A new Positive Investment List was published by the Indonesian government in February 2021 opening up new business opportunities in Bali that are especially attractive to foreign investors.
Businesses in trade, hospitality and tourism in particular play a major part in Bali’s expatriate and tourist led economy. Several of these business lines were reserved for 100% local ownership and in some cases allowed only partial foreign ownership in Bali. Many of these business lines are now open to 100% foreign ownership. Read on to find out which business lines have been affected and how the latest legislation has changed company set up requirements in Indonesia.
Business opportunities in the hospitality industry
As a tropical paradise island with a large population of expats, Bali holds profitable business opportunities in the hospitality industry all year round.
| Business Classification with Foreign Ownership in Bali | Old regulation – Allowed % of foreign ownership | New regulation – Allowed % of foreign ownership |
| Spa | 51% | 100% |
| Golf course | 67% or 70% (ASEAN) | 100% |
| Art Gallery | 67% or 70% (ASEAN) | 100% |
| Performing Arts Activities | 67% or 70% (ASEAN) | 100% |
Business opportunities in the trade industry
Trade and distribution were heavily restricted before the pandemic. The new positive investment list has opened up business lines, some that were previously completely banned from foreign investment, to 100% foreign ownership in Bali.
Foreigners now have the opportunity to import goods and distribute them in their own shops in Bali with full ownership. These changes will have a significant impact on the retail industry opening up more commercial shopping businesses to foreign investors.
| Business Classification with Foreign Ownership in Bali | Old regulation – Allowed % of foreign ownership | New regulation – Allowed % of foreign ownership |
| Department Store (47191) | 0% or maximum 67% if a special license from the Ministry of Trade is issued | 100% |
| Supermarket (47111) | 0% | 100% |
| Distributor | 67% | 100% |
| Warehousing (52101) | 67% | 100% |
| Property Broker (68200) | 0% | 100% |
| Commission Agent (46100) | 0% | 100% |
| Retail Store, unless specifically limited categories | 0% | 100% |
Business opportunities in the tourism industry
The main contributor to Bali’s GDP is tourism. Several business lines in this industry were reserved for locals, but the latest update to the positive investment list opens up more opportunties to foreign investment.
| Business Classification with Foreign Ownership in Bali | Old regulation – Allowed % of foreign ownership | New regulation – Allowed % of foreign ownership |
| Travel Bureau | 67% or 70% (ASEAN) | 100% |
| Catering and Catering Services | 67% or 70% (ASEAN) | 100% |
| Two-star hotel | 67% or 70% (ASEAN) | 100% |
| Exploitation of natural tourism objects outside of conservation areas | 67% | 100% |
| Advertising | 51% (ASEAN) | 100% |
| Organizing Meetings, Incentives, Conferences, and Events (MICE) | 67% or 70% (ASEAN) | 100% |
Changes to accommodation business lines in Bali
Not all the changes made to Indonesia’s investment laws have been favourable to foreign investment. Business opportunities in Bali’s accomodation lines are now more restrictive.
These changes restrict small accommodation based business lines (Usaha Mikro Kecil Menengah, UMKM) to Indonesian individuals meaning both Indonesian and foreign-owned limited liability companies can no longer register these businesses in Bali.
| Business Classifications with new limitations to foreign ownership | Old regulation – Allowed % of foreign ownership | New regulation |
| One-Star Hotel | 67% | Reserved for micro-, small- and medium- sized Indonesian enterprises |
| Non-Star Hotel/Hotel Melati | 67% | Reserved for micro-, small- and medium- sized Indonesian enterprises |
| Motel/Guest House | 70% (ASEAN only) or 67% | Reserved for micro-, small- and medium- sized Indonesian enterprises |
| Villa | 100% | Reserved for micro-, small- and medium- sized Indonesian enterprises |
If you want to start a business running small accommodation rentals in Bali, there are alternative classifications that can be used. To find out how foreigners can run an accommodation business with a villa, non-star hotel, motel or guest house, read A Guide to Renting out Villas in Bali as a Foreigner.
Requirements for setting up a business in Bali
The process for setting up a company in Bali remains mostly the same. There have been no changes to the capital requirements for opening a company or to the company structure of businesses with foreign ownership in Bali.
Here are a few resources on company setup that remains largely unchanged by the latest legislation.
- Minimum Capital Requirements for Setting up a PT-PMA
- Guide to setting up a foreign owned business in Indonesia
- Corporate Structure of a foreign owned business in Bali
Depending on the business classification, there may be additional licenses required to open your business. The licensing office in Bali is in the process of implementing the local regulations on which business classifications require additional licenses and the requirements for each license.
Requirements for investor and work permits (KITAS)
One change to company set up requirements lies in the need for a location permit. Most business lines now no longer require a location permit otherwise known as a company domicile (Surat Keterangan Domisili Usaha, SKTU) to set up a company. This licence is now only required if your company wants to apply for working stay permits for its employees.
The sponsorship of investor work permits (investor KITAS) does not require a location permit. However, you will still need to register your company to an address that has the building permits required for your business functions. Depending on the business activities, a virtual office is sufficient for setting up a company and acquiring an investor work permit (KITAS).
Want to take advantage of the new investment opportunities in Bali? Get in touch with one of our consultants.
