Finding office in Bali is challenging. Did you know that asking 5 years of rent in advance is a common practice in Bali? Or that before renting an office, your top priority is to check whether it has proper building documentation?
In this article we discuss the above, as well as describe the main aspects of legal and wise property renting when looking into real estate in Bali.
You need an office address for company incorporation
Building documents are necessary at a rather early stage of company incorporation.
While it is possible to start with company registration in Bali without all the building documents, you need them to process local licenses.
An office address is necessary to start company incorporation. It is possible to start the company registration without building documents just referring to address until the articles of association of the company and respective ministry approval. However, for processing the local licenses of Bali you need the building documents.
In the hopes of having the paperwork ready in time for a smooth incorporation, keep in mind that getting all approvals in Bali takes time. It is risky to start company registration without having building and land documentation prepared already at the very beginning of the incorporation process. Let’ s say you do that and it turns out that the request for the address is denied. If so, all of the documents you have prepared so far must be changed.
What to know about the building permit (IMB)?
The key aspect for company incorporation in Bali is having a correct building permit. Izin Mendirikan Bangunan (IMB) is a permit that defines the type and purpose of the building and in a sense gives a start to your business. IMB is issued by the local authorities.
The IMB is typically property bound. Meaning that in case of any future movements, the processed IMB building permit is connected to the property and land not with the company owner.
We encourage lessees on being careful with property owners saying they will soon have the IMB permit. Same goes to trusting those saying they have started processing it. Possible complications on the way can result in losing time and money. The minimum time for processing IMB is 6 months, while in practice getting it actually takes often over a year.
Choosing a property without IMB
If going ahead with leasing a property without an IMB there is a list of documents that eventually must be approved. Here is a list of IMB requirements:
- Land zoning documentation
- Land certificate and survey plan
- Building drawings
- Structural and services drawings
- Signed permission from direct neighbouring property owners
As said, the IMB processing is hardly ever as quick as 6 months and in practise takes over a year. In addition, when choosing a property without an IMB permit, add months of documentation preparation time to your schedule.
It is often the case that the owner is not getting a confirmation from the government due to insufficient documentation or property not being able to fulfill all the requirements needed for IMB.
While everything can work out well, it is the unknowing that endangers the future of your business. Thus, on top of your checklist should be seeing if the space has an IMB permit.
Finding out about IMB too late
Some parts about finding office in Bali are especially crucial to know in advance. To operate with a restaurant in Bali, you’ll need sufficient parking space as per the IMB requirements. Finding this out in a post-lease-signing stage can be damaging. Especially when you are settled in a packed area in Bali, rental agreement in your pocket signed for years. No parking space, no IMB.
Or let’ s say you want to run a Spa. In Bali the land is separated in zones. However the territory you are interested in is registered as residential area, where a Spa can not operate. This means getting a necessary IMB is either going to be difficult or not possible at all.
To receive an IMB with the function “villa” and “land” there are also specific requirements that one would need to know in advance. Land size must be at least 10 are and there can not be more than 25 rooms.
Emerhub can assist with reviewing the building documents, getting building documents as well as setting up your company in Bali. When you discover during company incorporation stage that no legal entity is classified to operate on the leased space it is not only disappointing. It will generate loss for years.
Note that the lease contracts in Bali are normally signed for a longer term. Finding a rental space for less than 5 years is rather rare.
Business classification determines the requirements for finding office in Bali
The IMB must be in accordance to the field of business you plan to run. There are several functions available, it is easier to choose a premise that has the right documents from the start.
To set a few examples of meeting your business classification:
- The IMB function for a distribution company must be “office” and “warehouse”
- Setting up a restaurant requires an IMB with the function “restaurant”
- The consulting company requires an IMB with the function “office”
If the current IMB needs changing or if you need to apply for a new IMB you will need at least 6 months to process a new one matching your business activities.
Using a virtual office in Bali
While the world has a knowledge of virtual office as only setting up a private message box, Bali has brought a slightly different meaning to the word.
The office area must physically exist. Common practise in Bali shows that it is often a shared space (also known as coworking space) or separated booths in a shared room.
However limited business activities have the possibility to use a virtual office.
- Trading for import and export etc.
Emerhub can help identify the exact requirements in your chosen industry.
For further information about the opportunities in Bali, reach out to us via the form below or by sharing your details here.