Bali is on the top destinations for tourism and now appears to be on the top destination with a lot of business opportunities for those who want to become entrepreneurs. The new president, Prabowo, wishes to make Bali a destination similar to Hong Kong and Singapore regarding business development.
Why Start a Business in Bali?
Influence from all over the world
Bali, famous for its surf spot, ricefield, rich culture, and vibrant nightlife, is attracting entrepreneurs and investors worldwide. After being a tourist place for decades, Bali now welcomes expats who want to relocate for the long term. Like Dubai, Bali has seen waves of foreigners running away from their country looking for new opportunities. With all nationalities represented in Bali, expats learn from each other, and find a place to develop and confront ideas. Bali expats and local entrepreneurs are germing business ideas.
Low Taxation on companies
Indonesia offers business opportunities in Bali with its low corporate tax rate. With only 0.5% income tax, new companies can grow without being pressured by high taxes, allowing entrepreneurs to focus on their business ideas. While not a fiscal paradise, Bali provides more tax advantages than even Dubai in some ways. Dividends in Indonesia are taxed at just 10% and can be exempt from tax if the profit is reinvested for 3 years.
Strong local economy
Being in Bali is being in Indonesia. This country of 280 million people is one the biggest economies in Southeast Asia and plans to be in the top 5 in the world in the next decades. By having a business in Indonesia, you can open a local market of 280 million people to test your business and open your gate to SEA. A lot of investors from property investment to marketing are realising that targeting locals can bring more return than targeting only expats. For example, having a property in Seminyak may have a higher occupancy rate if you also target people from Jakarta.
Registering a company in Indonesia has never been easier
Setting up a business abroad can be challenging, as there are so many documents, laws, and regulations to consider. Luckily, the process will be a breeze, and we’ll give you expert advice on which business structure and setup will fit your needs.
Reach out to the ILA team today to set up a free consultation or read more about the company registration process.
Key Steps to Unlock Business Opportunities in Bali
Legal Structure and Registration
The first step to taking advantage of business opportunities in Bali is to register a company called PT PMA. This type of company can be open to 100% foreign investment depending on the business sector. Unfortunately, not all business activities are open at 100% despite most of them having been open in 2021. We recommend consulting in order to determine if the business sector is eligible for foreigners or if a local partner is necessary. For example some businesses require 33% local participation or even 51% such as:
- Architect 33% (32% – if the other shareholders are from ASEAN)
- Construction 33% (32% – if the other shareholders are from ASEAN)
- Boat ownership 51%
The process to register a PT PMA in Bali takes 5 business days. A company requires 2 shareholders minimum. There are several types of companies in Indonesia but those structures are not open to foreigners.
Permits and Licensing
Having a company open doesn’t necessarily mean you can operate straight away. Indeed, some activities require validation in order to get a Sertifikat Standard. The activities below require validation from a specific ministry after the business has provided some additional information.
- Scuba diving
- Recruitment
- Real Estate as Broker
- Clinic
- Maritime affairs require a SUIPSUS or SIUPAL.
For property developers, additional licences such as UKL UPL or AMDAL can be required for PMA in order to build hotels or apartment hotels.
Also read: PSE License in Indonesia: Essential Steps for Online Businesses
Local Partnerships and Networking
Having a local partner is crucial in some activities. For anyone starting a business in medical tourism, it is important to start by finding doctors in order to validate the licence and navigate through the medical industry in Indonesia.
One of the keys to your success in Bali will also be to network with the right environment, depending on your business sector. For example, for somebody looking to develop a surf camp business, having some connections in Uluwatu might be a good place to start to understand the business sector and actors.
Hiring Staff and Employment Regulations
The success of a business is also the success of a team. For a newcomer to Bali, it might be difficult to understand the employment law in Indonesia, the possibility of hiring foreigners or locals. PT PMA are not restricted to hiring local people but there are some ratios and restrictions on hiring foreigners for some jobs. A ratio of 1 foreigner to 5 locals is required in order to be able to get an IMTA (working permit). A foreigner who wishes to work in Indonesia can only work for the company sponsoring the foreigner.
Indonesia gives 2 types of contract and companies can hire locals with a fixed term contract or offer a permanent contract (PKWT and PKWTT) while companies can hire foreigners only under a fixed term contract. Indonesian regulation is very protective for employees under contract, and it is difficult to fire employees who underperform. On the other hand the number of holidays for a worker in Indonesia is set at 12 days minimum (there are a large number of public holidays).
Tax and compliance
When you start a business in Indonesia, a company has a few obligations. Some are required monthly, quarterly and annually.
- Monthly obligations for a company include tax on salary, social security, local tax (restaurant, Airbnb), withholding tax and tax on income.
