Traditionally, most foreign investors setting up a business in Indonesia and Vietnam flock to big cities such as Jakarta or Ho Chi Minh City (HCMC). However, with rising labor costs, increasing competition, and infrastructure saturation, many are switching to “lifestyle-first” destinations such as Da Nang and Bali.
These regions in Vietnam and Indonesia are popular for digital nomads. However, they are also gaining more and more attention from foreign investors. Da Nang has experienced a strong economic rebound, posting a GRDP (Gross Domestic Product) growth of 9.18% in 2025 – the highest in five years. Meanwhile, Bali’s economic growth reached 5.82% in 2025 mainly driven by the tourism industry, specifically in the accommodation and F&B sector.
This is a point of contention for many foreign investors: Where is the best place to set up? To answer this question, we will compare Da Nang and Bali from a business perspective. We will look at each locale’s regulatory environment, capital requirements, incorporation timelines, government initiatives, and more.
Regulatory Environment and Ease of Doing Business
In 2026, both Da Nang and Bali have modernized the business registration process. The new Incorporation Law in Vietnam has removed the need to process an Investment Requirement Certificate (IRC) before you can set up a business. Meanwhile, Bali has simplified the registration process through Online Single Submission (OSS) under the Corporate Law in Indonesia.
Starting a Foreign-owned LLC in Da Nang
In Da Nang, the primary vehicle for foreigners is the 100% Foreign-Owned Limited Liability Company (LLC). The local Department of Planning and Investment (DPI) has streamlined the "one-stop-shop" model by allowing foreigners to establish a legal entity in the country without an IRC.
Like many of its Southeast Asian neighbors, Vietnam does have foreign equity restrictions through a “negative list” approach. This means, if a sector is not explicitly restricted or conditional, it is open for 100% foreign ownership. Here are examples of sectors that are completely open to foreigners in Da Nang:
- IT & Digital Services: Software development, data processing, and IT consulting.
- Management Consulting: HR, marketing, and general business advisory.
- Manufacturing: Electronics, textiles, and high-tech components (especially in Da Nang’s Hi-Tech Park).
- Wholesale & Retail: Most trading activities (though some retail outlets require an "Economic Needs Test" if opening multiple large locations).
Starting a PT PMA in Bali
In Bali, the primary vehicle for foreign ownership is through a PT PMA (Perseroan Terbatas Penaman Modal Asing). Company registration is primarily done through a centralized digital platform called the Online Single Submission (OSS) system.
Similar to Da Nang, Bali also follows the Positive Investment List. Each business activity has an assigned KBLI code which are open, restricted, or completely prohibited in Bali. Here are some of the most common industries that are open for foreigners in Bali:
- Digital Services & IT: Software development, SaaS, IT consulting, and tech startups thrive with Bali's nomad hubs.
- Manufacturing/Processing: Export-oriented production (e.g., food, textiles, electronics components) permits full foreign control, boosted by incentives.
- Renewable Energy: Solar, green tech projects qualify as priority sectors with 100% equity and potential tax breaks.
- Logistics/Warehousing: Supply chain support for e-commerce and tourism logistics allows complete ownership.
- Consulting Services: Business management advisory (non-regulated) fits your compliance expertise.
While Bali has a big market for tourism, foreigners do have ownership caps in hospitality and F&B (51%). This can be challenging for foreign investors, given that the government has initiated crackdowns on nominee arrangements in Bali. Additionally, the island no longer processes new PT PMA registrations for low and medium-low-risk KBLIs, which covers most tourism, F&B, and retail activities. Investors planning to enter these sectors will need to explore alternative structures before proceeding.
