Starting a business in Bali as a foreigner is easier than it might first appear.
The Indonesian government does reserve some business activities for locals but mainly, it’s very welcoming to foreign investors.
Our guide will walk you through all you need to know to get a business started and highlight a few things that might make the process a little easier too.
Can You Start And Own A Business In Bali?
Yes, you can start a business here in Bali as a foreigner. However, you should be aware that there are restrictions on the kind of business in Bali that you can do.
To find out which kinds of business are currently available, you should check the list from BKMP. That is the Indonesia Investment Coordinating Board.
And yes, it’s possible for a foreigner to own a business in Bali and the PT PMA (Penaman Modal Asing) business structure is designed to provide 100% foreign ownership as well as making it easy to employ foreigners and sponsor business visas.
How to Start A Business In Bali
There are six key steps to opening a business in Bali and they’re fairly straightforward.
However, we’d encourage you to bear in mind that some of these things might look simple, but can take quite a bit of time to arrange.
Don’t go into this process thinking you can start registration on a Monday and be done by Friday, it just won’t happen like that.
It’s going to take, at least, a month and often more time, to get your business in Bali started.
Choose The Activity Of Your Business
Check the BKPM list we mentioned above and ensure that you have picked a business in Bali that you can legally conduct as a foreigner.
Foreign investment isn’t needed in all sectors of the Balinese business marketplace, so you need to ensure that your idea won’t be rejected when you apply to register.
You can only own 100% of a business in Bali as a foreigner if you choose an “open sector” on the list.
If the sector is “Open with a condition” you will need at least two shareholders who are local and you may only be allowed to hold an average share of 49-51% of the company. (There are some sectors where this can be increased to 67-71% in specific circumstances).
If the sector is marked “closed” you cannot own this business type even as a minority shareholder.
These sectors are deemed to be politically sensitive and their business activities are only directed by locals. You can still get a job in these industries if the company can hire foreigners but you can’t have full foreign ownership or any other kind of ownership in them.
Set Up A Legal Entity And Register The Business
If you want to open your own business that is wholly foreign-owned, you will need a PT PMA which is a form of foreign-owned limited liability company.
This is the best for hassle-free business activities as the business license allows you to obtain a work permit, and business visa and to hire and sponsor other foreigners to work for you.
Once you know the legal entity you want to use you will need to file an application with the Ministry of Law and Human Rights which is in Bali.
You can turn up in person, apply online or use an agent for this, we’d suggest that using an agent is likely to make things go more smoothly and a lot faster.
Get Your Business License
If you’re approved by the Ministry of Law and Human Rights then you need a business license.
You can get this from the local government but will almost certainly need an agent to get this piece of paper.
There are plenty of agents offering these services to business in Bali and you will find the prices are usually pretty competitive.
Get Your Tax Identification Number
Once you have the license, you’re not done, you must then visit the local tax office and get a Tax Identification number known as an NPWP.
You cannot be compliant with Indonesian law without this number and we should note, you can’t open a bank account without it or secure a visa.
Open A Business Bank Account
Once you have the NPWP you should visit a local bank, you might talk to other businesses in your sector about which bank they recommend and then take your investment plan with you to arrange a bank account.
You will be offered a specialist business account for this purpose. If you need a personal account, you will need to some back another day as you will need your tax identification number too and you won’t get that without the next step.
Sort Out Your Business Visa
The last thing to do, assuming you will work for your new business, is sort out your business visa at the Indonesian immigration office.
If you don’t do this bit, you will be working illegally and can be deported.
Things To Do Before Starting A Business In Bali As A Foreigner
It’s always a good idea to invest some time into your business in Bali before you start pouring money into the business entity, etc.
Before you do your business setup, we’d recommend that you:
Research, Research and Research Some More
One thing you will quickly learn when doing business in Bali is that the local business environment can be very different from the way things work at home.
It’s a good idea to master local regulations, work out the tax environment, and learn, at least, a bit about the local culture and how things work on the ground.
This can help you better plan your business and ensure that you don’t end up facing a nasty surprise once you’ve sunk a small fortune into your venture.
Get Professional Advice
We wouldn’t dream of starting a business in Bali as a foreigner without getting advice from local accountants and lawyers.
