Bali has long been one of Indonesia’s most attractive destinations for foreign entrepreneurs and investors. Beyond its global reputation as a tourism hub, the island has become a popular location for establishing businesses in hospitality, property services, consulting, retail, and lifestyle-related sectors. However, starting from 2026, The Bali Provincial Government has introduced new restrictions on new foreign-owned company (PT PMA) registrations operating under selected low-risk and medium-low-risk business classifications.
Implemented through Indonesia’s Online Single Submission (OSS) system, the policy represents a broader effort to improve investment quality, strengthen regulatory oversight, and ensure that foreign investment contributes meaningful economic value to the province.
For foreign investors planning to establish a business in Bali, the changes underscore the importance of understanding Indonesia’s investment regulations before commencing company incorporation.
Why the Government Introduced the Restriction
The policy stems from concerns raised by the Bali Provincial Government regarding the rapid increase in foreign-owned businesses operating within sectors traditionally occupied by local micro, small, and medium-sized enterprises (MSMEs).
In January 2026, Bali Governor Wayan Koster formally proposed tighter controls on several business classifications commonly utilised by PT PMA entities. Provincial authorities argued that stronger supervision was necessary to ensure that foreign investment generates genuine economic activity, employment opportunities, and sustainable business development.
Concerns Over Low-Risk PT PMA Growth
According to provincial data, Bali accounted for nearly 40% of all PT PMA registrations issued nationwide between 2021 and 2025. During that period, more than 19,000 foreign-owned companies registered over 55,000 projects, many operating within low-risk sectors that required only a Business Identification Number (NIB) to commence activities.
Officials have expressed concerns that the accessibility of these business classifications may have encouraged company formations with limited operational substance or investment realisation. In some instances, authorities believe company structures were established primarily for immigration-related purposes rather than genuine commercial operations.
Focus on Local SME Protection and Investment Quality
The provincial government’s position is clear: future foreign investment should demonstrate measurable economic contribution and stronger regulatory accountability.
Key concerns behind the policy include:
- Dormant or inactive PT PMA entities
- Limited investment realisation
- Misuse of company registration frameworks
- Non-compliance with licensing obligations
- Increased competition within SME sectors
During 2025 and early 2026, authorities conducted compliance investigations involving hundreds of foreign-owned businesses. Official records indicate that more than 400 companies received sanctions for licensing violations and non-compliance issues.
What Has Changed for New PT PMA Applications in Bali
Under the new policy, PT PMA applications registered using a Bali business address can no longer obtain approval for certain low-risk and medium-low-risk business classifications through the OSS system.
Applications submitted under affected classifications will automatically receive a rejection notification, preventing the company registration process from proceeding.
Which Business Sectors Are Most Affected?
Commonly Restricted KBLI Categories
Several business activities have become a key focus of the new restrictions.
| KBLI Code | Business Activity |
| 68111 | Self-Owned or Leased Real Estate |
| 70209 | Management Consulting Services |
| 77311 | Motorcycle Rental |
| 77100 | Vehicle Rental Services |
| 79121 | Travel Agency Activities |
| 47711 | Clothing Retail Trade |
| 47511 | Textile Retail Trade |
| 47249 | Food Retail Trade |
| 47991 | Mobile Retail Food Trade |
Many of these sectors became attractive to foreign investors due to their relatively straightforward licensing requirements and low compliance burden.
Why These Industries Became a Regulatory Focus
Real estate, consulting, retail, and tourism-related businesses have seen significant growth in Bali over recent years. Provincial authorities have identified these sectors as areas where stronger supervision is required to ensure compliance with investment regulations and fair competition with local enterprises.
What Foreign Investors Should Understand Before Establishing a PT PMA
Understanding Indonesia’s Risk-Based Licensing System
Indonesia’s OSS platform operates under a risk-based licensing framework. Every business activity is assigned a risk level, which determines the permits, certifications, and approvals required before operations may begin.
| Risk Category | Licensing Requirement |
| Low Risk | Business Identification Number (NIB) |
| Medium-Low Risk | NIB + Self-Declared Standard Certificate |
| Medium-High Risk | NIB + Government-Verified Standard Certificate |
| High Risk | NIB + Full Business Licence (Izin) |
Why KBLI Classification Matters
For foreign investors, the most important lesson is that company formation should begin with a comprehensive review of the intended business activity and its corresponding KBLI classification.