Comparing Requirements for Setting Up a Company
Here is a summary of requirements needed to set up an LLC in Da Nang and a PT PMA in Bali:
| Requirement | Da Nang LLC | Bali PT PMA |
|---|---|---|
| Capital & Investment | No statutory minimum required primarily based on operational needs (e.g., $10k-$20k). Total must be deposited within 90 days of ERC. | IDR 2.5 billion (USD 150,000) declared/evidenced during registration. |
| Ownership | 100% Foreign Ownership through the Negative List | 100% Foreign Ownership through the Positive Investment List |
| Mandatory Personnel | At least two shareholders (individuals or corporate entities), and one legal representative. | At least two shareholders (individuals or corporate entities), one resident director (must have a tax card or NPWP) and one commissioner. |
| Physical Address | Required depending on the industry e.g. manufacturing. Virtual offices are permitted. | Depending on the KBLI. Mandatory for activities that require a physical presence, e.g. restaurants, clinics, factories). Physical addresses must follow zoning rules. Virtual offices are permitted for registration but may need a physical address post set up. |
| Setup Timeline | 4 to 6 Weeks (depending on complexity of the organization) | 6 to 10 Weeks (depending on complexity of the organization) |
In general, Da Nang is more startup friendly compared to Bali. Not only is it faster to incorporate, minimum paid-up capital is dependent on the scale of your business. Changes to the IRC requirements have made it even easier for small and medium-sized organizations to enter Da Nang.
Comparing Taxes and Tariffs
Understanding your effective tax rate and your ability to move goods across borders is essential for protecting your margins. Both Da Nang and Bali have tiered systems that reward different sectors and scales of operation.
Tax System for Companies in Da Nang
Vietnam’s tax system is designed to attract FDI by rewarding technical innovation and export-oriented businesses. The standard Corporate Income Tax (CIT) is 20% with tiered CIT for SMEs depending on annual revenue.
Apart from CIT for MSMEs, here are other tax advantages for foreign-owned companies in Da Nang:
- The 0% Repatriation: companies in Vietnam can repatriate their profits with 0% withholding tax. If your Da Nang LLC is owned by an offshore parent company, you can move profits out of the country without the extra layer of taxation common in other jurisdictions.
- VAT Rates: The standard VAT is 10%, but it is zero-rated (0%) for exported goods and services.
- Social Insurance Burden: While CIT is low, investors must account for compulsory social insurance contributions. Employers in Vietnam are responsible for approximately 21.5% of an employee's gross salary for social, health, and unemployment insurance.
- New Free Trade Zone in Da Nang: As of late 2025, Da Nang has also officially launched the first pilot Free Trade Zone under Resolution 136/2024/QH15. Companies in Da Nang can enjoy CIT breaks, industrialized zones, and freely import/export from across Asia and Europe.
Tax System for Companies in Bali
Indonesia’s taxation is robust and relies on a system of self-assessment and withholding. The standard CIT rate is 22%, but there is significant relief for small and medium-sized enterprises (SMEs):
- CIT Reductions (Article 31E): Companies with an annual gross turnover below IDR 50 billion receive a 50% tax reduction on the CIT rate for the proportion of taxable income that corresponds to a gross turnover of IDR 4.8 billion. This can effectively bring your CIT down to 11% for early-stage ventures.
- Final Tax for Micro-Businesses: For very small operations with a turnover below IDR 4.8 billion, there is an option to pay a 0.5% Final Tax on gross turnover, simplifying accounting for small creative or boutique firms.
- The Repatriation Barrier: Unlike Vietnam, Indonesia imposes a 20% withholding tax (PPh 26) on dividends paid to non-residents. While this can be reduced to 10% or 15% through Double Tax Agreements (DTAs), it remains a significant cost for those looking to pull capital out of Bali.
- VAT & Regional Taxes: VAT is 11%. In Bali, service businesses in the hospitality sector must also manage the 10% Regional Tax (PB1), which is separate from the national VAT system.
Comparing Taxes for Foreign Companies in Da Nang vs Bali
The following table provides a side-by-side comparison of the primary fiscal obligations and trade advantages available in both jurisdictions. While Vietnam leads in trade connectivity and profit repatriation ease, Indonesia offers specialized CIT reductions for smaller-scale operations.
