SEMINYAK, Indonesia — A decade ago, terrorists killed more than 200 revelers on the resort island of Bali in one of Asia's worst attacks. Residents wondered if the idyllic tropical retreat would ever recover, especially after another, smaller attack killed 20 people in 2005.
Bali did rebound—so much so, that many residents and visitors now feel overwhelmed. Foreign tourist arrivals have more than doubled in the past 10 years, leaving once-quaint villages gridlocked, with bumper-to-bumper lines of cars snaking through their narrow roads. Locals say there aren't enough police to rein in crime, while property speculators are pushing land prices beyond the means of many residents. Construction is paving over some of the island's most pristine environments.
Local authorities are even building toll roads on an island once better-known for lush rice paddies, beaches and historic Hindu temples overshadowed by volcanoes.
"If you think of Bali as a ship, the worry is that sooner or later the ship will sink," said Nyoman Wardawan, head of tourism marketing at the Bali government tourism office. He says about 200,000 new cars are added to Bali roads each year. "We are very limited to accommodate all these new visitors."
Residents and survivors of the 2002 bombings are planning a memorial service on Friday to commemorate the 10th anniversary of the attacks by Jemaah Islamiyah, an al Qaeda-linked terrorist group, in which suicide bombers detonated a car bomb on a crowded street outside a nightclub and a backpack bomb in a popular pub. The blasts killed 202 people, most of them in their 20s and 30s, including 88 Australians and seven Americans.
Authorities on Wednesday raised the country's security alert to its highest level after uncovering suspicious activity suggesting that some might be targeting the memorial events.
But Indonesia has largely succeeded in neutralizing terrorists in recent years after launching a crackdown on radical groups after the Bali bombings with the help of the U.S., Australia and other countries. Those efforts have included the creation of a new terrorist investigation police squad known as Detachment 88 and changes to Indonesia's legal code to make it easier to convict those accused of crimes. Authorities say most people involved in the 2002 attacks were later arrested or killed.
All that has made more people comfortable returning, even if some experts believe the risk of terror activity remains. After falling to fewer than a million in the aftermath of the attacks, the number of foreign arrivals has been increasing every year since 2006, hitting a record of more than 2.7 million in 2011, according to the Bali Tourism Board. Arrivals are up another 4.5% so far this year, and some government officials say they are aiming for six million by 2015 or soon after—far above Bali's population of about 3.9 million.
The figures have been bolstered by more American tourists, thanks in part to the movie "Eat Pray Love," starring Julia Roberts, which was based partly in Bali. Bali also has hosted rising numbers of domestic travelers as Indonesian incomes climb, as well as more Chinese visitors, whose arrivals are growing by 10% or more annually.
Not all the tourists are leaving happy. Steve Walker, an Australian in his 40s traveling with his wife, said the taxi ride alone from the airport to his resort in Seminyak took over an hour, compared with about half an hour on his last visit four years ago.
"We have been to Bali four times now, we used to love it, but this will be our last time here," he said. "We came here to escape the city, not have to plan around jams and spend hours in the car."
Drivers and tour guides say they have had to reroute their tours or discourage visitors from going to once-popular sites if they are short on time, including parts of northeast Bali that are home to a volcano and temples, and used to take an hour and a half to reach, but now can take four hours.
While all the activity has helped boost incomes for some residents such as taxi drivers, even boosters of the island worry it could backfire in the long run.
"It is not interesting anymore when on a full-day, eight-hour tour you spend five hours on the bus," said Al Purwa, president of the Association of Indonesia Tours and Travel Agencies (ASITA) Bali, a body that represents more than 350 travel companies on the island.
Local authorities imposed a moratorium on new hotel development in late 2010 to limit hotel construction in Bali's overpopulated south, where 70% of the island's roughly 2,200 hotels are located in an area that encompasses no more than 5% of Bali's total land mass. But it is often ignored by officials, residents say. Authorities say fresh construction continues largely because some projects were planned before the rules were put in place.
New hotels include a 743-room Mulia hotel and a Le Meridien in the busy Nusa Dua and Jimbaran beach areas respectively, both planned for the end of 2012.
Despite the moratorium, land prices in one of the most-developed beach communities, Seminyak, have shot up 200% to 300% from two years ago, says Daniel Miller, an adviser at property consultant Jones Lang LaSalle's Bali office. He said bidding wars break out among hotel developers whenever new plots are up for grabs.
Local leaders are responding with more construction of their own—even though it will likely only mean more visitors in the long run. Work is under way to expand the existing Ngurah Rai International Airport in south Bali, while authorities are scoping out sites in northern and eastern parts of the island for a new airport aimed at spurring development in Bali's quieter regions, though a location hasn't been chosen. A new toll road linking Nusa Dua and the airport is under way. Public bus routes are being planned, starting with a modest fleet of 18 buses next year.
At the Chedi Club Tanah Gajah in the rice paddies near the famed arts community of Ubud, general manager Simon Spiller says occupancy rates have jumped to 88% this year compared with 69% in 2011, and less than 40% when the resort first opened in 2004. The resort includes 20 villas spread across five hectares of land, and has enough space to grow organic food at the back of the hotel for guests.
Mr. Spiller remains worried, with new construction sites popping up around the resort and more cars on Ubud's narrow roads.
"Every morning I wake up, hoping that things remain the same," he said, responding to faint sounds of construction heard from the resort's garden. "But I know that if I were to leave Bali and come back in a few years, the landscape is going to be completely different."
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