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Bali Water: Waste Not, Want Not

Fears that New 1,000 Percent Increase in Ground Water Costs May Render Some Bali Hotels Economically Non-Viable.

(1/18/2010) BisnisBali reports that Bali's Governor Made Mangku Pastika has decided to delay the implementation of Gubernatorial Decree #16 of 2009, and will now stipulates that the 1,000% increase in the basic tariff for ground water will be fully implemented in 2011.

Governor Pastika is delaying the increase after receiving a review of the policy by a special team comprised of government and industry officials.

Putu Suardhika, a spokesman for the governor's office, said, "until the end of 2010 those using ground water will be given dispensation to pay only 50% of the new tariff." Reflecting the measures aimed to act as a strong disincentive against ground water use, industry elements will be encouraged throughout 2010 to improve the efficiency of their water usage and adopt technologies that permit the desalination of salt water.

Suardhika added: "The Governor will not revoke what he has already decided. This is for the sake of Bali. The Governor does not want to see Bali become a desert in a few year's time."

A decree signed on behalf of the governor by the Provincial Secretary for Bali, Drs. I Nyoman Yasa, stipulates that (the new) ground water taxes will be charged at 50% for 2009-2010. In 2011 the new tax will apply in full in accordance with the Governor's decree.

The provincial authorities have also indicated that they are prepared to consider tax relief for companies that can demonstrate the new tax burden will be too burdensome.

A group of hoteliers recently protested to the Regent of Badung, complaining that a ten-fold increase in the ground water tax represented too heavy a financial burden, preventing the profitable operation of their businesses.

Despite the Governor's agreement for a phased-in approach to the increased ground water taxes, many business continue to complain that a 50% reduction in 2010, prior to full implementation in 2011, still represents a viability-threatening increase in costs for many industries. The Vice-Chairman of the Bali branch of Indonesian Chamber of Commerce (KADIN), Bagus Sudibya told Bisnis.com: "We, representatives from industry, suggest the increase be staggered over 5-10 years. We ask the increase be around 100% per year or, at a maximum, 200% per year." And, while Sudibya says a 100-200% increase each year is still very 'heavy," it is preferable to a 1,000% increase over a period of only two years.

Sudibya acknowledges the government's urgent need to conserve its ground water supply and says the real solution is an improved public utility water supply. The KADIN Vice-chairman, who is also a Bali hotelier, said he would happily switch his water supply to the water board (PDAM) if piped water supplies were available.

An insight into just how threatening the new tax might be to local small hotel, the tax on the 2-3 cubic meters of water used by the average hotel guest in a single day will become Rp. 230,000 (US$23) to Rp. 335,00 (US$33.50) in 2011. This amount does not yet include the cost of electrical energy, staffing, operational and investment costs. Clearly, in some cases the new water tax will render many hotels economically non-viable without a massive increase in hotel room rates.