| Feature | Da Nang | Bali |
|---|---|---|
| Standard CIT Rate | 20% | 22% |
| Foreign Co. Tax Benefits | Tech/Hi-Tech Holidays: 4 years 0% tax, 9 years 5% tax. Includes 0% Import Duty on assets & raw materials for FTZ/Export firms. | Tax Holidays (PMK 130): 50%–100% CIT reduction for 5–20 years for "Pioneer" industries with high capital. Tax Allowances for SEZ projects. |
| Profit Repatriation | 0% Tax: Dividends paid to foreign corporate shareholders. Requires 100% capital contribution. | 20% Withholding: Standard on dividends (PPh 26). Can be reduced to 5-15% via DTAs. |
| Value Added Tax (VAT) | 10% (0% for exports) | 11% |
| Tax Treaties (DTAs) | 80+ Agreements | 70+ Agreements |
| Free Trade Agreements | 15+ (inc. EVFTA, CPTPP) | RCEP, ASEAN, and Bilateral |
Da Nang is the more tax-efficient choice for export-oriented and high-tech firms due to zero-rated export VAT and non-existent dividend withholding taxes. Bali, conversely, is better suited for domestic-focused services that can leverage Indonesia’s tiered CIT reductions provided you’re comfortable with higher cost for repatriating profits.
Government Incentives and Support for Businesses
Both Da Nang and Bali are actively competing for FDIs, but they prioritize different industries and investment scales.
Da Nang’s Focus on Innovation and Tech
Da Nang is positioning itself as the "Silicon Valley of Vietnam." The local government offers some of the most aggressive incentives in Southeast Asia for companies that bring technical know-how to the city.
If you set up in the Da Nang Hi-Tech Park or the Da Nang Software Park, you may qualify for a "4-9-10" tax holiday:
- 0% CIT for the first 4 years of profitable operation.
- 5% CIT for the subsequent 9 years.
- 10% CIT for the remaining duration of the incentive period.
Additionally, the Da Nang government provides support for R&D activities, including potential grants for technology transfer and rent exemptions in centralized software parks. These incentives are accessible even to mid-sized firms, making Da Nang a magnet for SaaS companies and hardware manufacturers.
Bali’s Special Economic Zones (SEZs)
Bali’s incentives are largely tied to designated Special Economic Zones (SEZs). These zones are designed for massive, high-capital projects rather than lean startups.
- Sanur SEZ: Focused on medical tourism and wellness, offering streamlined medical licensing and CIT holidays for health-related investments.
- Kura Kura Bali SEZ: Positioned as a "New Era" tech and education hub. It offers a 10-to-20-year CIT holiday, but only for investments meeting a very high threshold (usually exceeding IDR 100 billion).
For the average foreign investor in Bali (e.g., a boutique agency or a single-villa development), these incentives are often out of reach. Bali's "support" for smaller businesses is found more in its lifestyle brand and the ease of attracting international talent, rather than in direct fiscal grants or tax breaks.
Why is Da Nang the Destination for Foreign Investors
Although Bali is a great place for expats, it can be challenging to start a business as a foreigner. Not only do you need prior capital commitment, the incorporation process can also be long, especially for sectors that have foreign equity caps. Bali is more ideal for medium-to-large investments in medical tourism, large construction projects geared for eco-tourism as well as tech.
Da Nang, on the other hand, is more startup friendly. There are low barriers to entry and the set up process is faster thanks to new Incorporation laws. You are no longer required to obtain an IRC plus access to tax incentives through FTZs and other government initiatives.
Want to explore your options in Da Nang? Talk to our local experts in Vietnam for a free consultation!
Frequently asked questions
Can I start a business in Da Nang without a local partner?
For the vast majority of sectors, including IT, consulting, and trading, you can own 100% of the company as a foreigner. You will, however, need a "Legal Representative" who resides in Vietnam, which can be yourself.
Which city has better internet for a digital-heavy business?
Da Nang generally has more stable and faster fiber-optic infrastructure, as it is a major landing point for undersea cables and is built as a tech hub. Bali has many great coworking spaces, but residential internet can be spotty depending on the area.
Do I need to live in Da Nang to run my business there?
You do not need to be physically present at all times. However, you must have a registered office address in Vietnam and a Legal Representative (who could be a trusted employee or a professional service provider) to handle local compliance.
What are the tax implications in Vietnam vs. Indonesia?
Vietnam has a standard Corporate Income Tax (CIT) of 20%, but many businesses in Da Nang (especially in tech or in "High-Tech Zones") can qualify for tax holidays or reduced rates (as low as 10%). Indonesia’s standard CIT is 22%, with some concessions for small businesses.
Is it easy to open a corporate bank account in Da Nang?
Once you have your ERC and your company seal, opening a corporate account is straightforward. Major international banks like HSBC and UOB, as well as strong local banks like Vietcombank, have a significant presence in Da Nang.