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09 Nov 2022
Beyond Tourism: Exploring Potential Economic Sectors for Building Economic Resilience in the Post Covid-19 Pandemic Times in Denpasar, Bali
Project leader: Agus Fredy Maradona
Level of education and university: PhD, Macquarie University
Collaborating Organisations: The Regional Development Planning Agency of the City of Denpasar (Badan Perencanaan Pembangunan Daerah [BAPPEDA] Kota Denpasar)
Project Location: The project activities will take place in the regional area of Denpasar in the Province of Bali. The structured face-to-face interviews will take place in all 43 sub-districts (desa/kelurahan) in Denpasar. The district level focus group discussions as well as the regional (city) level focus group discussions will take place at the appropriate venues in Denpasar. The research dissemination seminar will also take place at a venue in Denpasar.
Activity Type: Academic research and research-related activities
Sector: Small and medium enterprise development, Economics
Project Rationale:
The proposed project is critical because it tackles a very contentious issue in a region where the economy, which relies heavily on tourism, is in turmoil because the tourism sector has suffered substantially during the COVID-19 pandemic: that is, whether the region can diversify its economy from the tourism sector hence creating a resilient economy in the post COVID-19 pandemic era.
The tourism industry has been the worst-affected economic sector by the pandemic. Regions where the economy relies heavily on tourism have been experiencing severe economic turbulence because their main economic machine has been forced to halt, particularly during the peak periods of pandemic. The City of Denpasar in Bali is one of the regions that has been experiencing severe economic consequences and the downturn of the tourism industry that the pandemic has caused. In fact, Denpasar experienced the second largest economic contraction in Bali in 2020 and 2021, and as of 2022, the region’s economy is yet to fully recover. Denpasar’s economic downturn was even deeper than that of the Indonesian national economy.
The devastating economic consequences of the COVID-19 pandemic on Denpasar’s economy have triggered serious talks about economic diversification among government officials, key industry players, and the general public. These stakeholders have realised that the tourism industry is very sensitive to shocks, and the over reliance to tourism has made Denpasar’s economy fragile. Therefore, to accelerate recovery from the economic effects of the pandemic and to create a resilient economy in the post-pandemic periods, it is believed that economic sectors other than tourism need to be developed to serve as new pillars of Denpasar’s economy, and that the economy should not rely on the tourism sector alone.
The talks about diversification of economy in regional areas in Bali, in responding to the COVID-19 pandemic, generally center on developing and strengthening the agricultural sector. Indeed, during the pandemic, the contribution of the agricultural sector to Bali’s economy had exceeded that of the tourism industry. Therefore, the agricultural sector has been seen as a promising sector that, in the long term, can be developed as an alternative to the tourism industry. As a result, the governments of regions in Bali have started to pay more attention to the agricultural sector in their economies.
While the agricultural sector seems promising, Denpasar finds it difficult to diversify its economy from the tourism sector to the agricultural sector, particularly due to its limitation in natural resources. Unlike other regions in Bali such as Karangasem, Buleleng, Klungkung, and Tababan whose abundant natural resources are suitable for agriculture, Denpasar does not have enough farmlands to develop its agriculture as a major economic sector. Denpasar has even a smaller number of agricultural lands than the Regency of Badung which, even with the regency’s heavy reliance on tourism, still has a functioning agricultural sector in the northern part of its region. In the last ten years Denpasar has experienced massive farmland conversion, in which farmlands have been converted into residential areas, metropolitan areas, and business areas including tourism establishments. Statistics also show that the contribution of the agricultural sector to Denpasar’s economy is considerably low and shows a downward trend. As such, farming has started to become a thing of the past for the younger generation of Denpasar’s population.
The inability to develop farming as an alternative main economic sector leads Denpasar to search for other potential economic sectors. But identifying these sectors is not a simple task because various socio-economic variables need to be considered and future projections of the economy need to be assessed. Up until now, based on the information provided by the Regional Development Planning Agency of the City of Denpasar (BAPPEDA Kota Denpasar), the Denpasar administration is yet to conduct a large-scale study to identify potential economic sectors because the region’s budget was focused on tackling the pandemic. Therefore, a study that aims to identify and explore potential economic sectors in Denpasar that can be developed as main economic machines for the region is urgently needed. This justifies the execution of the proposed project.
Apart from the questions about to what economic sectors the City of Denpasar can diversify its economy from the tourism industry, there are also concerns over whether Denpasar can really diversify its economy from tourism. As a region that has long been reliant on tourism, the economic infrastructure in this region has been significantly invested to support the tourism sector, hence any attempt to diversify the economy will be met by fierce questions regarding Denpasar’s capacity to embark on such an economic diversification agenda. Accordingly, a study that can answer these questions empirically is critically needed, hence the justification for the proposed project. The proposed project will empirically answer these questions by outlining what resources, investments, and strategies are required if Denpasar wants to diversify its economy from tourism to new potential economic sectors and evaluate whether Denpasar can meet these requirements and how long will it take.
Project Beneficiaries:
The project’s main beneficiaries are the Regional Development Planning Agency of the City of Denpasar (BAPPEDA Kota Denpasar), 4 heads of districts (Camat) in Denpasar along with their leadership team members, 43 head of sub-districts (kepala desa/lurah) in Denpasar, the Department of Cooperative and SMEs of Denpasar, the Department of Industry and Trade of Denpasar, and Denpasar Creative Agency.
Priority Development Area:
Economic Recovery
Link with Australian organisation:
Edith Cowan University (Associate Professor Hadrian G. Djajadikerta)
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