opening a restaurant in bali

Opening A Restaurant in Bali: Why and How?

  • InCorp Editorial Team
  • 16 May 2019
  • 4 minutes reading time

Despite the hard work that a foreigner has to put into for running any kind of business, opening a restaurant business in Bali may be one of the most rewarding experiences of your life. Setting up a restaurant business in Bali fuses two of every foreign investor’s greatest desires: making a steady profit while living in paradise.

Apart from that, due to the growing tourism and increasing consumer spending in this country with a population of over 260 millions, both residents in Bali and tourists have also grown to appreciate the local and international cuisine the island offers. The tremendous support from the Indonesian Investment Board and Tourism Board has also made Bali become the new dining destination of the world.

Therefore, it is pretty clear that opening a restaurant in Bali, if done right, is a sure-shot path to success. If you still don’t know how to go about it, or are in the midst of setting up your first restaurant in Bali, then you are in the right place.

This article tells you, in detail, why and how you should start a restaurant business in Bali.

Dining Scene in Bali

The number of international and local restaurants that has sprung up in Bali over the years has transformed this beautiful island into a lucrative paradise for more than just another popular holiday destination.

According to McKinsey Global Institute, there will be about 135 million people that belong to the consuming class of the country by 2030. Therefore, people in this consuming class will constantly look for entertainment and dining experience in restaurants with the additional income. The tourism sector, including restaurants, contributed to the country’s GDP of 14.6% in 2014, with an amount of IDR 1473 trillion.

Requirements for Setting Up a Restaurant Business in Bali

Restaurant businesses are considered a part of the tourism business in Bali. Therefore, foreign investors can refer to Ministerial Regulation of Ministry Culture and Tourism No. PM. 87 /HK.501/MKP/2010.

To own and start a restaurant in Bali, it is mandatory to establish a restaurant with physical space that can hold up to more than 60 seats. In addition, the location of your restaurant must belong to zones that are adequate for commercial activities. Necessary permits are required as well, which will be discussed in the following sections.

First of all, as a business owner of a restaurant in Bali, you will need to know your options of registering a legal business entity on the island.

For foreigners, there are two common types of legal entity available in Bali for restaurant business: a local company (PT) and a foreign-owned company (PT PMA).

A PT company has to be 100% owned by an Indonesian national. So if you are a foreign investor who wishes to own a business or to expand your business in Bali, this type of formation may not be suitable for you.

Alternatively, you can opt for a PT PMA. Fortunately, under the current Negative Investment List (NIL), foreigners are allowed to have 100% ownership of the PT PMA in the restaurant sector.

The permission of 100% foreign ownership is a part of the Indonesian government’s effort to attract even more foreign investment in this burgeoning sector.

However, one thing for foreigners to take note is that a small-scale eatery, also known as “Rumah Makan” in Indonesian, can only be formed under a PT owned by Indonesians.

Licenses Required for Restaurant Business

The permits and licenses required for this sector are listed in the following:

  • Tanda Daftar Usaha Pariwisata (TDUP) (or restaurant license) with a general validity of 5 years, depending on the area in Bali
  • Tourism operational license
  • Health and hygiene license
  • Building permit (IMB)
  • NPPKBC and/or SIUP-MB if you sell and/or produce alcohol
  • Intellectual property licenses if you play pre-recorded music or have live music

Required Documents for Restaurant License

  • Complete application form
  • Copy of ID/Passport
  • Copy of company NPWP
  • Copy of Company Article of Association
  • Copy of IMB permit
  • Copy of Environmental Impact Analysis AMDAL
  • Pictures in color of business location

 

The cost of a restaurant license starts from IDR 120 million. The entire process of company formation and license issuance will take up to 2-3 months.

How Cekindo Can Help

Preparing all the documents and reading through all the rules and regulations related to opening a restaurant in Bali as well as business and restaurant licenses may appear to be time consuming and energy draining. That is why Cekindo is here to assist you in starting a business in Bali. Get in touch with us today. We also have offices in Jakarta and Semarang.

Verified by

David Susandi

Branch Manager – Bali Office at InCorp Indonesia

Holding 11 years of experience in various roles, including project manager, operational manager, and corporate strategist, David Susandi is a prominent figure for many entrepreneurial organizations expanding in Indonesia.

Frequently Asked Questions

    A nominee arrangement is an arrangement that uses another person’s name as a subject. In Indonesia, it is prohibited. This restriction aims to prevent situations where a company is owned by one party but beneficially owned by another. According to the law, any nominee agreement between a local party and a foreign investor is deemed null and void.

    A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.

    • Import facilities
      Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production.
    • Tax holiday
      The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status.

      • Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.

    • Tax allowance
      For companies in certain designated areas or regions, the government may provide the following tax concessions:
      Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
      Accelerated depreciation and/or amortisation deductions
      An extension of tax losses carried forward for a maximum of ten years
      A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
      The applicant eligible has to meet high-level-criteria for the above tax facilities:
      High investment value or for export purposes
      High manpower absorption
      High level of local content
    • Investment allowance
      The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project.
    • Super deduction
      This facility could be granted to certain businesses, such as:
      60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
      Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
      Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.

    Under Indonesian Company Law, shareholders can hold shares with various preferential rights, such as voting rights, nomination rights for board members, priority dividend or liquidation proceeds, and options for conversion or withdrawal after a set period.

    In Indonesia, employment arrangements are categorized into temporary employment agreements (PKWT) and permanent employment agreements (PKWTT). Temporary contracts are for short-term, seasonal, or experimental work, while permanent contracts are for continuous employment.

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Disclaimer

The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

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