Denpasar city is the capital city of Bali Povince, geographically located between 08°35’31” – 08°44’49” LS and 115°10’23” – 115°16’27” BT.

The Population of Denpasar in 2006 is around 583.600 person, occupy 128 km2 of land, population growth rate2002-2006 is 3.01%, density 4,567/km2. Denpasar divided into 4 district which are North Denpasar, East Denpasar, South Denpasar and West Denpasar. Main activities that generate economic of Denpasar is tourism and services, which is much influenced by it’s neigborhood, famous tourist destination Kuta Beach. Tourism in Denpasar itself generates by two main destination area which is Sanur Beach in the Eastern part of Denpasar and Bali Museum and The Bali’s Art Center in the centre of Denpasar City. The position as capital of Bali province, it’s function as tourists destination, and it’s location that are close to Kuta Beach, attract many people to come to Denpasar. Living cost in Denpasar are lower compares to Kuta, attracts many people who works in Kuta to live in Denpasar.


Short History of Denpasar: Economic Perspectives

The main economic activities, in 2006, is trading and tourism which is 38,42 %, while the second economic activities is services (26,84%) followed by industry 12,86 %. The agicultural field is only 2,32 %. As Bali is one of the most popular tourist destination in Indonesia and for few years awarded as the world best island by The International Travel Magazine, the development of tourist accomodation is growing fast, attracts investor from all around the world. Most favourite investment is tourist accomodation which mostly built in Nusa Dua and Kuta near Denpasar and Sanur Beach in Denpasar, while the worker live in Denpasar where the living cost more affordable.

Trading activities experienced a rapid increase since 1998 when many people from Jakarta move to Bali during the succsession of the Soeharto era. Since then, the physical development increase rapidly because many migrant move to Bali from Jakarta and invest their capital in Bali.

The Bali bombing in 2002 and 2005, makes the Bali economics in general colapse including Denpasar. The amount of unemplyment worker increase and informal sector become alternative working field. The growth rate of GDP after bombing was decrease to 5.03% in 2002. In 2006 the tourism sector were rebuilt and many investor from all over the world bring their investment to Bali. Tourist accomodation, ie. villas, apartments, bungalows once again become the most favourite investment. The worker and labour from Java and Lombok come and increases city’s density. The growth rate of GDP in 2006 is incrase and reach 5,88%. Average growth rate of GDP in Denpasar at constant 2000 prices from 2002-2006 is 5,62% while in province scale the average growth rate is 3,83%. This indication shows that many capital and resources are concentrated in Denpasar.

Denpasar in the Knowledge of Economy

Berg, L. van den et al (2004) assume seven foundations and activities of a knowledge city. These sevens points can enhance performance and attractiveness of the city succesful in the knowledge economy; knowledge base, economic base, quality of life, accesibility, urban diversity, urban scale and social equity.

As Bali is one of the main tourist destination and attract many people, there are many polythecnics specialized in tourism establish in Denpasar. The labour market in tourism is still become one of the most potential market. In education fields, now in Denpasar, also many education institution make diversification, establish ICT training attract young people from all around Bali to come to Denpasar. The bachelor degree in agriculture is for free to enhance agriculture field, which has been left behind after the succsess of tourism business. The knowledge base are built to support all economic activities in Denpasar and generally Bali Province.

To reduce the dependance on tourism, Denpasar authurity decided to do diversivication in the economic base. Denpasar rethinking to strenghtened community based economic in agriculture, small and medium sizes home industry by built internet-based marketing and built gives loan without collateral. The challenges is, mostly, people in agricultural and home industry field doesn’t familiar with computer and internet, so far the program doesn’t work well. Now the economic base has an alternative, not only depends on tourism. In 2006 there are 219 small enterprise with 1.623 labour and 47 medium and large enterprise with 2.846 labour, while in 2002 only 24 small enterprises with 199 labour and 5 medium and large enterprises with only 220 labour.

