You may be one of them: returned from a holiday to the incredibly beautiful islands of Bali filled with the best people. And now you want to go there again, but this time is to start a business. It’s easy for everyone to see why not. Bali, one of the most popular tourist spots in Indonesia, offers great opportunities to foreigners. It has booming economy, abundant resources and relatively inexpensive labors. What type of business license in Bali do you need?
With over four million people, and commercial activities , setting up a company in Bali can be challenging from the beginning. Apart from adjusting to a different pace of work life and cultures, the real challenge comes from getting the correct visas and licenses for your business.
In this article, we will guide you through the different licenses for a company set-up in Bali. We will provide you information on business opportunities for foreigners you can consider — giving you realistic expectations in regards to this subject.
Types of Business Formation in Bali
One of the key steps of setting up a company in Bali is deciding what type of business formation that will best fit your needs.
PT PMA Indonesia
PT PMA (Perseroan Terbatas Penanaman Modal Asing), is the foreign-owned Limited Liability Company. It can be partially or wholly owned by foreigners, and is governed by Foreign Capital Investment Law in Indonesia. Do bear in mind that this is the only legal entity that a foreign national or company can start, and generate income in Bali, and in Indonesia.
It is also important to know that the BKPM (Capital Investment Coordinating Board) needs to approve a PT PMA registration before you can conduct businesses in the country. For a joint venture PT PMA, an Indonesian requires to own at least 5% of the company’s shares.
For a fully foreign-owned PT PMA, foreign owners need to sell at least 5% of company’s shares to an Indonesian or a legal business in Indonesia within 15 years.
To get extensive information of the formation of PT PMA in Bali, see Everything You Need to Know about Company Registration in Bali.
PT (Perseroan Terbatas), is also called the Private Limited Liability Company. It is the most common type of business entity opted by locals doing business in Bali, or in Indonesia as a whole. We can categorize a PT company into three sizes: small, medium and large. This formation allows to sponsor foreign employees when the business is at least a medium-sized PT.
If you think that a PT PMA does not fit your need due to the larger investments and startup costs, there are other alternatives you can explore:
- Representative Office (KP3A)
- General Representative Office (KPPA)
- Local Company (PT or CV) (discussed above)
- Nominee Company
In addition to that, make sure to check out the latest revision of Negative Investment List in Presidential Regulation No. 44/2016, to find out if the sector you are interested in doing business in Bali is not restricted to locals only. If a particular field requires partial ownership, you will need to seek a local partner that you know, or done through a professional consulting firm. A shelf company might be an option as well.
Requirements for Business License in Bali
In general, the incorporation process of PT PMA in Bali takes approximately 6 to 10 weeks. The current minimum capital for foreign investment is IDR 10 billion. There are two very important licenses when we talk about the business formation of PT PMA in Bali. Temporary License (or Principal License) and Permanent Business License.
Temporary Business License in Bali
We also know it as an Izin Prinsip in Indonesian. It is the primary license you obtain during the incorporation process. It only permits you to start investing and perform business activities in Bali.
Permanent Business License in Bali
As for a permanent business license (Izin Usaha Tetap – IUT), it enables you to run your business fully and continuously. With the principal license as one of the prerequisite document, you will finally get the IUT once the incorporation process is over and you have fulfilled all legal regulations.
On top of that, by securing a permanent business license in Bali, you are now ready to hire foreign experts, get supporting licenses such as import license. You can protect your PT PMA from future changes of foreign ownership regulations.
Other Business Licenses for Doing Business in Bali
As mentioned above, with an IUT you are able to apply for other supporting licenses for your business in Bali to operate. But what are they?
Here’s the thing: for specific fields for a PT PMA in Indonesia, you will have to acquire licenses, after the IUT. They are import licenses, medical distribution licenses, trademarks, trading licenses, industrial licenses, construction licenses, and mining licenses, among others.
Due to the unique business environment in Bali that is quite distinctive from the rest of Indonesia — with bar, café restaurant, property, diving and surfing schools, hotels, and water sports considered the main sectors — other important licenses include environmental license, disturbance license, operational license, hygiene license, and alcohol license (SIUP MB, to sell alcohol).
Most Common Businesses Owned by Foreigners in Bali
Although there are some sectors in Bali that do not allow any commercial activities to foreign nationals or investments. But there are still a lot of opportunities you can venture into.
Many tourists escape their home country and go on a spiritual retreat in Bali. Many locals never get tired of Bali and find it relaxing. Therefore, Bali has long been a hotbed for entrepreneurial foreigners for particular businesses. Let’s see some of the commercial activities as such conducted by foreigners:
- Food and beverages businesses (bars and restaurants, food tour, workshops and cooking classes)
- Clothing design and sales
- Cosmetics and beauty products import and sales (popular foreign brands)
- Health, spiritual and wellness services (yoga, spa, Ayurveda, etc.)
Of course, Bali’s endless sunshine and beaches mean there is plenty of demand for these businesses:
- Recreation and outdoor activities (surfing and diving, water sports, golf, cycling, etc.)
- Tourism (hotel and accommodations, tour agency, transportation, etc.)
If you do plan to start a business in Bali, and you have finally incorporated your business — Congratulations! But this is still not the end of it. In order to work and STAY in Bali at the same, a work permit or work visa application is another legal process you have to go through as well. Read our helpful article or consult Cekindo’s professional team to find out more.
The Final Thought
Starting a successful business in Bali is not always an easy feat. While you definitely have the courage to start your entrepreneurial journey, you will also need to be resilient, patient, and ready to learn. Update yourself with informative business news in Bali regarding opportunities, laws, and regulations. Eventually, everything will come together for the best.
Cekindo has helped set up hundreds of foreign-owned companies across Indonesia, including Bali and Java (Jakarta and Semarang namely). Send us your enquiry now and join the growing list of our clients.
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