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Aye, There’s the Rub

Bali Spa Industry Seeks Regulation and Standardization

(10/15/2012) Bali’s Spa industry is urging the government of Indonesia to implement regulatory measures addressing licensing, classification and the standardization of spa service in Indonesia. The proposed regulations, according to proponents, must be coordinated between the Tourism and Health ministries to safeguard the image and reputation of the nation’s fast growing spa industry.

Speaking to Bisnis Indonesia, the chairman of the Bali Spa Association, Lulu Susiani Widjaja, said, “The two ministries need to urgently announce a decision in connection with the classification and standardization (of the spa industry).” Saying clarification is needed to determine which agency of the government the spa industry must answer to, she continued: “For instance, if the industry is more inclined to offer traditional jamu products as one of the contents of its spa product, then it should fall under the Ministry of Health. But if it is a standard spa offering added value to tourism then it should answer to the Ministry of Tourism and the Creative Economy."

Widjaja complained there is no regulation classifying and standardizing the spa industry resulting in great confusion in the licensing process. As a result, many spas remain unregistered and fail to pay any taxes on their operations

According to Widjaja, the loss in taxes for Bali alone may amount to Rp. 240 billion (US$25.2 millions) each year. That figure is derived by applying a 12.5% tax rate on the estimated amount of spa transactions taking placed at unlicensed establishments.

“At this time Bali has approximately 1,000 spas, both licensed and unlicensed,” explained Widjaja.

Working Group on Spa Industry

In response to urgings from Widjaja and others, the Minister of Tourism and the Creative Economy, Mari Elka Pangestu, has announced the formation of a working group to work together with the Ministry of Health to strengthen the spa industry.

The working committee will also consult with the Ministry of Finance to determine proper levels of taxation.

Pangestu said part of the problem in developing the spa industry in Indonesia is the negative attitude in which spas are held by many segments of the public. As a result, spa’s are charged taxes normally applied to entertainment venues. The Minister said that spas should be developed as centers of wellness and health.

The Minister agreed that a code of ethical operations is needed to bolster the image of the spa industry to allow spas to realize their potential as a major contributor to the national economy.