Considered a major tourist hotspot in Indonesia, the Island of Gods provides the perfect blend of opportunities to investors for opening a restaurant in Bali.
Indonesia’s tropical climate, endless coastlines, and volcano-made fertile grounds make the country an ideal hub for a vast variety of food resources like coconut groves, paddy fields, and abundant seafood. The Archipelago’s long and diverse history with the amalgamation of vibrant cultures led to the evolution of food to various unique, exotic cuisines such as nasi tumpeng, pepes, and others.
Apart from being an essential medium of survival, food is known to strengthen family bonding and develop friendships. Moreover, it is customary for travelers and tourists to bond over food.
Over the last five years, the F&B sector has received foreign investments worth IDR 293 trillion, demonstrating great potential for investors to set their footprints into the country. Globally the F&B sector came to a standstill due to COVID-19, however, Indonesia’s market held up to the challenge
Despite plunging demand due to the pandemic, the sector’s Year-on-Year growth rate clocked 3.94% and 0.22% in the first and second quarter of 2020 respectively.
However, with the ease of lockdown restrictions, restaurants in Denpasar (in Bali) saw a 10% rise in visitors. Similar trends were observed in Greater Jakarta, Makassar, Medan, and Surabaya.
The inflow of investments over time and rising demand in the F&B industry signify Indonesia’s robust resilience from global economic shocks due to the COVID-19 pandemic.
As social distancing restrictions are gradually lifted and vaccines are made available to the population, the F&B industry, which is the second-largest sector in Indonesia, is expected to diversify in 2021. In Q1, FDI realization in the Food Industry accounted for US$968.3 million of investment value and is projected to reach US$2,471 million of revenue by the end of this year.
Following are some projections related to the F&B industry for coming years:
|Revenue in the F&B sector||US$2, 471 M||2021|
|Annual Growth Rate
US$3, 724 M
|Average Revenue Per User
With sound resilience to the pandemic and optimistic future projections, Indonesia’s food and beverage sector has set the stage for foreign investors to leverage the untapped opportunities available in the market.
The middle-income consumers are also proving to be a game-changer in driving up the food-service demand. According to the World Bank, over the past 15 years, Indonesia has brought down its poverty levels to below 10%. As a result, the middle-class population has grown from 7% to 20% and shown a spike of 12% in its consumption.
The change in the middle-income group’s propensity to spend was evident. The middle class spent more on the food products that were previously expensive for them. According to PwC, Indonesian spending on food pick up or delivery service increased by 47% during Covid-19 Pandemic. These will bolster the food-service demand and make the F&B industry a lucrative investment opportunity for foreign investors.
Local consumers are playing a pivotal role in reviving the COVID-19 struck on the hospitality industry. The Minister of Tourism and Creative Economy, Sandiaga Uno, in April 2021, stated that domestic arrival in Bali reached approximately 8,000 visitors a day – 50% of pre-COVID-19 domestic arrivals — revving up the food-service demand in the area.
Recent surveys show that the plant-based food lifestyle gained recognition during the pandemic.
In its wake, the majority of Indonesians have shifted to a plant-based diet to increase immunity and are actively buying fruits and vegetables. To meet the soaring demand, health-food delivery services have also increased by 7.4%.
Cloud kitchens are commercial facilities purpose-built to prepare food specifically for delivery and takeout. Restaurant owners are gravitating towards cloud kitchens considering the range of benefits it offers, starting from low start-up and administration costs to hassle-free logistics.
Indonesia shows an avid interest in this concept and chances of expansion to the national level look very promising. Cloud kitchens like GoFood Joint Kitchen, Hangry, and Grab Kitchen is making the most of the pandemic as many people have not yet started eating out. Such initiatives open up new opportunities for food entrepreneurs either looking to start a virtual restaurant or cloud kitchen.
Food trucks are very popular among Indonesians because of the delicious fusion style of cuisines it offers. They are also easy to set up as they have low initial investment and operational costs.
However, food trucks face challenges in attracting customers due to inconvenient location, standard restaurant menu, and expensive price perception. To combat such challenges, food trucks should provide affordable and hygienic food, vibrant & exotic menus, and keep customers updated with new locations.
The process to establish a healthy F&B Business starts with forming a company. For starting a business in Bali as a foreigner, there are two common types of legal entities:
|Local PT||PT PMA|
|What is it||A local company or Local PT is a 100% locally owned company. However, a foreigner can be appointed as a director provided he carries an Indonesian tax ID number (NPWP). It is structurally and functionally similar to a Limited Liability Company (LLC).||A foreign investment company or PT PMA is similar to Local PT functionally. However, 100% foreign ownership, depending on the business field, is permitted for PT PMA.|
|Benefits||Local PT allows more flexibility on investment value and is allowed to operate a wide range of business activities than foreign-owned companies.||PT PMA allows businesses to receive foreign investment opportunities that are restricted in Local PT registration.|
|Requirements||Copy of Personal ID (Indonesian) & NPWP (Taxpayer ID), Company Legal document (Plus Director Valid ID), Leased Agreement or Deed of sales and purchase, Company Address||Copy of Valid Passport minimum 18 months from expiry date;
Company Legal document;
Leased Agreement or Deed of sales and purchase; Company Address
Apart from the documents required to set up a company, the following sets of licenses are required to start a restaurant business in Indonesia:
Note that even though Food Trucks aren’t restaurants, they still need a restaurant license to operate.
Setting up a business overseas can be a tedious and daunting process. Cekindo’s comprehensive business solutions can help you leverage the best opportunities available in the FnB industry.
Our consultants have in-depth knowledge of the Indonesian regulations and will make sure you stay on top of all your business’s regulatory and statutory aspects. From applying for licenses, human resource management to market research and analysis, let Cekindo handle all the technical nuances of setting up your business while you focus on your core activities of running your restaurant.