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New visa raises overdevelopment concerns in Bali

A “second home” visa coming into effect this month aims to attract wealthy foreigners who can help accelerate Indonesia’s growing economy, but some worry it will come at the expense of locals and the environment.

KUTA, Indonesia (CN) — Of many favored locations on Indonesia's tropical island of Bali, Kuta in the south remains one of the most well-known among tourists.

“Do you want girls? Mushrooms?” A local guy on a motorbike asks national foreigners competing for space on Kuta’s narrow sidewalks leading to the beach.

Loud bars, jam-packed restaurants and hundreds of joyful foreigners escaping realities from home rob the sounds of taxi services filling the streets.

The air at Kuta beach is filled with languages from around the globe. Adults and kids are using the 1.2-mile shore to surf, swim and have fun.

Locals and foreigners alike are stunned as the sunset paints the sky pink and turns the ocean into a dark abyss.

No one predicted that a pandemic would shut down the party for almost two years. When Indonesian President Joko Widodo announced a lockdown in 2021 to control the spike of Covid-19 infections in Bali, locals would soon find themselves in a surreal situation where foreign tourists could no longer visit their businesses.

Before the lockdown, 60% of Bali’s gross regional product was found in the tourism industry. While the island has roughly 4 million residents, over 6 million foreign tourists visited in 2019. This number shrunk to less than 1 million in 2021.

The number of foreign visitors today is not near the same as in 2019, but tourists are returning to the island since borders opened in January 2022. The Indonesian government wants to continue this development, as it aims to boost foreign capital investment into the nation’s economy.

In October, after being selected to host the G20 summit, Indonesia’s Directorate General of Immigration announced the “second home" visa for foreign nationals wishing to stay in the country for up to 10 years. The visa is a paradigm shift in the country’s economic policy, as it makes it easier for foreigners to invest in Indonesia’s housing and tourism sectors, something that traditionally has been reserved for locals to prevent foreigners from occupying the market.

“Our fear is the ease of foreign investment, especially if it is targeting mass tourism, prioritizing proliferation from projects that damage the environment,” said Made Krisna "Bokis" Dinata, director of WALHI Bali, an organization fighting to protect the island's ecosystem.

Dinata has led demonstrations against giant Bali projects built for mass tourism, primarily those threatening its remaining rainforests, agricultural land and mangroves.

“The Balinese people will forever be confronted by a damaged environment, which the next generation will inherit. If this continues to happen, it will be a nightmare for our survival in Bali,” he said.

Guests enjoy the resorts and restaurants in Bali, Indonesia, with a direct view of Kuta beach. (Lasse Sørensen/Courthouse News)

Bali’s economy continues to be dependent on foreign tourists. A total ban on foreign investments on the island would cause damage to local entrepreneurs. However, investors should play a crucial part in conserving the island's remaining nature, Dinata told Courthouse News.

“The ease of investing for foreigners who live and want to contribute to the Indonesian economy, especially Bali, must also be balanced with their awareness to take part in preserving the environment in Bali,” he said.

Kuta’s transformation serves as an inspirational source for much modern-day tourism development in Bali.

Once a former fishing village, international tourism in Kuta dates back to the 19th century, when the Dutch successfully seized control of the island and branded its newly obtained jewel as a perfect paradise for foreign visitors.

Even after Indonesian independence in 1945, this image of Bali persists. It became a commodity for the political system centered in the neighboring island of Java, where the republic’s economic heart beats.

Kuta has undergone a massive transformation through giant state-run development projects that aimed to attract more visitors to Bali starting in the 1960s. In the 20th century, development in Bali’s tourism sector exploded.

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Massive resorts, privatized beaches and agricultural land converted to housing areas have made it comfortable for visitors but have also created worries for local Balinese who face increasing competition for land use and natural resources.

“It's all about attracting foreign currency, and Bali has always been the cash cow for Jakarta,” said Phyllis Kaplan, referring to Indonesia’s capital where the political system is concentrated.

Going by the nickname "Phiphi," Kaplan is the director of Sawah Bali, an organization aiming to conserve Bali’s remaining rice fields so local farmers can grow something to eat.

“My fear, as always, is the loss of prime agricultural land being developed into villas. During the pandemic, those who still had sawah [irrigated rice fields] were able to eat,” she said about the investment possibilities the new visa gives foreigners.

With its 5,780 square kilometers (2,231 square miles), Bali is slightly larger than Delaware, with a population three times bigger than that American state. That number does not include the millions of tourists that visited Bali before the lockdown.

Ubud, located in central Bali, Indonesia, is another hub where tourism has returned on a great scale. The town is going through renovations to meet demands from visitors. (Lasse Sørensen/Courthouse News)

Lack of water is a growing concern in Bali. Some of the poorest areas on the island are no longer able to cultivate rice, as the water stopped reaching their farms.

In an act of desperation, some villages have attempted to dig deep into the ground to extract clean water from it. Sometimes so deep that saltwater pollutes it, which is catastrophic for the island’s ecosystem.

"In Indonesia, the phenomenon of water scarcity in Java, Bali, and Nusa Tenggara is expected to continue to grow until 2030," said Suharso Monoarfa, Indonesia's minister of national development planning, in June this year.

According to the IDEP Foundation, an organization focusing on sustainable development, 60% of Bali’s freshwater was reserved by the tourism sector before the lockdown. More water will flow to the tourism industry should it continue to grow in Bali, despite the increasing scarcity of freshwater among locals.

“There has been no thoughtful insight on how to balance the mono-economy of Bali.  In fact, this new [visa] law only underscores the profound determination of the government to make tourism and building a home in Bali more profitable for the government,” Kaplan said.

As Indonesia seeks to accelerate its economy, the new second home visa is meant to be a contributive factor. It aims to attract a certain type of foreigner, wishing to spend cold cash in the country.

"This special visa will be given to billionaires, the world’s wealthy people, and investors to encourage the growth of investment in Indonesia, those who intend to stay longer in Indonesia," said Widodo Ekatjahjana, director of Indonesian immigration, before the visa was launched.

Foreigners must place 2 billion rupiahs ($130.000) in an Indonesian state-owned bank when applying for the second home visa, which will come into effect this Christmas.

Despite the visa giving its holders access to stay on any of Indonesia's more than 17.000 islands, Bali has been subject to the most attention by local media when the new visa was launched because it is the most popular place for foreigners to visit in Indonesia.  

Economist Ariyo Irhamna from the Jakarta-based Institute of Development of Economics and Finance told the South China Morning Post that the second home visa is a “good idea” to attract wealthy individuals.

However, it could also cause property prices to spike, leaving less wealthy Indonesians at a disadvantage.  

With an ambition to launch the Indonesian economy into new heights, Kaplan does not see the second home visa as a good solution for the common Balinese. The island has already entered a stage of overdevelopment, she said.

“Tourists are clueless. Even expats are clueless. Travel only means 'how much does it cost?' Not educating oneself about the country, its culture and social norms," Kaplan said. "I thought the tipping point was reached long ago.”

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