Not only can they help with the registration process but they can also help you navigate the oddities of local laws and ensure that you operate legally and see any cultural differences coming.
Network With People Already Doing Business In Bali
No man is an island and no business should be either. If you want a hassle-free life on the island among the vibrant culture of its people, then it’s worth spending some time networking on the ground before you move into your Bali office.
Talk to other expats and business owners, but also make sure that you get out and talk to an Indonesian citizen or two too. You will find they have a much better understanding of what the Indonesian government and Indonesian immigration office really want and can help you understand how to get it.
Be Patient, It’s Going To Take Time
Indonesian law is very welcoming to those who want to start a business in Bali. However, that doesn’t mean that it’s all going to be plain sailing, either.
This is a developing nation and there’s nothing that they love more than a paper trail and dragging out a process for a lot longer than it would take at home.
You can’t bully your way through this period of opening a business in Bali, it’s something you have to roll with.
Keep patient and focus on the big picture – starting your business in Bali rather than getting bogged down with occasional hurdles.
What Areas Of Business In Bali Are Popular For Foreigners?
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Tourism-related businesses – given that Bali is the biggest player in the tourism industry in the Indonesian market, the vast majority of foreign-owned businesses in Bali are focused on tourism.
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Education – schools, colleges, training institutes, universities, etc. There’s no end to people seeking knowledge on the Island of Gods
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Health & Wellness – including yoga retreats, studios, spas, etc. The demand for wellness activities is massive in Bali and there are many foreigners seeking their fortune in that sector too.
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Creative ventures – If you’re more into arts and crafts, you can open a gallery or a design studio or something similar.
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Technology ventures – one thing the Balinese local government is keen on seeing more of in Bali is tech startups.
One thing we don’t recommend no matter how many digital nomad blogs about business in Bali do, is life coaching.
FAQs
How Much Money Do I Need To Start A Business In Bali?
There are two things to consider (assuming you use the most common business structure) and they are the cost of the company itself – typically somewhere between 20 and 40 million IDR.
That’s around $1,333 USD to $2,666 USD ($2,000-$4,000 AUD).
And then there’s the cost of “paid-up capital” which is around 10 billion IDR, which must be paid into the business bank account within a year of opening. That’s around $66,666.77 USD or $100,000 AUD.
Other factors can influence the overall cost of foreign ownership of any given business including the area of work you want to operate in, whether you have a local partner, whether you want to employ foreigners, etc.
Can An Australian Open A Business In Bali?
Yes! Any foreigner who meets some basic criteria can open a foreign-owned company in Bali. Th
Can A Foreigner Own 100% Of A Business In Bali?
Yes, the local PT company structure (PT PMA Company – Penanaman Modal Asing a Limited Liability Company which acts for foreign investors) can be wholly owned by a non-citizen.
There are other business entities that can serve as local companies for foreigners but these are more complex legal entities and you would need specialist accounting or financial advice on starting a business in Bali as a foreigner to access them.
Is Bali A Good Place To Start A Business?
FINNS Beach Club is based wholly in Bali and we wouldn’t have opened the world’s best beach club if we didn’t love the island and its people.
Bali is also popular with many entrepreneurs worldwide and the business sector is reasonably welcoming to foreign-owned companies.
However, that doesn’t mean Bali is a great place to start a business for everyone and the process of getting a business license and setting up a foreign-owned company is not always easy.
Business operations are restricted in certain sectors and getting a legal entity may not even be possible for certain types of business.
You need to be confident that you can make the most of the local market and foreign investors should be seeking business advice prior to establishing a local company or representative office.
Final Thoughts On Foreign Ownership Of A Business In Bali
Starting a business in Bali as a foreigner is relatively straightforward and you can establish a legal entity along with a business visa, business license, business bank account, etc. relatively easily.
However, it’s worth noting that just because foreign investment is possible there’s no guarantee that running a business in Bali will be profitable or viable.
Before you invest in any business type, you should seek to ensure that the potential business activity makes sense within the context of the country’s regulations and that company registration is economically viable.
Also read:
Investing In Bali: All You Need To Know Before Buying Bali Property
Customs Regulations Bali: Everything You Need To Know About Customs Clearance For Indonesia