There are two kind of accesibilities in Denpasar, external accesibilities and interal accesibilities. International airport, Ngurah Rai International Airport, and harbour are located near Denpasar in a relatively close distance, only 20 minutes to the city center. The presence of airport is very important to support tourism, while the presence of harbour is important to send goods that are produced by home industry. These external accesibility, airport and harbour, is good and internationally known, but not the internal accesibility.Public transport in Denpasar only depends on minibuses that are not reach all area of the city, and the relatively uncomfort with no schedule. Dependants on private vehicle is very high, mostly motorcycles. Pedestrian ways are not accesible by disable and elderly people, it’s too narrow and the material quality is relatively poor. The public transport is not a good choice if we want to go travelling around Denpasar. The crowded public transportation also brings air pollution to the city’s spaces.

The presents of some public parks in Denpasar, makes the inhabitants has more choices to spend their leisure time, and makes a better quality of life. There are two main public park, Puputan Badung Park and Puputan Margarana Park, and a beautiful Sanur Beach. The houses are built in traditional Balinese architecture with a fairly good, but slums are also exist in a relatively small number (3,03%). The parks in Denpasar also absorb smog, that produces by motorized vehicles, and make the air clean.

Denpasar’s inhabitant comes from all around Indonesia and, in very small numbers, expatriat from foreign country. All of them has different culture, but Balinese culture are dominant. These urban diversity makes city looks more colourfull. We can see traditional neigborhood in the northern part of Denpasar, while the modern mixed neigborhood in the western part of Denpasar. Sanur Beach in the eastern become a international neighborhood, where expatriats live. There are 421 expatriat who live in Denpasar, in the year 2006.

Relative small city like Denpasar, needs to build strong network in a globalising world. The competition amongs tourism cities are very tight, and force city manager to aware to this condition. To see Denpasar in the global maps is almost imposible, but this small urban scale can be seen if the network that were built is strong. Without seeing the maps, people know Bali and Denpasar in the tourism network. Bali Tourism Board has a hardworking task doing this job.

Reducing poverty and inequality can stimulates economic growth by inceasing safety and by enhancing the purchasing power, which will strengthen the demand side of economy (Hall and Pfeiffer, 2000 in Berg, L. van den et al, 2004). Tourism industry in Denpasar attract also nonskilled worker in construction sector. After the construction project has finished, then they loose their job and become unemployment. There are no social equity for those who mostly work illegally. These condition increases poverty and inequality in Denpasar because there’s no insurance or social equity exist.


Poverty and Slums

Urban slums appears along the Badung River, where many poor people live in these area legally and illigelally. Slums area also appears squaterly in some area in four Denpasar’s districts. Based on the study conducted by PT. Narada Karya in 2007, population of poor people in Denpasar is 17.468 persons in 4.159 households. Characteristic of urban poverty in Denpasar can be seen from some physical factor such as location, building material, accses to services, ie. drinking water, sanitation, electricity, etc.

The poor is came from another province and usually occupy area near waterbodies, sometimes in illegal land status. In Denpasar, mostly, the status of the land is rented from local owner. Basic social services is poor. They use non permanent building material for their houses, basic services and facilities are minimum even their use illegal electricity power, makes their own well to obtain clean water, the area is unreachable by public transport, and they throw away the trash directly to Tukad Badung River, makes the environment getting worst time over time.

Illiteracy rate in Denpasar, based on Denpasar in Figures 2007, is 4.63% and mostly elderly people while illiteracy in labour force is almost zero. Unemplyent is around 6.06% from the poppulation. These two indicator, illiteracy and unemplyment, doesn’t has a direct link, because the illiteracy occurs among elderly, while the unemployment has a direct link to job opportunities. The informal sector in denpasar brings more job opportunities, and the inhabitants of Denpasar happy with these conditions. It is easy to find foods in affordable prices along the streets in Denpasar. Many street vendors offer cheap food and they open along the night until 04.00 in the morning.

Should it Become Formalised? Informal Sector

There are three kind of informal economic sector in Denpasar, day informal sector, night informal sector and very rare, morning informal sector. Common informal sector in Denpasar during daytime is door to door food trader, in the night many semi permanent café appears along the main street, selling food in a very various item, from sea food, chinese food, indonesian food, etc. In the morning, door to door raw food material trader go around neigborhood by bike or motorbike.

