Towards a Self-Reliance of Small and Medium Tourism Industry in 2040: How Bali’s Government Makes Efforts?

Towards a Self-Reliance of Small and Medium Tourism Industry in 2040: How Bali’s Government Makes Efforts?

I Nyoman Suyatna¹, I Ketut Sudiarta,² Ni Gusti Ayu Dyah Satyawati.³

• ¹    Faculty of Law Universitas Udayana, E-mail: nyoman_suyatna@unud.ac.id

• ²    Faculty of Law Universitas Udayana, E-mail: sudiartafl@unud.ac.id

• ³    Faculty of Law Universitas Udayana, E-mail: dyah_satyawati@unud.ac.id

  Article Info

  Received: 31^st October 2021

  Accepted: 28^th December 2021

  Published: 31^st December 2021

  Keywords:

  Small and medium industry; Tourism; Bali; Provincial Government; Legal framework

  Corresponding Author:

  I Nyoman Suyatna, E-mail : nyoman_suyatna@unud.ac.id

  DOI:

  10.24843/JMHU.2021.v10.i04.p01

  
  

Abstract

Bali Provincial Regulation No. 8 of 2020 concerning Bali Province Industrial Development Plan Year 2020-2040 was created to balance the structure and fundamentals of the Balinese economy which includes three pillars, namely tourism, agriculture, and industry. Besides, it also reflects an effort to reduce the dependence of the Balinese economy on tourism. This article assesses the process of the creation of Bali Provincial Regulation No.8 of 2020 concerning Bali Province Industrial Development Plan Year 2020-2040 and its content, mainly regarding the position of the small and medium tourism industry. It also offers a lens on the future legal framework of the tourism industry in Bali. It is a normative legal study that uses the statute, conceptual, and analytical approaches. This article argues that the future legal framework of the tourism industry should deal with, at least, the following five issues: mass tourism; degradation of nature and environmental quality; meeting the perception and expectation of travelers; the quality of tourism services; and protection to the tourists as a costumer.

• I.    Introduction

The enactment of Bali Provincial Regulation No.8 of 2020 concerning Bali Province Industrial Development Plan Year 2020-2040 (hereinafter, Bali Province Regulation 8/2020) leads to a high expectation of the industrial stakeholders in Bali. The idea behind this regulation was that a strategy to balance the structure and fundamentals of the Balinese economy which includes three pillars, namely tourism, agriculture, and industry. Besides, it also reflects an effort to reduce the dependence of the Balinese economy on tourism.¹

Whatsoever, for decades the tourism industry played a vital role in the economy of Bali, harvesting the efforts made by generations who became the main agents of the reborn

tourism industry after Indonesian independence. ² Even the current situation of pandemics suspends the income generated from tourism, it is expected that the tourism industry, as well as tourism-related industries, will still predominate the economy of Bali in the upcoming future, particularly after the tourism activities are fully recovered.

For decades, major investments in tourism sectors have successfully run their business in Bali. Despite that fact, small and medium-sized business entities also play a significant role to support tourism in Bali. It is generally argued that small and medium enterprises are the driving forces for the tourism industry. Undeniably, they create jobs, generate taxes significantly, and develop a local supply chain that would enhance economic activities at the regional level.³

Some previous research studied issues that related to the topic of the present article. Made Antara and Made Sri Sumarniasih published research that identifies the role of the tourism sector in the Bali economy that using macroeconomic data, to be analyzed by a qualitative descriptive analysis method. ⁴ The research recommends that the development of tourism in Bali should be harmonized with the development of other sectors such as agriculture and small industry/handicraft, because these three sectors are interrelated to one another. Agriculture with its aspects of the culture and customs is the capital of Bali tourism development, while tourism is a blessing for the people living in Bali.⁵

In addition, a German scholar, Stefan Koos, published an article that highlights some legal aspects that could be important for a rebalancing of tourism that focuses on the tourism industry in Bali.⁶ It was legal research that studies one or several general symptoms of certain laws by analyzing, conducting in-depth examinations of the legal facts, and then seeking a solution to the problems.⁷

This article aims at analyzing the process of creating the Bali Provincial Regulation No.8 of 2020 concerning Bali Province Industrial Development Plan Year 2020-2040 and its content, primarily with regards to the position of the small and medium tourism industry. Besides, this article discusses the future legal framework of the tourism industry in Bali.

• 2.    Research Method

This paper is a normative legal study. It reveals relevant laws and regulations in Indonesia and focuses on the content of Bali Provincial Regulation No.8 of 2020 concerning Bali Province Industrial Development Plan Year 2020-2040. This normative

research uses statute, conceptual, and analytical approaches. Legal sources were collected by using a literature study while the analysis is conducted qualitatively.

