Blueprint for Starting a Bali Construction Company as a Foreigner

As a major tourist destination in Southeast Asia, Bali’s demand for residential and commercial properties is growing. According to the Investment Coordinating Board (BPKM), the housing and industrial sectors received IDR 401.5 trillion (~USD 25 million) in foreign investment in Q1 of 2024 alone. 

The booming market and prime tourism location make Bali a popular place to invest in a construction company. In this article, we will go through key regulations on how to start a construction company in Bali as well as legal requirements and licensing. 

Key Regulations for Starting a Construction Company in Bali

Types of Legal Entities for Foreign-owned Construction Companies

To legally operate a foreign-owned construction company in Bali, you must set up a legal entity in the country. There are two options for foreign investors seeking to establish operations within the sector:

• Perseroan Terbatas Penanaman Modal Asing (PT PMA) – the most common legal entity structure that allows a maximum of 67% of foreign ownership for non-ASEAN and 70% maximum for ASEAN countries. The rest of the shareholders (30-33%) need to be local. PT PMA suits both medium and large scale construction projects.
• Badan Usaha Jasa Konstruksi Asing (BUJKA) – serves as a representative office for foreign construction companies wishing to establish a presence in Indonesia. This structure is better suited for larger foreign construction companies for large-scale projects. 

Legal entity	Limited Liability Company (PT PMA)	Foreign construction representative office (BUJKA)
Ownership	– 67% for ownership for non-ASEAN countries – 70% maximum for ASEAN – 30-33% local	Fully foreign-owned, does not require local shareholders.
Licensing Requirements	– Principle License from BKPM – Notarial Deeds of Establishment – Domicile Letter – Corporate Tax ID (NPWP) – Company Registration Certificate (TDP) – SBU from LPJK – Business License for Construction Service – Membership Certificate from National Construction Association	– BUJKA license from BKPM – SBU from LPJK – Domicile Letter – Corporate Tax ID (NPWP) – Membership Certificate from National Construction Association
Minimum Capital Requirement	Minimum paid-up capital of IDR 2.5 billion (approx. USD 150,000).	No specific paid-up capital requirement; must have a net worth of at least IDR 50 billion (approx. USD 4 million).
Project Scope	IDR 10-100 billion (USD 700,000-6.3 million) project budget (not including the price of the property) and limited to one construction project (consulting, work, or designing)	Limited to high-risk, high-tech, and high-cost projects only.
Local Partner Requirement	Required to form a joint operation with a local construction company.

Emerhub’s company registration service can help you determine which legal entity is better suited for your planned operations. To learn more about the difference between PT PMA and BUJKA, check out our guide on how to establish a representative office in Indonesia. 

Legal Requirements and Licensing 

Foreign investors must secure a business license specific to the construction sector from the Ministry of Public Works. Emerhub’s local experts can help you identify which permits apply to your activities. Our team can also help review and manage the application process for all the most commonly requested licenses: 

• Construction Business Entity Certificate (Sertifikasi Badan Usaha – SBU) – issued by the Lembaga Pengen Jasa Konstruksi (LPJKN) that certifies the company’s qualifications and competency to operate in the construction sector. It is valid for three years upon first application and is renewable. 
• Work Competency Certification (Sertifikat Kompetensi Kerja – SKK) – a certification system that evaluates and recognizes the competencies of professionals in the construction sector. It ensures e that all individuals working on any project have all the necessary knowledge, skills, and practical experience. 
• Business Identification Number (Nomor Induk Berusaha – NIB) – mandatory for all foreign-owned businesses in Bali and is required for obtaining other licenses and permits. It also serves as a Tax Identification Number (Nomor Pokok Wajib Pajak – NPWP) for tax compliance in Bali.

Permits Required for Construction Projects 

When operating a construction company in Bali, it will be your responsibility to secure mandatory permits for all your building projects on the island. To kickstart your construction projects, Emerhub can assist you in obtaining all the necessary building permits including:

• Building Approval Certificate (Perizinan Bangunan Gedung – PBG)
  • Mandatory permit for construction and renovation of buildings per safety and technical standards as well as spatial planning laws in Bali.
  • To obtain a PBG, applicants must submit detailed architectural plans and technical documents to the local Dinas Penanaman Modal dan Pelayanan Terpadu Satu Pintu (DPMPTSP). 
• Building Function Certificate (Sertifikat Laik Fungsi – SLF)
  • Confirms that a construction project meets the intended purpose of use whether residential, commercial, religious, cultural, social, or special purposes.
  • Complements the PBG by ensuring that the construction adheres to local spatial and zoning regulations.

Please note that Bali has recently implemented a moratorium on issuing new permits for certain building projects within the tourism sector. If you are unsure how this will affect your intended business activities, Emerhub’s building permit application service can help you navigate the new regulations to ensure that your business is registered properly.

Working with Architects on your Construction Projects

Choosing the Right Architecture Firm in Bali

Working hand-in-hand with architects and interior designers is commonplace within the construction industry. Not only can these professionals bring the client’s vision to life, but they are also well-versed in Bali’s building codes and regulations. Selecting the right architect is vital for the success of your construction project in Bali. Here are some tips to consider:

• Experience and Portfolio – Look for architects with a strong portfolio of projects in Bali. Their past work should reflect an understanding of local aesthetics and building practices.
• Local Knowledge – Choose architects familiar with Balinese culture and environmental considerations. This knowledge will help create designs that resonate with the local community and enhance property value.
• Communication Skills – Effective communication is essential. Ensure that the architect understands your vision and can articulate it clearly throughout the project.
• Sustainability Practices – Given Bali’s focus on eco-friendly development, consider architects who prioritize sustainable design practices, using materials and methods that minimize environmental impact.

Overview of Regulations Affecting Architectural Firms in Bali

Architectural firms in Bali must adhere to various regulations to operate legally. Whether you are choosing a potential partner or considering extending your services within this sector, you must ensure compliance with the following:

• Licensing Requirements – Architects must be registered with the Indonesian government and possess the necessary licenses to practice.
• Compliance with Building Codes – All designs must comply with local building codes, which dictate aspects such as structural integrity, safety measures, and environmental considerations.
• Cultural Sensitivity – Projects should respect Balinese cultural norms, which may influence design elements such as height restrictions or aesthetic choices.

How to Set up a Construction Company in Bali

Starting a construction company in Indonesia as a PT PMA (foreign investment limited liability) can be challenging due to high capital requirements and the necessary industry experience for registration. 

If you lack sufficient investment or prefer to establish a representative office, Emerhub can guide you in obtaining a BUJKA (Foreign Construction Services Representative Office) license, which has no minimum investment or shareholder and director requirements.

However, having a local partner—whether active or silent—is essential for both PT PMA and BUJKA operations.

Emerhub specializes in assisting foreign investors with both entity types. Our services include:

• Comprehensive consultation throughout the process
• English translation of incorporation documents
• Opening a bank account

We aim to simplify the journey of establishing your construction company in Indonesia, allowing you to focus on your business while we handle the complexities of compliance and partnership development.

Want to set up a company? Fill in the form below and one of our highly-skilled local experts will get in touch!