Friedmann in Iain Begg 1999 said that informal work, as it is called, is “a highly vulnerable activity; nevertheless it is of crucial importance….In countries where neither unemployment insurance nor social security exist, and where the formal economy is quite unable to productively absorb the growing increments of urban labor resulting from natural increase and migration, informal work is one of the principal sources of income for the poor”.

Informal activities in Denpasar increase rapidly since there are many workers lost their job after Bali Bombing 2002 and 2005. Informal sector also occurs by the high grade of migration, where the migrant doesn’t has enough skill to fulfill the limited formal job opportunities. The rapid development after Bali bombing, to recover economic conditions, also attract more people to come, increase the migration rate, but the working fields is limited to all of those migrant. Informal sector in food trading become major economic activities and the big new economic challenges. Street vendors in the night is the most favourite sector, after formal restaurant and café closed time. Other favourite informal sector is door to door ready and fast food trader. The commodity are, meatball, fried noddles, fried rice, bakmie, etc. Beside food and goods trader, in informal sector field also there are barber shop, motorbike repairer, handphone shop and computer repairer, and other services field. Garbage collection also amongs the favourite informal sector, mostly at the dumpsite area. Garbage collector riding their bike also come door to door to collect hosehold’s unusable goods.

Since informal sector activities are largely ignore, rarely supported, often regulated, and sometimes actively discouraged by the government (ILO definition on informal sector in Dijk, 1996), informal sector nowadays, in Denpasar, has their own organisation and were built by community initiative. The biggest informal sector organisation in Bali is Koperasi Krama Bali (Bali’s People Cooperation) which members comes from all around Bali Province. The organisation give credit, facilities, workshop, training, and also create network amongs raw material producer into final trader. Informal sector become “formalised” not by government but private sector and by the informal worker itself.


The term ‘sustainable development’ has become widely used to stress the need for the simultaneous achievement of development and environmental goals (Mitlin and Satterthwaite, 2001). The issue of sustainability often linked with the disharmonius of nature, the pollution, natural resources degradation and most of the issue does not mention the city as a part of disscusion. Mitlin and Satterthwaite, 2001 clarify that it is not cities that are responsible for most resource use, waste, pollution, and greenhouse gas emissions, but particular industries and commercial and industrial enterprises (or corporations) and middle and upper income groups with high consumpstions lifestyles.

Poor public transport management in Denpasar, forced people to own their own transportation vehicles which most of all vehicle are motorized and use fossil fuell. The amount of motorized vehicle in Denpasar in 2006 is 438.266 vehicle, it means more than 75% of the poppulation own a motorized vehicles. The lack of public transport brings traffic crowded and jam during the rush hour in the morning and afternoon. Traffic jam makes travel time to and from work longer and increase driving time and results in an increase in air pollution and in the incidence of respiratory diseases (Jackson and Kochtitzky, 2002). Large amount of private vehicle produce more smog that caused many bad effects on human health.Other bad influence of crowded motorized vehicles is it’s noise, and increase the risk of traffic accident, brings the road become a dangerous places.

Home-scale industries along Tukad Badung river doesn’t have liquid waste treatment plant. Their throw out all of their liquid directly to Tukad Badung river creates chronical water pollution. At the end, water pollution also can infect the soil, because the water from Tukad Badung river also uses as irrigation water sources.

Lack of air quality, water pollution, poor sanitation and drainage system in Denpasar increase the potency of urban disease. Denpasar municipality Healthy Office reported some potential diseases become an epidemic in this city. Three most potential diseases become an epidemic are: (1) Diarrhea, (2) dengue fever, and (3)Pneumonia. Diarrhea is linked to bad sanitation system and lack quality of drinking water. Dengue fever linked to bad waste management, and lack of environmental awareness. Pneumonia linked to bad air pollution and smog.


Theoritically, decentralisation in Indonesia has make local government autonomous to manage their city. In practice, many cities and municipalities still rely on the central government in order of development fund and human resources from the central government.

