A Guide To Investment Opportunities in Labuan Bajo

Labuan Bajo is an area in Flores, Indonesia. It is a fishing town near beautiful waters and is the gateway to the very popular Komodo Island. Investors must take advantage of the opportunities for businesses in Labuan Bajo.

Why Invest in Labuan Bajo

Labuan Bajo is a picturesque coastal town in Indonesia. It is just starting to gain popularity among international tourists. As such, there is not much competition yet in the area.

Tourism-focused Development

Labuan Bajo is part of the Indonesian government’s 10 New Balis initiative. This project aims to develop tourist destinations in Indonesia and to make them as popular as Bali.

Under this project, the government will make improvements to selected destinations. The goal is to mimic the success of Bali as a tourist destination.

The government will improve public facilities and transportation. They will also make it easier for tourists to go to these destinations. One way is by allowing visa-free entry to foreign nationals from certain countries.

There will also be a lot of marketing campaigns to promote Labuan Bajo. The campaigns will target foreigners as well as locals.

International Port

The new port is good news for both businesses and tourists. For one, it will ease the process of importing and exporting goods. In addition to that, it provides tourists access to the area and other nearby destinations like Komodo Island. The port also allows Labuan Bajo to be a stop for cruises.

International Airport

The airport servicing Labuan Bajo is set to become an international airport. Komodo Airport will accommodate flights from Australia and Hong Kong among others. The airport will also increase passenger and cargo capacity.

A subsidiary of the world’s best airport, Changi Airport, will manage Komodo Airport. The reputation of the airport operator will surely grab the attention of tourists.

Ideas for a Business in Labuan Bajo

Tourism and Hospitality Businesses in Labuan Bajo

The government is building up Labuan Bajo as a tourist spot. In line with this, tourism and hospitality businesses in Labuan Bajo make for solid investments.

Accommodations

As the number of tourists in Labuan Bajo increases, so will the demand for accommodations. Foreign investors can build or acquire property to house tourists visiting Labuan Bajo. You can open a hostel or guesthouse in Labuan Bajo. Renting out rooms or villas through Airbnb is also an option as long as you register your business.

Restaurants

The need for restaurants will also increase as tourism in Labuan Bajo grows. Since the area is not quite developed yet, you can stand out by offering items from your own culture. You can also look for local consultants and workers so you can serve native dishes.

Diving and Snorkeling

Labuan Bajo is close to the water which makes it a great spot for water activities. Diving and snorkeling are quite popular. Marine life in Labuan Bajo includes manta rays, sea turtles, and sea sponges. Businesses in Labuan Bajo that offer diving and snorkeling will consistently generate income.

Tours

Organizing tours in the area is another option for investors. There are many attractions in and around Labuan Bajo. These include Komodo Island, Rangko Cave, and Kalong Island.

Setting up tours to show the best spots will surely catch the interest of tourists. You can also organize tours focused on the local culture and traditions in Labuan Bajo.

Providing Services to Businesses in Labuan Bajo

There is potential to generate income from other businesses as well. The demand for services to support businesses will grow as more investors come in.

Internet Service Providers

The Indonesian government is setting up Labuan Bajo to be one of the “new Balis.” The demand for stable and reliable internet access will continue to grow.

Labuan Bajo will likely attract digital nomads and other remote workers. As such, accommodations must provide internet connectivity to their guests. Businesses will also need stable connections to communicate with clients and customers.

Training Centers for Hospitality Services

The influx of hospitality businesses will mean employment opportunities for locals. To give themselves a competitive edge, people will want to receive specialized training. Businesses will invest in training their staff so they can provide quality service.

Construction

Labuan Bajo is still quite industrial. Many businesses need construction and renovation services. This opens an opportunity for foreign investors to provide these services.

Indonesia allows partial foreign ownership of a construction company. Alternatively, existing construction companies based overseas can open a construction representative office (BUJKA). With a BUJKA, you can partner with a local construction company to work on projects in Labuan Bajo.

How to Start a Business in Labuan Bajo

To open a business in Labuan Bajo, you must meet the following requirements:

• Shareholders. Businesses in Indonesia must have at least 2 shareholders. The shareholders can be individuals or corporate shareholders.
• A valid business address. You must have an address for your business to register it. You must have an address in Flores with the appropriate building permit for commercial activities.
• Minimum paid-up capital. The minimum paid-up capital for foreign businesses is IDR 2.5 billion (approx. USD 170,000). Note that any business with foreign ownership is a foreign business.
• Local licenses. Depending on the nature of your business, you may have to obtain local licenses in Flores.

The percentage of foreign ownership allowed depends on the business classification. 

Business activities	Allowed foreign ownership
Hostel, short-term rental villa, or guesthouse	100%
Hotel (4 stars or less)	67%
Tours	70%
Restaurant	100%
Internet Service Provider	67%
Training Center	100%
Construction	67% (non-ASEAN), 70% (ASEAN)(Min. capital requirement of IDR 50 billion)

Emerhub is ready to help you start your business in Labuan Bajo. Our consultants will advise you on the classification that is most suitable for your company. We will take care of central licenses. We will also facilitate obtaining local licenses in Flores.

Buying Land in Labuan Bajo

Can foreigners buy land in Labuan Bajo?

The best way to buy property in Indonesia for commercial use is through the Hak Guna Bangunan (Right to Build) certificate. Foreigners can obtain this certificate through a foreign-owned company. As such, the property will be under the company’s name. As the name implies, this certificate grants the holder rights to land in Indonesia.

Validity of the Right to Build certificate:

How to Safely Buy Land in Labuan Bajo

Buying property as a foreigner is a challenging task. It is important to conduct due diligence to ensure that everything goes smoothly. Think of it as doing a background check on a property.

Due Diligence Checklist

• Land ownership. You need to make sure that you are dealing with the correct person.
• Land certificate. Verify the land certificate of the property because not all certificates are available to foreigners.
• Zoning check. Zoning laws determine business activities you can conduct on the property.
• Payment of taxes. Unpaid taxes will affect the price of the property.
• Absence of disputes. The notary must check if there are disputes on the property. This is especially important when dealing with inherited property.
• Land borders and infrastructure. Many disputes can arise between neighbors because of access points and borders.
• Building permit. If the land has a structure on it, it must have a building permit so you can do commercial activities.

Start the registration process for your business in Labuan Bajo. Get in touch with our consultants by filling out the form below or by emailing [email protected].