Tony Stephens, Kuta – More than 90 per cent of Balinese communities suffered a fall in income and school drop-out rates were up to 60 per cent after the Kuta bombings, according to a report released yesterday.

Some Balinese children who stayed at school also had to work to help the family make ends meet, and some teachers, whose incomes were affected by unpaid fees, were also forced to work outside school hours.

The report, Bali, Beyond the Tragedy, was compiled by the World Bank, the United Nations Development Program and USAID, in association with the Indonesian Government. It is the most comprehensive assessment of the socio-economic effects of the bombings.

The report focuses on tourism, which the terrorists had targeted as Indonesia's largest foreign exchange earner after oil and gas.

It recommends that the Government and donors concentrate on security, economic diversification and community-based development to mitigate the crisis.

It also looks at the impact on other parts of Indonesia, notably Lombok and East Java, where goods are produced for Bali's tourist market. Bali's poverty rate last year was only 4 per cent, compared with a national figure of 16 per cent, but is expected to rise this year.

A statement released by the Co-ordinating Minister for Economic Affairs, Dorodjatun Kuntjoro-Jakti, said the "doomsday scenario" predictions made immediately after October 12 last year were wrong and the Indonesian economy had proved resilient.

But the report offered a less optimistic outlook:

• Of the 90 per cent of respondents who noted an income declines in their Balinese communities, the average reduction was 40 per cent.
• Twenty-nine per cent of workers were affected by job losses and even more were affected by reduced incomes and underemployment.
• Up to three-quarters of about 50,000 people working in the hotel industry were either working reduced shifts or had been made redundant. Tourists are returning but travelling less and spending less.
• Thirty-one per cent of the 400 surveyed schools reported children dropping out. The rates varied greatly, with the highest levels in the north-east of Bali.

The report recommended grants or scholarships from the Government, private donors and local safety net programs.

Andrew Steer, of the World Bank, said that the overall effect on employment was a little less than expected but the effect on incomes was greater.

He said that fear of corruption was one reason why aid agencies were slow to get funds into communities – they had to ensure that the money was well targeted. The World Bank was already helping 610 villages.