In the first step of decentralisation, around 2.1 million public servant were moved from central government to local government. The salaries of those public sevants became responsibilities of local government. (Urban Sector Development Unit Infrastructure Department East Asia and Pacific Region ,2003).

To make a frame in developing Denpasar as the autonom municipality, local authorities, together with all stakeholders, summarizes the vision and mission of Denpasar which are as follows:

· Vision : to build Denpasar as a Cultural City in a in harmonious and equilibrium in sustainability.

· Mission:

1. To build community character based on Balinese culture

2. to develop local genius

3. to realized good governance by law enforcement

4. to enhance society welfare

5. to accelerate economic growth by develop comunity based economy

Loans without collateral gives to small and medium size enterprises to increase it’s performance. When the performance of small and medium size enterpises increases, expected enhance the welfare and increase economic growth. Some innovation to attract investor and makes public private partnerships also generates by government. One of the succsess is Kesiman Kertalangu Cultural Villages. In these area government stimulates local people to make their own tourism object, where they can sell souvenirs, agriculture products and doing some sport activities such as jogging, beach volley, or spent their leisure time with families.

Transparency is an important issue in government services. All inhabitants can criticizes the government through mass media, government websites, or in other ways. All governement project’s bidding must published in mass media, so the process is transparent. In order to make a better places, some physical project conducted ie; inner city revitalisation, green river campaign, slums identifications, urban renewal.

To answer health problem, some community health center were built. At least there are 10 community health centers, 26 coomunity health sub centers, 54 clinics and 16 hospitals in 2006.


The tourism business is very vulnerable in the issue of terorrism and security, while the security is still handled centralized. It is better to make diversification in economic field. Some rules and laws shows explicit directions in economis development. Local Development Program (PROPEDA-Program Pembangunan Daerah) creates chances to built economic strategy in local level. Since it is to risky to depends and specialised on tourism, agricultural and home industry become alternative to do diversification, because there’s not much natural resources in Denpasar.

Public transportation system should become priority in developing Denpasar, because it has many direct link to another field, trading, sustainability, eficiency, pollution, health, etc. it is important to have a good public transportation system in a tourism city like Denpasar. Having a fresh air, clean water, healthy environment, good basic services can enhance the quality of life of Denpasar’s inhabitant.

The government together with all stake holders including the citizens have to make a strong cooperation to realize the whole agenda for a better future.

List of References

Begg, I. (1999), Cities and Competitiveness, Urban Studies, vol. 36, 5-6, pp. 795-809

Berg, L. van den et al (1999), The Urban Life cycle and the role of aMarket Oriented Revitalisation Policy in Western Europe, in: Urban Change in The United States and Western Europe, A.A Summers, P.Cheshire and L.Senn (eds), The Urban Institute Press, Washington.

Berg, L. van den et al (2004), European Cities in The Knowledge Economy, Euricuur, Rotterdam.

Dijk, Meine Pieter van (1996) The Urban Informal Sector as a new Engine for Development, Theoritical Developments since 1972, Asien Afrika Lateinamerika, Vol.24, pp.177-192.

Dijk, Meine Pieter van (2006) Managing Cities in Developing Countries: The Theory and Practice of Urban Management, Edward Elgar Publishing, UK.

Mittlin, D and Satterthwaite, D (2001), Sustainable Development and Cities. In C Pugh (ed.), ustainability, the Environment and Urbanization, Earthscan, London, pp.23-61 (36 pp.)

Mittlin, D (2005), Understanding Chronic Poverty in Urban Areas, International Planning Studies, Vol. 10, No. 1, Pp. 3 – 19

Stren, Richard (2006), An Urbanizing Africa, The Challenge of Informality, Toronto, University of Toronto

Urban Sector Development Unit Infrastructure Department East Asia and Pacific Region (2003) Kota-Kota Dalam Transisi : Tinjauan Sektor Perkotaan Pada Era Desentralisasi di Indonesia, East Asia Urban Working Paper SeriesThe World Bank

Wratten, W (1995), Coceptualising Urban Poverty, in Environment and Urbanisation, Vol.7, No 1, Pp 11- 36.





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