- Each quarter companies also need to report their investment in OSS to comply with the LKPM report. This report includes the number of employees and investment.
- On an annual basis, experts with a KITAS need to report their personal tax before the end of March while companies have to report their annual income tax by the end of April.
7 Best Business Opportunities in Bali
1. Tourism and Hospitality
Bali’s tourism sector continues to grow month after month, with millions of international visitors each year drawn to its beaches, cultural sites, and unique hospitality. This influx creates a high demand in the sector. Prabowo, the new president, has recently announced a new airport in the north of Bali, which could boost business opportunities in Bali, especially in sectors like well-designed accommodations, including resorts, boutique hotels, and villas on Airbnb.
Setting up a tour agency is another promising business. Whether it’s guided temple tours, scuba diving, a surf camp in Uluwatu, or wellness retreats in Ubud, you will definitely find customers.
2. Real Estate and Property Management
Real estate investment is booming and seems not going to end for now. Many foreigners seek short-term or long-term rentals, and the demand for private villas is increasing as more people explore business opportunities in Bali. A few years back, most visitors preferred hotels, but now private villas, especially in areas like Ubud, Seminyak, and Canggu, have become more popular. Villa rental businesses cater to both tourists and expatriates, with short-term rentals providing high returns in peak tourist seasons. Additionally, property management services are needed to handle daily operations, maintenance, and guest relations.
3. Medical Tourism and Wellness: Investment Prospects in Bali
Bali is internationally recognised as a wellness haven, attracting visitors interested in relaxation and retreats. This has led to the growth of health-centric businesses like yoga retreats and wellness spas in areas like Ubud.
In the last few years, Bali has also seen and attracted medical tourism with clientele from Australia, Asia and Europe looking for an esthetic clinic or detox centre.
4. E-commerce and Digital Products
As remote work becomes more common, Bali has become a global hub for digital nomads and entrepreneurs running online businesses. E-commerce and digital service businesses, such as web development, graphic design, and content creation, have become increasingly popular and accessible.
For those interested in e-commerce, selling handmade crafts, Bali-inspired fashion, or eco-friendly products through digital marketplaces is an excellent way to combine local culture with international commerce.
With the large number of businesses in Indonesia, setting up a marketing agency for local companies can be an opportunity for talented people as well.
5. New technology and Blockchain
With its large community of digital nomads, Bali becomes a place to invest in new sectors such as the blockchain to develop new solutions and ideas:
- Tokenisation
- Payment gateway
- Decentralised Finance and Fintech
From real estate tokenisation to DeFi solutions, Bali’s growing interest in blockchain and technology presents several opportunities for tech-driven entrepreneurs. By tapping into Bali’s tech-minded expatriate community you can establish a strong presence on the island and use this network to develop a digitally-forward Bali.
6. Infrastructure and construction company
Companies in construction and infrastructure certainly respond to some of the biggest business opportunities in Bali. With the island’s growing tourism and real estate development, Bali faces significant challenges in managing its infrastructure and waste. From traffic management to waste and water management, entrepreneurs with innovative ideas and international companies have valuable opportunities to contribute toward making Bali a cleaner and more organised place.
7. Education and Training Centers
With a large expat population and a constantly growing number of tourists, there is a consistent demand for high-quality educational services in Bali. International schools, language courses, and professional training programs cater to the needs of expatriates. For expats living in Bali, one of the biggest challenges is to find a school near their home.
Having educational centres focused on coding boot camps, marketing boot camps, surf camps, and hospitality training are all viable business ideas. Additionally, workshops and short courses for tourists on topics like traditional Balinese crafts or cooking can add value to Bali’s unique cultural experience and attract international visitors.
Also read: How To Open A Representative Office In Bali
Most Common Challenges and How to Overcome Them
Culture Adaptation: Essential for tapping into business opportunities in Bali
Having the best idea and the money to invest doesn’t guarantee success. Bali can be overwhelming or difficult to understand. Culture can sometimes be challenging for Westerners arriving with their Western mindset, and they can find themself quickly frustrated. One of the common challenges is to adapt yourself and take time to understand the situation. Being here on vacation even for several months is different from having a business and suddenly not being the guest but the one hiring and giving orientation to a staff member.
Rules understanding and administration
It is when you think you have understood the rules that suddenly you realise you understood nothing. Indonesian regulations can sometimes be difficult to understand, even for Indonesians or long-term expats. Some laws can be in contradiction to each other, and in Bali, everybody has their own word to say they know more than others. To avoid losing yourself in the regulations or the Facebook group where everybody knows, we recommend contacting experts in the field in which you are looking for information.