The selected KBLI determines:
- Whether foreign ownership is permitted
- Applicable licensing obligations
- Investment requirements
- Regulatory supervision levels
- Operational restrictions
A business model that is permissible in one region or sector may face different requirements elsewhere.
Key Areas Investors Should Verify Before Company Registration
Before incorporating a PT PMA, investors should assess:
- Current KBLI classification
- Foreign ownership eligibility
- Risk category assignment
- Licensing and certification requirements
- Operational substance obligations
- Regional restrictions
- Minimum capital and investment requirements
Conducting this assessment early can prevent costly mistakes such as signing commercial leases, purchasing assets, or investing capital before confirming regulatory eligibility.
Avoiding Common Mistakes During Company Setup
One of the most common mistakes made by foreign entrepreneurs is assuming that all business sectors remain equally accessible to foreign investment.
Regulations continue to evolve, particularly in regions such as Bali. Early legal and licensing due diligence remains essential before making operational commitments.
Using the Right Legal Structure for the Right Purpose
PT PMA Is Designed for Genuine Investment Activity
The latest policy also reinforces an important principle within Indonesia’s regulatory framework: every legal structure should be utilised according to its intended purpose.
A PT PMA exists to facilitate genuine foreign investment and commercial operations. Establishing a company should be supported by a legitimate business strategy, operational activity, and measurable investment commitment.
Also read: How to Register a Company in Indonesia
Residence Permits Should Match Actual Activities in Indonesia
Indonesia offers several immigration pathways tailored to specific purposes.
| Purpose | Appropriate Permit |
| Employment | Work KITAS |
| Business ownership and investment | Investor KITAS |
| Family reunification | Family KITAS |
| Retirement | Retirement KITAS |
| Long-term residency | Second Home Visa |
| Indonesian diaspora | Global Citizen Indonesia (GCI) |
Selecting the appropriate permit helps ensure compliance with immigration and investment regulations while reducing long-term legal and administrative risks.
Why Compliance and Operational Substance Matter More Than Ever
As Indonesia strengthens supervision of foreign investment, authorities are increasingly focused on business substance rather than administrative registration alone.
Companies are expected to demonstrate active operations, fulfil investment commitments, maintain proper licences, and contribute to the local economy.
Are Existing PT PMA Companies Affected?
Existing Licences Remain Valid
Existing PT PMA companies that obtained their NIB and business licences before the restrictions took effect may continue operating under their approved licences. Their legal status remains unaffected by the new policy.
Increased Compliance Audits and Regulatory Scrutiny
However, authorities have indicated that businesses operating within affected sectors may face greater scrutiny moving forward through inspections, audits, and compliance reviews.
Steps Existing Companies Should Take
To minimise compliance risks, existing PT PMA operators should ensure that:
- Investment commitments have been fulfilled
- Tax filings remain current
- Activities align with registered KBLI classifications
- Required permits and certificates remain valid
- Corporate reporting obligations are maintained
Foreign Investment Opportunities in Bali Remain Open
Medium-High and High-Risk Sectors Continue to Accept PT PMA Investment
Importantly, Bali remains open to foreign investment. The restrictions primarily affect selected low-risk and medium-low-risk sectors. Business activities classified as medium-high-risk and high-risk remain available for foreign investment, subject to the applicable licensing and compliance requirements.
The policy should therefore be viewed less as a closure to foreign investment and more as a shift towards attracting businesses that demonstrate stronger capital commitment, operational substance, and long-term economic value.
Establish Your PT PMA with Lets Move Indonesia
Before committing capital or launching operations, it is essential to understand how current regulations affect your proposed business activities. With the right guidance and a properly structured investment strategy, foreign entrepreneurs can continue to build successful and compliant businesses throughout Indonesia.
As a subsidiary of LMI Consultancy, Lets Move Indonesia assists foreign investors throughout the entire company establishment process in Indonesia.
Our team provides support for PT PMA incorporation, registration and licensing, tax and administrative compliance, all through to assisting with residency permit applications to make your business expansion in Indonesia more feasible.
