Aceh Diary: Price distortions

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There are two prices in Banda Aceh—the price charged to locals, and that reserved for foreigners. Or as some around here put it the “blue-eyed price” and the “brown-eyed price."

I had heard before coming out that Banda is something of a bubble economy these days from all the local and international organizations and NGOs falling over each other in a rush to spend the big bucks. I didn’t realize then to what extent that’s true, and how much it’s distorting the local economy and perceptions of the people as to the budget limitations some organizations, including IFC, have.

The estimates we received from vendors, in more cases than not, were eye-popping not only for the international staff but local ones as well. To give you a taste, these included $1,700 (labor only) to paint 8 rooms and $1,400 to plant some grass on a few relatively small weedy beds of mud disgracing our main entrance. Of course, we decided we’d much rather don some overalls to paint ourselves and keep the Claritin handy while letting the weeds out front grow to their full glory than spend that kind of cash.

My own wallet was in no less danger: a travel agent we had initially selected quoted $2,750 for a “discounted” roundtrip economy ticket from Banda to Bangladesh (I could fly full-fare to Alaska for less!). So I bought an entirely undiscounted $1,100 business class ticket instead, through an agent back home in Dhaka. To me, the enormous ticket price differential was telling, particularly given the cheaper one was of a higher class. Of course, partly responsible was the lack of competition in Banda Aceh, where good travel agents are few and far between, and the cut demanded by the middleman—in this case a travel agent in Medan (nearest major Indonesian city) which books the tickets.

These examples are synonymous with what we’ve seen in other industries/sectors in Banda. In some instances, local businesses were actually asking for large deposits and advance payment as insurance, having dealt with some sketchy NGOs who skipped town leaving unpaid bills and a bad image of the development community in their wake. It would be interesting to know though, what the price for such products/services would’ve been before the tsunami, or even now, if we didn’t have a signage on our roof.

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