Every game has an end, and the Governor of Bali has now blown the whistle for Bali investors. Low and medium-risk PMAs can no longer be opened by foreign investors. In other words, Bali is now clearly indicating that it no longer wants foreign investment except for large-scale projects.
OSS can no longer issue new NIB (Business Identification Numbers) for PMA companies classified as medium and low risk. As a consequence, new companies cannot proceed with their business licenses, obtain bank accounts, or operate if their business address is located in Bali.
These developments have created significant uncertainty for foreign investors and businesses operating in Bali.
This article examines why these restrictions emerged, which business sectors are affected, what exceptions may still apply, and what options remain available for investors moving forward.
Why Is Bali Restricting Foreign Investment?
Developers have built properties illegally without obtaining the required building permits (PBG and SLF), while some investors were led to believe the projects were legal.
Thousands of properties have been built in areas where short-term rentals were not authorized, and real estate agents allowed investors to believe this was possible while claiming that permits would be obtained later.
Green areas in Canggu and Uluwatu have almost disappeared, while infrastructure development has not kept pace, particularly because construction in some of these areas was never originally planned.
How can a government be criticized for not developing roads in areas that were not even intended for construction?
Agents were also creating fake companies to help foreigners obtain Investor KITAS and live in Indonesia, despite those companies having no genuine activity. In some cases, several foreigners who did not know each other were added to the same company structure.
PMA companies are required to report investments and pay taxes, yet many companies have failed to submit LKPM reports or pay taxes for months, and in some cases, years.
Which Business Sectors Are Affected by These New Rules?
General Affected Categories in Bali
All KBLI classifications categorized as Low Risk and Medium-Low Risk are now closed in the OSS-RBA system for PMA companies following requests from the Regional Government (Pemda).
The real estate sector is particularly affected, although some exceptions remain.
Specific KBLI Codes Mentioned as Affected or Closed
The following codes are generally considered low or medium-low risk and can no longer be applied for by new PMA companies or added through amendments in Bali:
- KBLI 68111 – Real Estate Activity/Buying Villas
- KBLI 55900 – Other Accommodation/Long-Term Lodging Services
- KBLI 55110 – Starred Hotel/Short-Term Rental
While this remains an applicable accommodation for KBLI, it cannot be issued to PMA companies classified as low risk. - KBLI 70209 – Management Consulting and Marketing
- KBLI 77100 – Motorcycle and Scooter Rental
- KBLI 93130 – Fitness Centers and Physical Activities
- KBLI 47511 – Retail
- KBLI 961XX – Spa Activities
- Holding companies are categorized as low risk
Exceptions (KBLI Codes That May Still Be Allowed for PMA in Bali)
- KBLI 68200 – Real Estate Brokerage/Broker
- Hotels with building projects exceeding 6,000 sqm
- KBLI classifications are deemed Medium-High Risk
- KBLI 56100 series – Restaurants and Food Service Activities, which remain classified as High Risk
| Term | Definition |
|---|---|
| OSS-RBA (Online Single Submission – Risk-Based Approach) |
Indonesia’s digital licensing system classifies businesses according to risk level and determines licensing eligibility. |
| NIB (Business Identification Number) |
The primary business registration number issued through OSS-RBA, required for licensing, banking, and lawful operations. |
| KBLI (Business Classification Code) |
Indonesia’s official business classification system used to determine licensing scope, risk category, and investment eligibility. |
| Low and Medium-Low Risk Classification | Risk categories under OSS-RBA used to regulate licensing requirements and determine whether certain business sectors remain open to PMA investment. |
| Holding Company | A company established primarily to hold ownership interests or investments rather than conduct operational activities, generally classified as low risk. |
What Should Business Owners in Bali Do Now?
If your company is already registered in Bali and currently operating, you are not affected by this regulation or its implementation.
However, local government authorities have clearly indicated that audits may be conducted. We strongly recommend that business owners ensure compliance with their KBLI obligations.
Is There Another Way to Open a Company in Bali?
Clearly, there is currently no straightforward way to register and operate a new company under these affected KBLI categories.
However, many inactive companies and business owners are now exploring resale opportunities. Existing companies may therefore become an alternative solution for investors seeking operational structures.
We already have several clients interested in purchasing existing companies.
Alternative structures for registering companies and operating in Bali may also remain possible if certain requirements are met.
| Term | Definition |
|---|---|
| Company Resale Structure | An acquisition model that involves purchasing an established company rather than forming a new entity. |
| Alternative Business Structure | A compliance-based operational arrangement designed to meet licensing and regulatory requirements when standard PMA formation is restricted. |
How Is the Rest of Indonesia Affected?
Jakarta, Lombok, Sumba, and other regions are currently not affected by this regulation.
Indonesia is a sovereign state, and Bali remains a small island of approximately 5–6 million people within a country of more than 280 million.
These changes are unlikely to affect Indonesia as a whole and may instead reinforce current investment trends, with capital already moving toward Lombok and other islands. From Lombok’s perspective, this development may prove beneficial.
Bali is currently discussing the creation of a financial hub while simultaneously restricting the creation of certain companies. There appears to be a growing dichotomy between policy language and practical implementation.
Rather than focusing solely on illegal development, company monitoring, and regulatory enforcement, authorities have instead opted to restrict new business formation more broadly.
Bali will certainly continue to develop, but investors are unlikely to forget the instability and regulatory changes that have occurred over recent years. Countries such as Vietnam and the Philippines, as well as regions within Indonesia, are also observing how investors respond.
Capital moves quickly. Political and regulatory adaptation takes longer.
Regulatory changes in Bali require investors to reassess business structures, licensing strategies, and KBLI classifications before proceeding with new investments.
ILA Global Consulting assists investors with PT PMA structuring, KBLI assessment, licensing review, compliance advisory, and alternative business solutions in Bali and across Indonesia.
Contact ILA Global Consulting to understand how these changes affect your investment plans and explore compliant business options moving forward.
