How to Set Up a Foreign-Owned Company in Bali
A guide to successfully begin your business journey in Bali
Table of contents
For those seeking to establish or grow a company in SE Asia, the island of Bali is a rapidly-growing region for business opportunities and starting a company.
While part of Indonesia, Bali has its own set of rules and requirements that make it somewhat different compared to the rest of the country.
First, we’ll establish what it means to set up a foreign company in Indonesia, then take a deeper look into what it takes as an investor to set up such a company in Bali.
In order to establish a company in Indonesia, you must meet certain requirements and capital investment.
All foreign companies in Indonesia are PT PMAs (Perseroan Terbatas Penanaman Modal Asing), a limited liability company with foreign direct investment.
As long as any of the shares are held by a foreign national or a foreign company, a company is considered a PT PMA. It doesn’t matter if it’s 100%, 51%, or even 1% — if there are foreign shareholders, you are a foreign-owned company.
However, if you aim to only represent an overseas company in Indonesia, and will not generate any income from local activities, you can set up a representative office instead. If you only want to hire some employees in Indonesia, as an alternative to setting up a company you can use an Employer of Record service provided by Emerhub.
When registering a PT PMA in Bali, there are certain regulations regarding foreign ownership percentage, initial capital, and structure that are universally enforced.
Allowed Foreign Investment in Bali
The percentage of Allowed Foreign Ownership depends on the business classification. Not all business activities can be 100% foreign-owned. Some common examples are:
|Industry||Max. foreign ownership|
|Hotels less than 3 stars||67%|
|Shops and beauty salons||0%|
|Event organizing (for weddings, retreats)||67%|
|Meetings, incentives, conferences (MICE)||67%|
|Trading for import, export, and distribution||67%|
Indonesia has over 2000 different business classifications (KBLIs). Contact Emerhub with more information about the specific business activities you are interested in conducting in Indonesia, and we’ll be happy to help out with your registration process.
Unwritten Regulations in Bali
Occasionally, there is a government moratorium on issuing a license for a certain classification. Even if there is no written regulation, it may be impossible to get a license. One recent example is the Villa classification. For many years, this business could not be registered due to a government moratorium — even though it was not on the negative investment list. Now it is possible, as the local government has changed their practice.
Initial Capital Needed to Set Up a Company in Bali
Your business registration requires a paid-up capital of at least IDR 2.5 billion. This can be proved by issuing a Shareholder Capital Statement Letter (Emerhub can provide one for your business registration).
If you would like to open a small business in Bali, you can use a nominee company through Emerhub.
Company Structure in Bali
In order to establish the PT PMA, the following personnel must be in place before beginning the registration process:
- Shareholders – Minimum two people or legal entities (100% owned subsidiary is not possible). If the shareholders can also be legal entities, then the director and commissioner (see below) must be physical persons.
- Director – A PMA must have at least one resident director: this must be a foreigner who applies for a KITAS, or an Indonesian physical person.
- Commissioner – does not have to be resident and have a KITAS. It can be a foreigner not living in Indonesia.
Company Licenses in Bali
Being able to set up a company quickly and online is not an option in Bali. Unlike Jakarta, where the majority of application submissions have moved to online portals, Bali is still rather analog. Thus, the process takes longer and is more expensive.
Some license applications must be submitted manually to the proper Balinese authorities. You also may be required to have a local license in addition to the central license provided from Jakarta. For processing certain licenses, out-of-pocket payments and donations are required.
Permits for Business Building Use in Bali
- Specific Space – The building permit (the IMB) must be specific to the business activity. For example, if you register a restaurant, the IMB must be for a restaurant; if a consulting company, the IMB must be for an office; if a villa, the IMB must be for a villa; if registering a shop, the IMB must be for a shop. The requirements also vary in different regencies, such as Badung, Denpasar, and Gianyar.
- Separate Space – Not all the business classifications can be registered in a shared building/shared office. For some activities, a separate building is required. For example, “work training” which is used for training specific skills must have a separate building.
- Documentation / Permits – Many buildings in Bali do not have proper building documentation, which can cause a lot of hassle when registering a company. For example, amongst other building documents, lease tax receipts are sometimes requested. If lease tax has not been paid, licenses will not be issued. The worst-case scenario can be registering half of the company documents that can be done without building documentation — and then being informed that the building is not suitable. In such cases, all the licenses must be redone, and this means a lot of extra money.
The standard timeline for the PT PMA registration across Indonesia is 16 working days. However, when compared to Jakarta and other more highly digitized government operations, Bali has less consistent processing and more endemic errors in the system. This leads to a wait time of 1 to 3 months for registration to be completed.
Foreign ownership limitation depends on the business classification and can be anywhere between 0-100%. Learn about the ownership restrictions in some of the popular industries in Bali.
A PT (Perseroan Terbatas) is an abbreviation for a limited liability company (LLC). If a PT has foreign ownership, it’s still called a PT. The phrase “PT PMA” just refers to the foreign ownership and is not used in the legal name of the company.
Yes, that is a recommended way of conducting property business in Bali. Read more about doing property business in Bali.
It depends on your business classification. The registered address must be a building relevant for the business activities. Read more about the building permits in Bali.
Due to the decentralized nature of Indonesia, and the slower adaptation to online services in Bali, there are some differences in doing business on this island as compared to the rest of the archipelago, particularly Jakarta. In Bali, you must adhere to standard Indonesian practices — but also allow for some discrepancies and unexpected delays, plus be prepared to do much of the process analog or in-person.
The best way to ensure that you navigate this process with minimal snags and help with managing the many requirements and steps is to have a specialist in doing business in Bali to help facilitate the process.
If you are ready to build your dream company in Bali and would like Emerhub’s assistance in making the setup as seamless as possible, please fill out the form below or get in touch with Emerhub at [email protected]. Your first appointment with Emerhub is always complimentary, so schedule a call or meet with the expert closest to you and get help with your business needs today.
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