Few could have predicted the tragic massacre of student demonstrators and violent aftermath that led to President Suharto’s premature resignation in May 1998. And even though the general unrest of that month did not extend to Bali, the island suffered its consequences. In spite of the fact that relative peace prevailed on the island, tourist arrivals dropped dramatically and many expatriates fled the island. Several countries issued over-cautious travel warnings and speculated that the worst was yet to come. Bali’s tourist drought continued for several months and brought tremendous hardship to Balinese across the social scale.

Many with huge loans based on optimistic business predictions found themselves so short of money that they could not service their interest, much less principal. In the worst cases some could not even pay their workers salaries as interest rates soared to 60%. Almost every big project that had not yet reached a critical mass or did not have overseas backing was either postponed indefinitely, canceled or shut down completely, and numerous workers were laid off. Owners and managers of the various super hotels and other tourist facilities that had been built at an unprecedented rate over the previous five years by huge corporate investors, were also dealt a shocking blow. And Bali’s large silver industry was virtually shut down due to the almost complete disappearance of hydrochloric acid from the market. This essential silversmithing product could be found, but only at outrageous prices on the black market.

The dark clouds did, however, carry a silver lining. For those still operating with a firm income of foreign currency, salaries in rupiah became negligible when calculated in dollars. In the first half of 1998, locally produced furniture, garments and handicrafts dropped to bargain prices, attracting a shopping frenzy by both foreign and local exporters. Many exporters made windfall rupiah profits as they sold out their entire stocks to bargain hunters in dollars. While imports dropped to a trickle, the demand for export caused a shortage of out-bound containers, forcing exporters to queue for as long as a month and pay a premium to have empty containers brought in from Singapore. The major hotels joined with the government’s Department of Tourism to mount Bali Promo, a public relations campaign aimed at bringing the tourists back by assuring a still-wary international public that Bali was now “Better than Ever”.

Fortunately, the message seemed to get through. By the peak-season month of August tourist numbers had rebounded, although the usually full luxury hotels were still offering cut-rate prices in an attempt to fill rooms. Nevertheless, there can be no illusion that the current state of tourism is comparable to its buoyant pre-crisis condition. The days of uninhibited, exponential tourist growth have come to an end for at least a few years. But can this seeming tragedy perhaps be seen as a blessing in disguise?