Indonesia halts new hotel, villas construction in Bali: Here's why

"The construction of new hotels, villas, and nightclubs would be paused," Indonesian authorities said

Indonesia has decided to halt the construction of new hotels in certain areas of Bali, raising concerns about the effects of overdevelopment on one of its most iconic tourist spots. Bali, long a favourite among international visitors, has seen a surge in tourism following the pandemic, but the strain on local infrastructure, the environment, and the island’s cultural heritage is now under the spotlight.

Hermin Esti, a senior official at the Coordinating Ministry of Maritime and Investment Affairs, confirmed the government’s decision.

"The construction of new hotels, villas, and nightclubs would be paused," he told news agency Reuters. The timeframe for this moratorium, however, remains unclear. Senior minister Luhut Pandjaitan suggested in an interview with news website Detik that it could last up to a decade. According to official data, Bali had 541 hotels in 2023, up from 507 in 2019.

 

Bali isn't the only destination taking action against overdevelopment. A number of countries have introduced measures to control the spread of infrastructure in tourism-heavy areas, often to protect natural resources and preserve the local character.

In April 2024, Amsterdam introduced a dual approach aimed at limiting new hotel construction while also capping the number of overnight stays by tourists each year. According to Euronews, Amsterdam has implemented a "one in, one out" system for hotels, meaning that a new hotel can only be built if an existing one closes. Furthermore, any new hotel must match or reduce the number of beds offered by its predecessor.

Thailand also placed restrictions in 2018 on the construction of large hotels and villas in Koh Samui and Koh Phangan, seeking to safeguard the islands' fragile ecosystems. Similarly, Venice has been grappling with issues of overdevelopment and heavy tourism, prompting authorities to restrict new hotel constructions in certain parts of the city. Efforts are being made to maintain a balance between welcoming tourists and preserving Venice’s unique architectural and cultural identity.

Greece has taken similar steps in Santorini, with authorities enforcing strict building regulations to prevent overdevelopment. They have limited the number of new hotels and villas to reduce the strain on infrastructure and protect the island’s traditional architectural style.

How is Bali managing the tourism surge?

Bali's appeal has only grown since the pandemic, with foreign visitor numbers soaring. Data from Indonesia’s statistics bureau shows that 2.9 million international visitors arrived on the island through Bali airport in the first half of 2024. However, this influx has brought its own challenges. Increased traffic, rampant construction, and viral incidents of tourists misbehaving have caused frustration among both locals and officials. Videos on social media showing tourists disrespecting local customs—posing nude at sacred sites or disrupting traditional ceremonies—have fuelled anger among Bali residents and Indonesians across the country.

According to Luhut Pandjaitan, around 200,000 foreigners are currently living in Bali. The growing expatriate community has raised concerns about job competition and crime. The government is now auditing tourism on the island, aiming to find a balance between sustaining the economy and preserving the local culture and environment.

In February 2024, Bali introduced a tourism tax of 150,000 rupiah (approximately $9) for foreign visitors. Authorities are also considering a new rail link between Bali’s airport and popular tourist destinations to ease congestion on the island's roads, which are often clogged with traffic.

Tourism Minister Sandiaga Uno recently warned that South Bali is edging towards over-tourism. "A 10% increase could push us into that territory. We must avoid a situation like Barcelona, where tourists became public enemies,” he said, according to national news agency Antara.

However, despite these concerns, Indonesia remains keen on promoting tourism, especially to international markets. In 2023, an estimated 606,439 Indian nationals visited Indonesia, underscoring the country’s popularity among Indian travellers. To further boost tourist numbers, Indonesia is planning to offer free entry visas to visitors from 20 countries, including India.

Indonesian Tourism Minister Sandiaga Uno confirmed in June that the visa exemption policy was on track. He reassured reporters that the policy would be finalised before the change of government in October 2024.