Developers drawn to tourist magnet

Thousands of Australians will visit Bali for their summer holidays but few are likely to realise what lies beneath the surface. Or maybe they will

"THE magic is going," says Dan, a French expatriate living in Bali, lamenting the pervasive development boom in the Indonesian island province long considered idyllic by foreigners.

Since the 2002 and 2005 terrorist bombings, tourists, particularly Australians, have returned in droves. But, the word is, an environmental time bomb is ticking.

Seduced by the tropical beauty, stunning beach sunsets, surf sand and Balinese Hindu culture, tourists pack Kuta's bars and nightclubs and nearby Seminyak's upmarket hotels, villas and restaurants. Yet some are noticing cracks in the system as archaic utilities and infrastructure buckle under rampant development denuding the island's rainforests and coastline. Even the Balinese are in danger of disorientation from their attractive culture of customs, dance, music and art.

Gridlocked traffic, pollution, rotating power blackouts, water shortages and sewerage and garbage embarrassments are threatening ecological sustainability and tainting the much loved island's image as a haven from the urban rat race. "If Bali continues in this way, it will collapse in 10 years," predicts Oswar Mungkasa, the executive of the country's National Development Planning Agency responsible for solid waste and drainage.

"For me, Bali is not as attractive as it was. Local government doesn't realise, because investors keep coming, it is sitting on a time bomb,"he says.

Mungkasa fears there'll need to be "a cholera outbreak [there was one in 1994] or some sort of wake-up call" before attitudes change.

Lack of awareness and absences of regulatory enforcement are recipes for infrastructure disaster, Mungkasa says. "Bali is a fantastic island. You can find anything there, from the culture, the sun, the sea, even sex. The environment is getting worse, but the tourists are still coming."

If they drop off, he says, lack of sanitation and other problems won't register with the locals.

"The [Balinese] mindset is not educated or aware. They see sanitation as a cost, not an investment. They dump their rubbish in the drainage system. They cannot understand why they should change their habits."

Although development restrictions apply on valuable beachfront property in Kuta, Legian and Seminyak, hotel construction continues unabated in defiance. Mungkasa denies there will be a moratorium: "It's just an idea; you cannot stop investment."

In the scramble for the tourist dollar, opportunistic investors are carving into what remains of untouched western and southern coastlines. Southwards from Canggu to Jimbaran and the Bukit, and recently westwards to Tabanan Province, developers are snapping up available prime property, prompting the sentiment that the 5600sq km island's charm is eroding along with the land. Regulations that stipulate buildings must be at least 100m from the high tide mark and no more than 15m high are constantly flouted, sources say.

As the jewel in Indonesia's tourism crown, Bali generates 30 per cent of national tourist revenue or an estimated $US3 billion ($3.4bn) or more a year.

Authorities are not looking to cap the island's lifeblood, contributing as it does more than 80 per cent of revenue to island government coffers.

Sydney expat Alasdair Stuart, a spokesman for inTouch Realty in Seminyak, the island's first real estate agency, sees no let-up in property sales, with values rocketing 100 per cent in the past 18 months in Canggu. He asks: "What economic crisis? There isn't one here. There is rampant and random urban sprawl."

Very little is left for sale in lucrative Kuta, Legian and Seminyak, which were fishing villages 40 or fewer years ago. "Until about a year ago, Batu Belig [south of Seminyak] was the last bastion where you could buy land. It's all finished."

Isolated areas such as Canggu, Tabanan and the Bukit are going the same way, even though much of the property is not even beachfront, with multimillion-dollar homes and hotels. Many of the investors are from Singapore, Jakarta and Hong Kong, Stuart says.

South of Canggu, three beachfront villas are for sale at between $US3.3 million and $US3.7m, while a record $US5.7m deal is being sealed on about 1.5ha of clifftop land in the Bukit, viewed as a tsunami-proof zone. "The Bukit has been explosive. Land has risen 500 per cent in the past five to six years. I think Bali is one of the most bulletproof places on the planet because property prices are fuelled by tourists all year round," Stuart says.

Foreign tourist arrivals, at 1.83 million for the 10 months, jumped 13.5 per cent from January to October, compared with 2008. They were expected to top two million by this week, with additional flights meeting demand. Australians, taking advantage of their stronger dollar, are topping the list, at 350,000 for the 10 months, a rise of 38 per cent, although Japanese tourists, ranking second, fell 9.13 per cent. The benefits for investors have been mixed. A trend to mid-range accommodation and villas has slashed luxury hotel occupancy rates to 65 per cent.

The island's infrastructure is fraying under the pressure. Electricity comes coal-powered from Java but there are no energy-efficiency incentives offered. Tempers are flaring over rolling blackouts lasting up to six hours since October. With no respite offered until mid-January, some islanders will spend Christmas and New Year in the dark. The wealthy residents, Stuart says, won't be affected because they buy two or three generators. "They are added to the list of things they need."

The established hospitality industry is getting nervous too. Stuart Smith, a Melburnian expatriate who has lived in Bali for 12 years, has three boutique hotels and complies with local laws. Smith says growth from large developers, even just in the past six months, is having a catastrophic impact on Bali's foreshores.

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