The good vibes of Bali do not make it only a dream destination for Eat, Pray, Love holidays but it is also an island with countless business opportunities and millions of consumers.
Many expats start doing business in Bali after moving to the island. For example, set up a lifestyle business in Bali.
Two most common legal entity types in Bali are a 100% Indonesian-owned limited liability company (PT) and a partially or wholly foreign-owned company (PT PMA).
| Foreign-owned company (PT PMA) | Locally owned company (PT) |
Minimum investment | Investment plan of IDR 10 billion (~USD 780,000) | Same as paid up capital |
Paid up capital | IDR 10 billion (~USD 780,000) | IDR 51 million (~USD 3,600)* *if only local employees |
Allowed foreign ownership | Up to 100%, depending on the business classification | No foreign ownership allowed |
Compliance | Investment reporting to BKPM, and more compliance requirements | Fewer compliance requirements |
Issuing KITAS | Can hire foreigners | Paid up capital IDR 1 billion (~USD 70,000) per foreigner |
Combining several business activities under one company | Many limitations, depending on business classification | No limitations |
Setting up a PT PMA in Bali
In Indonesia, companies that have even 1% of foreign shareholders are already considered foreign companies. The maximum allowed foreign ownership depends on the business classification of the company.
For example:
Business classification | Maximum allowed foreign ownership |
Real estate | 100% |
Trading (import, export) | 100% |
Hospitality (3+ star hotels) | 100% |
Hospitality (non-star to 3-star hotels) | 67% (an Indonesian shareholder must hold the remaining 33%) |
Retail | 100% |
Limitation on the maximum foreign ownership means that for company registration, foreigners must have a local partner. If you do not have such a local partner, VIVO ASIA can assist you with this.
In addition to general licenses, operating a specific business may also demand several additional permits. For example, a restaurant needs permission to sell alcohol, and a hotel requires a tourism license, etc.
The shelf companies that many business consultants provide in Bali do not often have these specific licenses and thus are not sufficient for operating the planned business. However, if you are considering this option, see how to buy a shelf company in Indonesia safely.
The minimum paid up capital requirement is Rp. 10 billion (~USD 780,000) and with the new One Single Submission (OSS) system, the incorporation process in Bali takes around three to four months.
Learn more about the process and requirements in our guide to setting up a foreign company in Indonesia.
Setting up an Indonesian PT company
Local companies can only have 100% of Indonesian ownership. If a foreigner holds even 1% shares, the company is a foreign-owned company.
You can start an Indonesian PT company with as little capital as 51 million IDR (~USD 3,600). However, if you plan on hiring foreign employees, it should have a minimum of 1 billion IDR (~USD 70,000) capital per foreigner.
Nominee company in Bali – the safe way
Limitations on foreign ownership and smaller capital requirement compared to a PT PMA are the reasons why many foreigners in Bali make the mistake of setting up a local company using an unreliable nominee, often without any written agreements.
It usually happens when the foreign national trusts a local individual to act in good faith and hold shares on behalf of them. When money gets involved, we strongly advise to stay rational and go for safer options.
If you are going to use a local company that you want to have full control over then you can set up a nominee company in Bali with VIVO ASIA. This way you will have full control of the company through a set of legal agreements.
Recruiting skilled workforce and obtaining licenses can also be complicated in Indonesia. VIVO ASIA can handle the legal framework and help you find qualified employees.
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