Protecting Local Business in Bali: Overview of Current Regulations for Foreign Investors in 2025

Bali continues to be one of the most attractive destinations in Asia for foreign investment, drawing entrepreneurs from Europe, Australia, and the United States. With the growing interest from foreigners, the Indonesian government has reinforced its business regulation mechanisms to protect local entrepreneurs and maintain market balance. This article outlines the current rules for 2025 — from company capital structures to visa options and industry-specific restrictions.

1. Capital Requirements for Foreign-Owned Companies (PT PMA)

What is a PT PMA?

PT PMA (*Perseroan Terbatas Penanaman Modal Asing*) is the legal form for companies in Indonesia with foreign capital. It is the only legitimate route for non-residents to conduct business in Bali.

Minimum Paid-Up Capital

As of 2025, the following requirements apply:

• Minimum paid-up capital — 10 billion Indonesian Rupiah (approximately USD 650,000).
• At least 25% of this amount (2.5 billion IDR) must be deposited in a bank account and documented with official bank statements.
• Capital details must be included in the articles of incorporation and submitted to BKPM — Indonesia’s Ministry of Investment/Investment Coordinating Board.

Reporting and Oversight

Each PT PMA is required to regularly submit:

• Laporan Kegiatan Penanaman Modal (LKPM) — an investment activity report (quarterly or semi-annually depending on the company's size).
• Financial and tax reports to the Direktorat Jenderal Pajak — Indonesia’s Tax Directorate General.

Failure to meet these obligations may result in penalties, operational restrictions, or business license revocation.

2. Visa Options for Business Owners

Investor Visa (C314) and Stay Permit/KITAS

To establish a business with foreign participation, the C314 investor visa is available. It allows:

• Stay in Indonesia for up to one year.
• Subsequent conversion into a Investor KITAS — a temporary stay permit for shareholders and directors of a PT PMA.

Important: The investor KITAS is not a work visa and does not entitle the holder to be employed. It is strictly intended for individuals with ownership and management roles in the business.

Profit Reinvestment

Profits earned by a PT PMA can be reinvested to increase company capital without incurring additional taxes — provided that procedures are followed and documentation is submitted. This approach encourages long-term investment.

3. Sectoral Restrictions: The Priority Investment List

What is the Priority Investment List?

Indonesia's former Negative Investment List (DNI), which restricted foreign access to certain sectors, was replaced in 2021 by the Daftar Prioritas Investasi (DPI) — the Priority Investment List.

It defines:

• Sectors completely closed to foreign investment.
• Sectors with foreign ownership caps (e.g., max 49% foreign share).
• Government-promoted industries (offering tax incentives and subsidies under specific conditions).

Restricted or Prohibited Sectors in Bali

As of late 2025, restricted sectors include:

• Micro-retail — kiosks, minimarkets, and market stalls. Completely off-limits to foreign investors, even through PT PMA.
• Taxi and local transportation services — permitted only for Indonesian citizens.
• Repair shops and street-level services (basic beauty, cleaning, laundries) — only through locally owned entities.
• Tourism businesses — allowed through PT PMA, but often require an Indonesian partner, licensing, and minimum capital compliance.

To ensure accuracy, investors should consult the latest DPI version available at OSS Indonesia and BKPM.

4. Second Home Visa — Long-Term Stay Permit

A New Option for High-Net-Worth Investors

Since late 2022, Indonesia has offered a special Second Home Visa program. It allows foreigners to reside in the country for 5 to 10 years without requiring a KITAS or work visa.

Requirements as of 2025:

• Bank account: Must hold at least 2 billion IDR (~USD 130,000) in an Indonesian bank account.
• Real estate: Alternatively, own property structured through PT PMA with a long-term lease arrangement, since direct property ownership is prohibited for foreigners under Indonesian law.

Key point: Property acquisition is conducted via leasehold titles of up to 80 years (25+25+30 years) registered under a company with foreign participation. This is a legal alternative to direct ownership.

5. Summary and Practical Recommendations

Between 2023 and 2025, the Indonesian government reaffirmed its commitment to transparency, sustainability, and balancing local and foreign business interests. This does not represent a tightening of restrictions—on the contrary, regulations are now clearer and more predictable. To successfully launch or grow your business in Bali:

• Incorporate through a PT PMA: The only legal form for foreign entrepreneurs.
• Meet capital and reporting obligations: Ensure your company’s capital is properly deposited and submit LKPM on time.
• Review sectoral restrictions: Double-check the DPI and industry requirements before registering your business.
• Explore visa options: C314 + KITAS suit active business involvement, while the Second Home Visa offers passive residency for property or tourism investments.

By understanding the legal framework and market landscape, investors can minimize risks and build a compliant, resilient business in Indonesia.

Tip: Always consult with licensed legal experts specialized in Indonesian investment law before setting up a company or purchasing real estate.

Frequently Asked Questions (FAQ)

Can a foreigner open a café or restaurant in Bali?

Yes, but only through a PT PMA. Minimum capital requirements must be met, licenses obtained, and the appropriate KBLI business code registered in OSS.

Can foreigners buy land in Bali?

No. Indonesian law prohibits direct land ownership by foreigners. However, long-term leases (up to 80 years) can be secured through a PT PMA and used for commercial purposes.

Are there tax incentives for new companies?

Certain sectors listed in the Priority Investment List may receive tax holidays (5–10 years), subsidies, and expedited licensing. Eligibility depends on KBLI code and location.

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Conclusion

Doing business in Bali in 2025 remains viable and promising for foreigners, provided that one understands and adheres to local regulations. Legal incorporation, capital transparency, and visa compliance pave the way for entering the Indonesian market with confidence and legitimacy.