Bali Wants a First Option on Airport Privatization

(9/29/2003)

The recently announced plans for a partial privatization of the Ngurah Rai International Airport have raised concerns that the process will somehow bypass local Balinese interests. The demonstrated profitability of the facility and its central role in the Island's economy, have prompted several community leaders to call on the Government to give the Provincial Government of Bali and the Balinese people a "first option" on any shares put up for private purchase.

Dr. Ketut Rahyuda, S.E., the Chairman of the Bali branch of the Indonesian Transportation Community (MTI) and the Dean of the Economics' Faculty at Bali's Udayana University, demanded investment priority be given to the Bali provincial government. In statements made September 25, 2003, and quoted in the Indonesian-language Bali Post, he pleaded, "don't give priority to outside interests." Dr. Rahyuda sees the revenue contribution of the airport as being able to make a contribution to Bali's official coffers.

While the Government has formally declared its intention to privatize at least 30% of the airport, the actual date for privatization is still seen as several years off and the mechanism and price for the privatization are yet to be announced.

In a separate setting, the Advisor to the Indonesian Chamber of Commerce for Bali (KADIN), Jaya Susila, has echoed Dr. Rahyuda's call for Bali's participation in the future shareholding saying it would be unfortunate if the Balinese people were left as only spectators in the operation of the airport. Susila called on those responsible for the privatization process to provide a "first option" to the Balinese in the actual share offering process.

Speaking to the local press, Susila, although underlining his support for a Bali share in the airport, expressed concerns that when the provincial government has a vested interest in the airport they may lose their objectivity in dealing with operational issues. Citing one example, he was concerned that vested shareholder might opt to keep the airport open on Nyepi day. Currently, the airport, like the rest of the island, goes into a state of suspended animation for 36 hours during the Nyepi observances each year.