From Newsweek International

Can Bali Bounce Back?
How terror took the top end off a tourist paradise.
By Jonathan Kent
Newsweek International

Nov. 6, 2006 issue - Transport, sir?" Wayan Oka, 28, spends much of his day hanging out with his friends on Monkey Forest Road in the town of Ubud. Indeed, walk down the streets of Bali's cultural capital, and in 10 minutes you'll be accosted by a dozen or more young men like Oka, sitting beside the road and hawking their services as unofficial taxi drivers. "You're my first job today," Oka says. It's past 9 p.m. and Ubud's streets are dark and almost deserted. The restaurants have long since emptied, and the bars are quiet Oka is 28 and an economics graduate, but with business this bad, there's no demand for economists. "My girlfriend and I want to get married, but I don't have enough money," he says.

Before Oct. 12, 2002, international tourists thronged to Bali, a Hindu jewel set in a necklace of predominantly Muslim islands strung through warm equatorial seas. Then came the awful day when bombs went off in the Sari Club and Paddy's Bar in the tourist center of Kuta, killing 202 people and injuring many more. The first major terrorist attack since 9/11 raised fears that the war on terror was opening a new Asian front, one that would choke off Bali's economic lifeline: tourism.

Remarkably, after plummeting for two years, the number of visitors to Bali rebounded to new, record highs by September 2005. But a month later suicide bombers struck again in Kuta, and at two seafood restaurants in Jimbaran Bay. "I heard an explosion at the Menaga Café a few meters down the beach," says Wayan Wirasa, owner of the Nyoman Café at Jimbaran, who was working that night. "Then I saw a man walk up to the Australians and there was another explosion. They found his head 50 meters over that way," he says, pointing down the beach. The bombers killed themselves and 20 other people, including five tourists. They also crippled Bali's tourism sector yet again.

This time, however, the fallout has taken a different form. "There wasn't the same rush to the airport as in 2002," says Michael Burchett, chairman of the Bali Hotels Association. "But new bookings just didn't come in." Prices had already been so heavily discounted after the 2002 attack that agents advised hotels it wouldn't help to cut further. So they started tossing in extras, like free room upgrades and spa treatments.

Yet bookings remained depressed for months, 20 percent off the norm, and there was a sharp shift in clientele. Jet-setting Japanese and free-spending Australians are staying away, replaced by penny-counting Chinese and Taiwanese. Burchett calls these the "shorter-stay, lesser-spend markets." He blames in part official Australian travel advisories that put Bali near the same class of risk as war-torn Lebanon, a comparison he calls "ridiculous." Kuta guesthouse owner Made Supatra Karang looks forlornly over what's left of his modest business empire. "Before the bomb blasts, business was quite good in Bali," remembers Pak Made ("Uncle Made"), as he's known. "I had a couple of businesses. I had a garment shop, I had a money changer's, I had a restaurant. After the bomb blasts this one, the guesthouse, is the only one I have left. The other ones didn't go well."

Few places are so dependent on tourism as Bali. Conservative estimates trace a quarter of the jobs and a third of GDP to the trade. With the number of Australian tourists down more than 55 percent since the last attack, and the number of Japanese down 30 percent, Bali is being forced to turn to a budget market it would rather not entertain. "Tourism affects 80 percent of the community in Bali either directly or indirectly, so these issues have had a severe effect on the economy as a whole," says Burchett.

Pak Made, meanwhile, is doing his bit to encourage more people to join them. He's chairman of the Kuta carnival, started after the 2002 bombings. This year 1,600 people joined in a festival of kites at the carnival. Trying out his kite left Made misty-eyed. "Look at my kite, look at my kite," he yelled as it pulled a huge carnival banner aloft. "We would like to live like this, peaceful on the sky. Do you think?" Hoteliers now report a "noticeable" uptick in reservations going forward, says Burchett. Perhaps Bali can rebound from terror, one more time.

© 2006 Newsweek, Inc.
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