• 3.    Result and Analysis

  • 3.1.    The Creation of Bali Province Industrial Development Plan Year 2020-2040

    • 3.1.1    The Process

In Indonesia, every single region has the autonomy to plan its regional industrial development. At the provincial level, the governor prepared a provincial industrial plan that refers to the National Industrial Development Master Plan and National Industrial Policy. The preparation should also take into account at least the following considerations:

• a.    the potential of regional industrial resources;

• b.    Provincial Spatial Plan and/or Regency/City Spatial Planning; and

• c.    harmony and balance with industrial development policies in regencies/cities as well as socio-economic activities and environmental carrying capacity.

The Governor of Bali has no absolute authority in creating a provincial industrial development plan as it has to obtain approval from the Province House of Representatives. Before approval is given, a series of political deliberation between the members of the Bali Province House of Representatives was organized by the Coordinator of Discussion for the Draft of Bali Provincial Regulation concerning the Bali Province Industrial Development Plan. The appointed coordinator was I Nyoman Budi Utama, who is also serving as a Vice Chairman of Regional Regulation Making Board the Bali Province’s House of Representatives,⁸ a board that among others responsible for coordinating the preparation of the provincial legislation program between the House of Representatives. ⁹

In terms of preview mechanism, the national government, represented by the Ministry of Domestic Affairs, evaluates the draft of provincial regulation on an industrial plan by assessing its compatibility with:

• a.    Higher laws and regulations;

• b.    Public interest;

• c.  National Industrial Development Master Plan and National Industrial

Policy;

• d.    National Long-Term Development Plan, and in line with the Term Development Plan the length of the province;

• e.    Provincial Spatial Plan; and

• f.    Potential regional industrial resources, social activities economic and environmental carrying capacity.

During the evaluation process, the Director-General of Regional Development of the Ministry of Domestic Affairs coordinates with the Ministry of Industry, relevant ministries/non-ministerial government agencies, and work units within the Ministry of Home Affairs. The result of the evaluation is stipulated under the Decree of the Ministry of Home Affairs. This ministerial decision must be used as a basis by the governor and the Provincial House of Representatives to improve the draft regional regulations. The improved version has to be resubmitted to the Minister of Home Affairs to obtain a registration number before it is officially promulgated as a provincial regulation by the governor.

There was discourse with regards to the title of the provincial regulation. Coordinator for the Discussion of the Bali Province Industrial Development Plan Nyoman Budi Utama explained that this draft was originally submitted under the name "Bali Branding Culture-Based Industrial Development Plan 2019-2039". However, after consulting with the Ministry of Industry, it was suggested to name it "Bali Province Industrial Development Plan 2020- 2040". However, the Bali Province Industrial Development Plan is still allowed to include the content ‘based on Balinese Branding Culture’.¹⁰ During the discussion process, there was also a concern about the protection, control, and empowerment of a local industrial product. This includes the development of a local industry based on Balinese culture and the protection of Balinese-style products, such as Balinese-style handicrafts and processed foods and beverages labeled as Bali.¹¹

• 3.1.2. The Content: Where Small and Medium Tourism Industry is Positioned?

The Annex of Bali Province Regulation 8/2020 holds that in line with the Provincial Development Mission, the Industrial Development of Bali Province carries out two missions. First, realizing the role of Bali’s branding culture based provinces leading industry in the economy; Second, building and developing the province's leading industry based on the Balinese branding culture to strengthen the economy of the people of Bali.

The annex also mentions 22 missions of the development of Bali Province. Four out of those missions are related to tourism, namely:

• 1.    Developing new tourism destinations and products based on culture and in favor of the people that are integrated between regencies/cities throughout Bali;

• 2.    Improving the promotion of Bali tourism domestically and abroad in a synergy between regencies/cities throughout Bali by developing new innovations and creativity;

• 3.    Improving a comprehensive tourism service quality standards; and

• 4.    Developing an integrated security system that is supported by human resources and adequate facilities and infrastructure to maintain the regional, local communities, and tourist securities.

Further, the annex listed The Bali Province Industrial Development Goals for 2020-2040

• 1.    Provincial Leading Industries with National and International Competitiveness;

• 2.    Increasing the availability and quality of raw materials;

• 3.    Development of competent human resources as Industry players;

• 4.    Product quality improvement and diversification;

• 5.    Improving infrastructure and technology that supports the interests of the Province's Leading Industry;

• 6.    Improvement of a conducive business climate;

• 7.    Expanding product access to global markets through digital promotion;

• 8.    Increasing institutional support;

• 9.    Open access to capital that is affordable for the Province Leading Industry players; and

• 10.    Increasing the growth of the Province's Leading Industry to strengthen local communities’ economy at the Regency/City, Province, and National level.

