Analyzing Indonesia's Balance of Payments Amid Bali Tourism Surge

The growing influx of tourists to Bali is often seen as a primary support for Indonesia’s national currency. However, there are doubts that this tourism boom automatically strengthens the country’s balance of payments. Behind its apparent boom lie structural issues that could weaken the external economy.

Tourism is recorded in the balance as service revenue. The increase in foreign tourists is expected to improve the current account. However, significant foreign exchange leakage due to foreign airline dominance, logistics, and international digital platforms makes this gain superficial.

The main issue with Bali’s tourism sector is not the number of tourists but the weakness of domestic services. Consequently, despite extensive promotion, Indonesia records a significant service account deficit, pointing to weak integration of the tourism industry with the national economy.

Investment patterns in tourism also cause concern: foreign investments speed up infrastructure development, but the major share of revenue benefits foreign owners, leading to profit repatriation and weakening the balance of payments.

Reliance on foreign tourists creates an illusion of resilience. Any global turbulence, from economic slowdowns to geopolitical tensions, can negatively affect tourism revenue. To strengthen the balance of payments through tourism, it is essential to minimize capital leakage and enhance local value addition.

Ultimately, the development of Bali’s tourism should be a starting point for re-evaluating Indonesia’s economic policy. A healthy balance of payments is built on a robust economy, not on temporary tourism revenues.