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Business impact resonates beyond Bali
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Tourism industry experts are warning that the weekend's devastating bomb attacks in Bali are likely to have an economic impact well beyond Indonesia. They say that growth in the Southeast Asian region will likely suffer in the final three months of this year, and the attacks highlight the need for greater security, including on vital sealanes. "This will resonate through the region, well beyond Bali," Pacific Asia Travel Association (PATA) president and chief executive Peter de Jong told CNN Monday. He said it showed the vulnerability of the tourism industry and its position in the frontlines of social conflict. De Jong and other experts agree that Bali will recover, over time, but the short-term impact will deal a heavy blow to Indonesia's tourism business, and possibly to its neighbours as well. "In the minds of European or North American tourists, Malaysia and Indonesia may not appear all that different," IFR Asia Pacific chief economist George Worthington noted in a commentary Monday. Worthington also pointed out that a quarter of the world's oil trade passed through the region every day. "An attack on a ship in the Straits of Malacca (between Indonesia and peninsular Malayisa) could severely hit the economies of Northeast Asia that depend so heavily on oil from the Middle East," he said. Key income earnerTourism is a key earner of foreign exchange for Indonesia, generating 10 percent of total export income. Indonesia gets about 5 million visitors a year, with about a quarter of them arriving directly in Bali by air. Figures from the World Travel & Tourism Council show that before the Bali attack, travel and tourism was expected to generate $20 billion in economic activity for Indonesia this year and provide 5.75 million jobs or 6.1 percent of total employment. Its contribution to Indonesia's gross domestic product this year was expected to be 3.4 percent. The Bali attacks come just as the long-time island paradise has been emerging from the downturn after the September 11 terror attack in the United States last year. (Full story) Tourist arrivals in Bali slumped immediately after those attacks as potential U.S. and European visitors chose to stay closer to home. Bali Tourism Office director I Gede Pitana said then that "any activities or actions that could disturb Bali's tourism industry will be rejected by the community". As numbers fell to about 85,000 overseas tourists a month in the last quarter of 2001, Pitana predicted a recovery in 2002 on the back of more visitors from China and Japan. The market met his prediction, rebounding to almost 150,000 a month in the first half of 2002 as more flights from Japan came on stream and the first large-scale Chinese arrivals began. Now that rebound has come to a halt and economists see worse to come. Knock to growth
IFR Asia Pacific chief economist George Worthington warned Monday that Southeast Asian economies will come under pressure from the Bali attacks, with growth in the final quarter of this year likely to be affected. "The whole region is likely to be hit by tourist cancellations, undermining growth to some degree in Q4 (the October-December period)," Worthington noted. For the broader Southeast Asian region, travel and tourism was expected to generate economic activity of $123 billion this year, according to special research commissioned by the World Travel and Tourism Council (WTTC) Many of the casualties in Bali were young Australians, with 14 confirmed dead and many more expected among the 187 known fatalities. The island traditionally has been seen as a low-cost holiday destination for young people. It draws about 200,000 Australia visitors a year, and there are usually some 20,000 Australians in Bali at any one time. (Full story) Immediate cancellations
One of Australia's biggest travel businesses, Flight Center, said it was seeing a lot of immediate short-term cancellations in the wake of the bombings, while people were holding off taking action on longer-term bookings. Flight Center has about 20 percent of the Australian outbound market to Bali. Chief executive Shane Flynn said the attitude of airlines to the resumption of flights would have a big bearing on customers' decisions. But Flynn told CNN that Bali would bounce back, so long as it did not see a repetition of the tragedy. "Bali is such a great destination," Flynn said. "We saw it within three to six months of September 11 that visits to New York started picking up. Now, twelve months later, New York is more popular then ever," he said. PATA's de Jong said there was no denying the bombings would have an immediate impact on Bali's tourism industry. But he said the island would recover, over time. "The question is, how quickly?" he said, noting that it was hard to say yet how long this process might take. 'No safe havens'De Jong, who was having dinner about 300 meters from the Sari night club when the bomb went off, said the tragedy reinforced that there were no longer any "safe havens" in the world. "The larger issue is how it affects the region," de Jong said. "This will resonate through the region, well beyond Bali." He said it showed the vulnerability of the tourism industry and its position in the frontlines of social conflicts. But he said that the world's need for mobility would not change and people, sadly, were "learning to live with these events". "For the sake of the living, we go on." De Jong said PATA was ready to send a task force of experts to Bali to work with Indonesian tourism authorities on the rebuilding of the industry there. He said experts in crisis management and areas such as communications and marketing were available to help.
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