Bali has introduced one of its most significant investment policy changes in recent years by restricting new Foreign Direct Investment (PMA) licences across 18 business sectors. The move, implemented through Indonesia’s Online Single Submission Risk-Based Approach (OSS RBA) system, reflects the provincial government’s commitment to strengthening local micro, small, and medium-sized enterprises (MSMEs) while encouraging higher-quality foreign investment.
The policy, which has been in effect since the third week of May 2026 after receiving approval from Indonesia’s Ministry of Investment and Downstream Industry (BKPM), prevents new foreign-owned companies (PT PMA) from registering businesses within the affected sectors through the OSS platform.
For foreign investors planning to establish a company in Bali, the announcement serves as an important reminder that Indonesia’s investment regulations continue to evolve, making careful business planning and regulatory due diligence increasingly important.
Why Has Bali Restricted New Foreign Investment?
According to Bali Governor Wayan Koster, the Provincial Government conducted an extensive review of foreign investment licences after identifying indications that some foreign investors were utilising Indonesia’s risk-based licensing framework to enter sectors traditionally dominated by local businesses.
Under Indonesia’s OSS RBA system, businesses classified as low-risk generally require only a Business Identification Number (Nomor Induk Berusaha/NIB) before commencing operations. Provincial authorities believe this simplified licensing mechanism enabled certain foreign investors to establish businesses in sectors closely linked to local MSMEs without undergoing additional licensing or verification processes.
The government also noted that some businesses were registered using virtual office addresses, raising concerns regarding regulatory supervision, operational transparency, and fair competition.
As a result, Bali has decided to restrict new PMA registrations within selected sectors to better protect community-based businesses while promoting more sustainable investment that contributes to the island’s long-term economic development.
Which Business Sectors Are Affected?
The restriction applies to 18 Indonesian Standard Industrial Classification (KBLI) categories classified as low-risk and medium-low-risk business activities.
The affected sectors include:
- Star-rated hotels with a building area below 6,000 square metres
- Budget hotels (Hotel Melati)
- Owner-occupied or leased real estate businesses
- General management consultancy services
- Industrial management consultancy services
- Car, bus, truck, and similar vehicle rental services
- Motorcycle rental services
- Retail clothing businesses
- Retail textile businesses
- Retail food businesses
- Mobile agricultural produce trading
- Other accommodation providers
- Cafés and beverage establishments
- Traditional medicine shops
- Tailoring and made-to-order garment businesses
- Stadium facilities
- Fitness centres
- Sports event promotion services
New PT PMA companies will no longer be able to obtain business licences for these activities through the OSS platform until further government policy changes are introduced.
Existing Foreign-Owned Companies Can Continue Operating
The restriction does not affect businesses that had already obtained the necessary licences before the policy came into effect.
Existing foreign-owned companies may continue operating as usual, provided they continue to fulfil all applicable corporate and investment obligations. These include submitting Investment Activity Reports (LKPM) and maintaining compliance with Indonesia’s corporate governance, licensing, and reporting requirements.
Failure to comply with these ongoing obligations may still result in administrative sanctions or restrictions on future corporate actions.
What Does This Mean for Foreign Investors?
Although the policy narrows investment opportunities in certain sectors, it does not signal that Bali is closing its doors to foreign investment. Instead, the provincial government has reaffirmed its commitment to attracting investments that:
- create employment opportunities;
- support sustainable economic development;
- respect Balinese culture and local wisdom; and
- encourage partnerships with Indonesian businesses and MSMEs.
Many sectors remain fully open to foreign investment, particularly in technology, manufacturing, renewable energy, healthcare, logistics, education, professional services, and other industries aligned with Indonesia’s national investment priorities.
For prospective investors, the latest policy highlights the importance of reviewing the applicable regulations before selecting a business activity or establishing a company.
Understanding KBLI for Business Permit in Indonesia
The Klasifikasi Baku Lapangan Usaha Indonesia (KBLI) is Indonesia’s official business classification system used to identify and regulate business activities.
Every company established in Indonesia must register one or more KBLI codes through the OSS RBA platform. The selected KBLI determines several key aspects of a business, including:
- whether foreign ownership is permitted;
- the company’s business risk classification;
- licensing and certification requirements;
- reporting obligations; and
- sector-specific regulatory approvals.
Choosing the appropriate KBLI is one of the most important decisions during company incorporation, as an incorrect classification may delay licensing or prevent a business from carrying out its intended activities.
Establishing a PT PMA Through OSS RBA
A PT PMA (Foreign Investment Company) remains the primary legal entity for foreign investors wishing to conduct commercial activities in Indonesia.
The incorporation process is now integrated through Indonesia’s Online Single Submission Risk-Based Approach (OSS RBA) system, which streamlines company registration and licensing.
Establishing a PT PMA generally involves:
- determining the appropriate KBLI classification;
- preparing the company’s Deed of Establishment;
- obtaining approval from the Ministry of Law;
- registering through the OSS RBA system;
- obtaining a Business Identification Number (NIB);
- applying for any required Standard Certificates or Business Licences based on the company’s risk level; and
- completing tax registration and other post-incorporation requirements.
Because licensing requirements depend largely on the selected KBLI and the applicable business risk level, investors should carefully assess whether their intended activities remain open to foreign ownership before beginning the incorporation process.
Navigating Indonesia’s Evolving Investment Regulations
Indonesia continues to modernise its investment framework through digital licensing and regulatory reforms. At the same time, provincial governments may introduce additional policies reflecting local economic priorities.
For foreign businesses, understanding both national regulations and regional policies is becoming increasingly important when establishing operations in Indonesia. Working with experienced consultants can help investors identify suitable business structures, select the correct KBLI classification, and maintain compliance throughout the company lifecycle.
Register Your Business in Indonesia with Lets Move Indonesia
Establishing a company in Indonesia requires more than simply completing registration through the OSS system. Investors must ensure their chosen business activities remain open to foreign investment, select the correct KBLI classification, obtain the necessary licences, and maintain ongoing compliance with Indonesian corporate regulations.
At Lets Move Indonesia, we provide comprehensive support for foreign entrepreneurs, multinational companies, and investors looking to establish or expand their businesses across Indonesia. Our professional consultants assist in establishing a legal business entity across Jakarta, Bali, and other provinces in Indonesia, simplifying the process while ensuring your investment complies with the latest national and regional regulations.
Speak with our consultants today to claim your complimentary one-hour consultation and stay updated on Indonesia’s latest immigration, investment, legal, and business regulations with Lets Move Indonesia.
