Setting Up a Manufacturing Company in Bali: A Comprehensive Guide

Setting up a manufacturing company in Bali allows you to leverage the island’s tourism-driven economy with Indonesia’s competitive business incentives, offering a unique growth opportunity for foreign investors interested in tapping into the Indonesian market. 

In this article, we’ll explore key industry insights, legal requirements, and essential steps to successfully establish your manufacturing company in Bali.

Why Choose Bali for Manufacturing? 

While Bali is globally known for its tourism, the island also offers several incentives aimed at encouraging foreign investment, particularly in regulated manufacturing sectors and their scale of operations. These include:

1. Tax Holidays: Corporate Income Tax (CIT) reductions based on investment size and sector.
   • For investments between IDR 100 billion (USD 6.6 million) and IDR 500 billion (USD 33 million), a 50% CIT reduction is granted for five years, followed by a 25% reduction for the next two years.
   • Investments exceeding IDR 500 billion (approximately USD 30 million) qualify for a 100% CIT reduction for a period ranging from five to 20 years.
2. For investments between IDR 100 billion (USD 6.6 million) and IDR 500 billion (USD 33 million), a 50% CIT reduction is granted for five years, followed by a 25% reduction for the next two years.
3. Investments exceeding IDR 500 billion (approximately USD 30 million) qualify for a 100% CIT reduction for a period ranging from five to 20 years.
4. Tax Allowances: 30% reduction in taxable income based on investment in physical assets. This is spread over six years at 5% per year. Additional benefits include faster depreciation, amortization, and a 10% tax on dividends paid to non-residents.
5. Import Duty Exemptions: Reduced or 0% import duties on raw materials and machinery. Sectors such as eco-friendly manufacturing and artisanal production qualify for exemptions on key imported components like renewable energy systems, biodegradable materials, or advanced crafting tools. 
6. Sector-Specific Perks: Sectors operating within Special Economic Zones (SEZs) like the Kura Kura Bali SEZ receive additional benefits including extended tax holidays and land lease incentives.

Emerhub’s business advisor in Bali can help you understand the specific benefits your manufacturing company qualifies for, allowing you to maximize your tax benefits and import duty exemptions.

Mandatory Requirements to Start a Manufacturing Company as a Foreign Investors 

Establishing a manufacturing business in Bali involves meeting several legal requirements. Our compliance experts can facilitate every step, ensuring your company complies with local regulations and avoids any potential setbacks:

1. Register a Legal Entity– Before you can start your business operations, you need to set up a legal entity in Bali. The PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the most common choice for foreign investors as it allows 100% foreign ownership in approved manufacturing sectors such as food production, renewable energy, electric vehicle assembly, textiles, and furniture. 
2. Meet Capital Requirements– For a foreign manufacturing company, the minimum paid-up capital is IDR 2.5 billion (around USD 150,000).

It’s worth noting that while IDR 2.5 billion is the base requirement for all PT PMAs, manufacturing operations tend to require higher actual investment depending on the scale and nature of production.

1. Local Representation– Appoint at least one director who is an Indonesian resident with a Tax Registration Number (NPWP)
2. Prepare Essential Documents–  Ensure you submit all required documents for company registration such as the Articles of Association, Proof of capital investment, Shareholder agreements, Deed of establishment, Identification documents for all directors and shareholders.

Since May 2026, Bali's OSS system no longer processes new PT PMA registrations for low and medium-low risk KBLIs. Most manufacturing activities, however, are classified as medium-high or high risk, meaning this restriction generally does not apply to the sectors covered in this article. That said, KBLI classification varies by the specific nature of your production, so it's worth confirming your classification with our team before proceeding.

Registration Steps for Manufacturing Companies in Bali

The registration process for a manufacturing company in Bali typically takes between 1 to 3 months, depending on your level of compliance. Here’s a comprehensive overview to navigate the process:

1. Register Your Legal Entity with the MoHLR

The first step is to register your legal entity with the Ministry of Law and Human Rights (MoHLR). This involves submitting the Deed of Establishment which includes your Articles of Association, along with details of your shareholders and directors. Once approved, your company will be officially recognized as a legal entity, enabling you to proceed with the next steps.

2. Obtain Manufacturing License and Additional Permits

Before you can start manufacturing, you’ll need to obtain several key permits and licenses, on top of the standard business license (NIB). The following permits are overseen by several different government agencies which Emerhub experts can liaise with on your behalf:

1. Industrial Business License (Izin Usaha Industri or IUI): The IUI is a specific license mandatory for all manufacturing businesses. It is issued by the Ministry of Industry and grants legal permission for you to officially begin manufacturing operations.
2. Building Permit (IMB): This is required when constructing or modifying your manufacturing premises.
3. Product Specific Licenses: You must secure additional permits and licenses based on your KBLI classification and the type of products or services you plan on offering. 
   • For example, if you are manufacturing food products, you’ll need the BPOM (Badan Pengawas Obat dan Makanan) approval.
   • The SNI (Indonesia National Standard) certification is also required for over 130 regulated product categories. Emerhub experts can help you determine if your products fall under this requirement.
4. For example, if you are manufacturing food products, you’ll need the BPOM (Badan Pengawas Obat dan Makanan) approval.
5. The SNI (Indonesia National Standard) certification is also required for over 130 regulated product categories. Emerhub experts can help you determine if your products fall under this requirement.
6. Environmental Permits: These are mandatory if your operations are deemed environmentally impactful. Key permits include:
   • The Environmental Impact Analysis (AMDAL) for large-scale manufacturing operations
   • The Environmental Management Plan and Environmental Monitoring Plan (UKL-UPL) for smaller operations.
7. The Environmental Impact Analysis (AMDAL) for large-scale manufacturing operations
8. The Environmental Management Plan and Environmental Monitoring Plan (UKL-UPL) for smaller operations.

3. Tax Registration

Once you obtain your NIB (Business Identification Number), it will also serve as your company's Taxpayer Identification Number (NPWP). If your annual turnover exceeds IDR 4.8 billion, you will also need to register for Value Added Tax (VAT). This ensures your business is fully compliant with Indonesia's tax regulations.

4. Open a Corporate Bank Account

You must open a corporate bank account in Indonesia to deposit the minimum required capital and manage all business-related financial transactions. This account will also be used for tax payments and other financial operations.

5. Register for Social Security Program

To comply with Indonesia’s labor laws, your company must register with the BPJS Kesehatan (national health insurance) and BPJS Ketenagakerjaan (employment social security) programs. These programs ensure that your employees receive healthcare and social security benefits.

Emerhub’s business advisors can assist with ensuring all your registration steps are streamlined and compliant. We will prepare necessary documentation and secure relevant licenses and permits on your behalf. 

Ensuring Post-Registration Compliance for Your Manufacturing Business

Once your manufacturing company is registered, maintaining compliance is key to ensuring your smooth operations. Emerhub offers specialized comprehensive support throughout your operations in Bali, with corporate solutions ranging from: 

• Company Setup and Registration
• Tax and VAT management
• Corporate bank account setup
• Securing related employee work permits and visas
• Managing ongoing compliance such as regular reporting and license renewals.

Additionally, we provide Importer of Record (IOR) services for warehousing and importing machinery or raw materials.

Ready to start a manufacturing company in Bali? Contact us via the form below and one of our experts will get in touch with you!