorium aims to halt new hotel construction to prevent the conversion of agricultural land into commercial properties. Regions suggested for the moratorium include Badung, Denpasar, Gianyar, and Tabanan. This is in response to high occupancy rates and environmental impacts that need protection.
Additionally, maintaining safety and comfort for both residents and visitors in these areas is a priority. Quoting Kompas.com, Satria Wei, head of Hospitality Services at Colliers Indonesia, notes that the moratorium will significantly affect investors planning to invest in Bali. However, it may not drastically impact those who already have permits and suitable locations, particularly from a regulatory standpoint.
“While the moratorium affects southern Bali, it appears to have positive effects in other areas,” Satria remarked. He also indicated that the proposed moratorium would not impact ongoing hotel construction but may have implications for future projects.
Satria emphasized that if the moratorium is implemented correctly, strategically, and transparently, it could yield positive outcomes. A well-considered strategy is essential, including careful selection of areas that should enforce the moratorium to avoid unintended negative results.
The central government is currently reviewing the proposal, initially suggested by the Bali Provincial Government to promote high-quality tourism on the island. This proposal not only addresses the moratorium on tourism accommodation construction but also pertains to issues surrounding the conversion of rice fields into commercial land and the Online Single Submission (OSS) permitting system, which currently excludes local involvement.
“I was shocked to see viral videos on TikTok of cliff cuts and new beach clubs in Tabanan and Denpasar that we were unaware of,” commented Sang Made Mahendra Jaya, the acting governor of Bali. “We need to address the rampant land conversions and the unregulated sale of alcohol at small vendors, which should be restricted to restaurants and hotels.”
In summary, the proposed hotel moratorium in Bali presents both challenges and opportunities for investment. While it may disrupt current trends in the hospitality sector, it also offers a chance to refocus efforts on sustainable development and diversified investments in the region.
Source: Kompas.com, Bisnis.com
Image: via Shutterstock