Industrial empowerment is directed for the development of small and medium industries based on Balinese Branding Culture, which is expected to develop start-ups as a producer of complementary products for big industries, then it will become a big industry in the future. Small and medium industries play a strategic role in the regional economy as they have a very large variety of products, able to fill the region's broad market, become a source of income for the wider community, and have the resilience to various crises that occur and creating a sustainable economy. In the context of the small and medium industry development policy, SMEs are expected to be able to face the challenges of an open global economy as well as to shift in the structure of the economy as a world-class tourist destination through upholding local wisdom values and increasing the competitiveness of SMEs to become the flagship of Balinese Branding Culture.

To achieve those goals, the regulation stipulates a strategy for the development of small and medium industries, as follows:

• a.        Utilization of potential raw materials;

• b.       Creating job opportunities;

• c.        Utilization of technology, innovation, and creativity of technology;

• d.       Expanding market access by developing marketing methods

Industrial products;

• e.       Improving product competitiveness through the application of

standardization;

• f.        Increasing the advantages of local potential-based Industry by

effective coaching and empowerment; and

• g.       Increase the competitiveness of the workforce.

Lastly, the Small and Medium Industry Development Program is directed to be able to synergize with large industries in resulting products. The program includes policy formulation, institutional development, the growth of new entrepreneurship, and the provision of facilities for SMEs.

3.2. Ius Constituentum: The Future of Legal Framework of Tourism Industry in Bali

From a legal theory, ius constituendum is conceived as an ideal law or a law that is expected in the future. ¹² This term reflects a law aspired to in the life of the state but has not yet been formed into law or other provisions. ¹³ The embodiment of ius constituendum may include three aspects: reform the old law into a new law; legal changes to the applicable law, and the formation of law. ¹⁴ In this paper, ius constituendum is meant as an ideal concept of how the future legal framework of the tourism industry in Bali should be designed by taking into consideration the experiences, current facts, and the foresee situation.

Looking back at the experiences of tourism activities before the year 2020, the tourism industry in Bali was criticized for at least the following five matters. First of all, mass tourism disturbs the comforts of travelers in Bali. In terms of infrastructure and access, roads in southern parts of Bali were crowded mainly in the late afternoon besides tourists’ complaints about the quality of pedestrian and traffic facilities. Secondly, degradation of nature and environment quality. Some academic works reveal the degradation of environmental quality i.e air,¹⁵ water, ¹⁶ and coastal¹⁷ areas that were impacted by tourism activities.

Thirdly, Bali has not succeeded yet to correlate the perception and expectation of traveler candidates with the real situation in Bali. I Gusti Bagus Rai Utama conducted a research to confirm the existence of important tourism attraction variables to determine which factors are the main attraction of Bali from the perspective of European tourists who visited Bali. This study is a confirmatory analysis to determine the existence of the tourist attraction of Bali island as a tourism destination from the perspective of European tourists.¹⁸ The study reveals that the image of Bali as the destination of history, culture, and nature is one of the factors that determine European tourists to

visit Bali. ¹⁹ The remaining challenge is to indicate the perception and expectation of those who wish to visit Bali, e.g travelers from East Asia, South Asia, and South Pacific countries.

Forth, tourism services in Bali as part of the tourism industry were questions. This includes hospitality, transportation, guiding, and facilitating access to tourist destinations and objects. Ni Ketut Arismayanti, Made Budiarsa, I Made Bakta, and I Gde Pitana analyzed the conformity level between performance and the concern of Bali tourism destination quality in research that asked the perceptions of 600 tourists in 6 tourist attractions in Bali, namely: Tirta Empul, Penglipuran Village, Tanah Lot, Monkey Forest, Lovina, and Banjar Hot Springs. ²⁰ The research concluded that the quality of tourism destinations does not fulfill what is considered important by tourists and that the service is not satisfactory. ²¹ Besides, indicators of the quality of Bali tourism destinations and tourist attractions show that all indicators are not suitable and have not met tourist expectations. ²² Tourism services offered by big tourism enterprises are not the issue as they employ well-educated and well-trained management and staff. Also, tourism services managed by local governments or a tourism authority appointed by the government are not the main problem as well. The main problems are illegal tourism-related professions²³ as well as tourism services that are managed by undocumented micro business entities and individuals who claim his/her services are part of community-based tourism. Many travelers feel cheated and harmed. Although very few of them reported their unpleasant experience to the authorities, in this era of information technology they have the power to give a bad review of tourist service. This will be contra-productive to the image of Bali as a worldclass tourist destination.

