Not Just Seeking Dollars
The annual meetings of the International Monetary Fund (IMF) and the World Bank (WB) in Bali are prestigious for Indonesia. More than 15,000 delegates and non-delegates from 189 countries are expected to attend the meetings.
Many heads of state, finance ministers and central bank governors of the world will gather in Bali. In addition, CEOs of multinationals, academics, economic observers, the public and the media from a number of countries will also come to Bali.
No doubt, the number of participants at the international event will provide direct benefits for Bali. At the very least, all hotels in Bali will be fully booked. Many restaurants and entertainment venues will also be full. Various tourist destinations in Bali will be crowded, including various souvenir outlets that will be “invaded” by visitors.
The government therefore believes that the event will contribute to boosting Bali’s economic growth to 6.54 percent this year. It will at least be able to restore tourism in Bali, which grew only 5.59 percent in 2017 due to the eruption of Mount Agung.
The benefits for Bali are quite reasonable, as the government has spent a large amount of money for the success such a major event. Indeed, compared to the cost of the event, its economic impact is relatively small, estimated at around Rp 566 billion (US$37.15 million). The government claims that it will receive around Rp 100 billion in non-tax state revenues (PNBP).
This means that if the event’s costs are compared to its economic benefits, Bali willl still profit. The government estimates that the hotel and hospitality sector will contribute Rp 900 billion while the trade sector will contribute another Rp 800 billion. This calculation is based on an assumption that guests will stay an average around 9 days in Bali, because the IMF-WB event participants will be there before and after the meetings of Oct. 8-14.
In order to serve the participants’ various needs, the event has helped create thousands of jobs. Moreover, if a hotel has cooperated with micro, small and medium enterprises (MSMEs) to open outlets and offer tour packages, the multiplier effect is even greater.
However, if the spending on improving Bali’s infrastructure is included, the costs total around Rp 4.04 trillion: for example, the costs of constructing the Simpang Tugu Ngurah Rai underpass, expanding the
apron of I Gusti Ngurah Rai International Airport, expanding the capacity of Benoa port and completing the Garuda Wisnu Kencana sculpture.
Improvements to these infrastructure facilities – including improving cleanliness in Bali through constructing the Sarbagita Suwung landfill – were needed to improve transportation, communications and security from the airport to the Nusa Dua area, the site of the meetings.
Of course, the IMF-WB Annual Meetings 2018 will not only have an economic impact on Bali’s tourism. The event can also be used as an opportunity to promote major tourist destinations in provinces outside Bali like Labuan Bajo, Banyuwangi, Mandalika, LakeToba, Raja Ampat, and many others.
The success of the annual meetings and related events in Bali can build a positive image to transform tourism into a leisure industry. The tourism sector can, therefore, help plug Indonesia\'s current account deficit.
In the second quarter, the current account deficit stood at US$8 billion, a sharp increase from $5.7 billion in the first quarter. If tourism can be developed further, it would not take long for Indonesia to settle its current account deficit problems.
In 2017, the country saw only 13.7 million foreign tourists. If foreign tourists spent an average $1,000 per day, $13.7 billion in foreign exchange was generated. If many countries choose Bali to hold MICE (meetings, incentives, conventions and exhibitions) events, foreign exchange revenues could double.
However, the success of the IMF-World Bank meetings in Bali should not be measured only by its economic benefits.
If its success is based only on economic calculations, this reasoning will can be easily countered by, for example, prioritizing development inequality over the need to finance disaster management for both the earthquake in Lombok, West Nusa Tenggara, and the earthquake and tsunami in Central Sulawesi.
Therefore, as the host of the meetings, Indonesia must fight for a greater agenda, especially in encouraging concrete policies from the IMF and the World Bank for developing countries – in particular, the roles of the IMF and the World Bank in resolving the current "situation" of global economics, for example, their stance on the United States’ protectionist trade policy that has triggered a trade war. It should also include the need to build synergy between the IMF-WB and developing countries in promoting financial inclusion.
The policies that the IMF and the World Bank recommend in the future must be based on the characteristics and economic structure of each country, especially those policies on developing countries.
The IMF must be fair in promoting monetary cooperation and addressing balance of payments issues in many countries. It must have a system and have the courage to act if a certain country\'s policies might trigger instability in international monetary activities.
The IMF should not only act as a firefighter, providing loans to member countries that need bailout funds, but must also be able to make an early decision if a certain country\'s policies has the potential to spread “contagion” other countries.
Likewise, the World Bank should be able to work together with the IMF so their policies are able to eradicate poverty and inequality in the world more effectively. Have a good meeting!
ENNY SRI HARTATI, Executive Director, Institute for Development of Economics and Finance (Indef)