Five, tourists as a costumer in a general meaning, face uncertain protection in Indonesia, including Bali. In an education event on the topic of tourism services consumer protection, the Head of the National Consumer Protection Agency emphasized that every tourist has the right to get legal protection, security, comfort, and safety as stipulated in Law No. 8 of 1999 concerning Consumer Protection, and vise versa, business actors in the tourism industry and the national and local governments are obliged to provide comfort, security, friendliness, legal protection and tourist safety as regulated in Law no. 10 of 2009 concerning Tourism. ²⁴ Tourism industry that promotes trust for the consumers (tourists) could contribute to even more attractive tourism.

The small and medium tourism industry is a specific term that is commonly included in the meaning of tourism enterprises, that are considered as part of stakeholders in

tourism development.²⁵ General types of small and medium industries have been proven able to adapt to any type of economic circumstances, including economic turbulences in a financial crisis. But the current Covid-19 pandemic that entails the abstention of international travelers to Bali since the beginning of 2020 up to now, indicates that small and medium tourism industries that have a direct link with the presence of tourists to Bali are also collapsed.

Philosophically, the law is created to give a greater benefit to society. In this context, the upcoming steps of realizing a self-reliance industry have to look at the present needs of the Bali society, as well as, foresee its future situation.

A Socioeconomic aspect ²⁶ should also be taken into consideration. The rapid development of information technology urged industrial stakeholders to modify their traditional means of working, producing, marketing, and selling their products, both goods, and services. Therefore, the government should ensure that any empowerment for small and medium industries is suitable to the development of means and technology to be adopted and used by them.

From an administrative and public service perspective, the authorities, in this regards local government offices, should facilitate access for capital, business license, and market to small and medium tourism industries. In terms of facilitating access to capital, planning should focus on providing access to capital for the micro-tourism industry that has high innovation value; as well as support or guarantees in applying for business loans with soft interest.

In facilitating access to business licensing, the planning needs to consider progress in the business licensing process which currently uses online single submission. In the future, regardless of the approach used to measure the level of tourism businesses, such as risk-based business licensing, in principle the business licensing system should simplify administrative arrangements. The government should eliminate the complexity of the system for applying for new permits or extensions that may cause the industries to be reluctant to process their administrative permits. This is certainly not good for the tourism industry database and the tax sector.

From a market perspective, the government has the responsibility to open market gaps, develop existing markets, and revive markets that are seen as starting to fade. Although market issues tend to be in the realm of business and the economy, the government still has the authority to intervene in the market from time to time to maintain the stability of the tourism business, especially the micro and medium-sized tourism industry.

4. Conclusion

The creating of Bali Provincial Regulation No.8 of 2020 concerning Bali Province Industrial Development Plan Year 2020-2040 has complied with the guidance of regional regulation-making. The Governor, as well as the provincial house of representatives, shared responsibility in preparing draft and facilitating discussion. The draft of the regulation was also consulted to, and evaluated by, relevant authorities at the national level.

The Annex of the provincial regulation holds that the industrial development of Bali Province carries out two missions. First, realizing the role of leading industries that based on Bali’s branding culture-based in the economy. Second, building and developing these industries to strengthen the economy of the people of Bali. the annex also makes clear that this plan covers the strategy for the development of small and medium industries, that including tourism industries. The Small and Medium Industry Development Program is directed to be able to synergize with large industries in producing products. It includes policy formulation, institutional development, the growth of new entrepreneurship, and the provision of facilities for SMEs.

The development of tourism activities is generally followed by the presence of industry. For decades, small and medium industries play a significant role to sustain the tourism business in Bali. The present situation, as well as the foreseen future need of the tourism industry in Bali, must be taken into consideration in ensuring selfreliance of small and medium industries that is not for the sake of business entities only but also to give a greater benefit to Bali society in general. In this regard, the legal framework of the tourism industry in the future should deal with at least the following five issues: mass tourism; degradation of nature and environmental quality; meeting the perception and expectation of travelers; the quality of tourism services; and protection to the tourists as a costumer.

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Legal Documents

Law No. 3 of 2014 concerning Industry

Minister of Domestic Affairs Regulation No. 113 of 2018 Concerning Evaluation of the Draft of Local Regulations on the Province and Regency/City Industrial Development Plans

Bali Provincial Regulation No.8 of 2020 concerning Bali Province Industrial

Development Plan Year 2020-2040

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