Business in Bali: Complete Crash Course

Legal Business Setup

Business Entity Types

1. PT (Perseroan Terbatas) – Limited Liability Company

• Most common for serious businesses
• Minimum capital: IDR 2.5 billion (can be paid gradually)
• Suitable for: Restaurants, hotels, retail stores, services
• Allows foreign investment (with restrictions)

2. CV (Commanditaire Vennootschap) – Limited Partnership

• Simpler than PT
• Lower capital requirements
• Good for: Small to medium businesses
• Indonesian partners required

3. Individual Business (Usaha Perseorangan)

• Simplest form
• For Indonesian citizens only
• Good for: Small shops, services, freelancers

4. Koperasi (Cooperative)

• Community-based business model
• Popular for: Agricultural businesses, local communities

Foreign Investment Rules

• Most businesses require Indonesian majority ownership (51%+)
• Negative Investment List restricts certain sectors
• Tourism, restaurants, retail often allowed with conditions
• Always consult legal advisor for current regulations

Essential Permits & Licenses

Basic Requirements for All Businesses:

1. Business License (SIUP)

• Required for all trading activities
• Obtained through local government office
• Validity: 5 years

2. Company Registration (TDP)

• Company data registration
• Required before SIUP
• Annual reporting required

3. Tax Registration (NPWP)

• Tax identification number
• Required for all businesses
• Register with local tax office

4. Location Permit (HO/SITU)

• Permits your business location
• From local district office
• Required before opening

Industry-Specific Licenses:

Restaurants & Food:

• Food safety certificate
• Halal certification (if applicable)
• Liquor license (for alcohol service)

Tourism & Hospitality:

• Tourism business license (SIUP Pariwisata)
• Building permits for accommodations
• Environmental permits

Retail:

• Trading license
• Import permits (if selling imported goods)

Banking & Financial Requirements

Opening Business Bank Account

Required Documents:

• Business registration documents
• Tax registration (NPWP)
• Company deed
• Director identification
• Local address proof

Recommended Banks:

• BCA (Bank Central Asia) – Most popular, good online banking
• Mandiri – Government bank, reliable
• BNI – Good for international transactions
• CIMB Niaga – Popular with businesses

Payment Systems

• Cash is still king in Bali
• GoPay & OVO – Essential for local customers
• QRIS – Universal QR payment system
• Credit card terminals – For international customers

Tax Obligations

Main Business Taxes:

1. Corporate Income Tax

• Standard rate: 22% (2024)
• Lower rates for SMEs with revenue under IDR 50 billion

2. VAT (PPN)

• Standard rate: 11%
• Required for businesses with revenue over IDR 4.8 billion/year

3. Withholding Tax (PPh)

• Various rates depending on transaction type
• Must be deducted from certain payments

Monthly Obligations:

• Monthly tax reporting (SPT Masa)
• VAT reporting (if applicable)
• Employee tax withholding
• Social security contributions (BPJS)

Annual Requirements:

• Annual tax return (SPT Tahunan)
• Financial statement submission
• Tax audit (for larger businesses)

Labor & Employment Laws

Employment Types:

1. Permanent Employees (PKWT)

• Full benefits required
• Severance pay obligations
• Minimum wage compliance

2. Contract Workers (PKWTT)

• Fixed-term contracts
• Limited renewal periods
• Lower severance obligations

Mandatory Benefits:

• BPJS Kesehatan – Health insurance
• BPJS Ketenagakerjaan – Employment insurance
• THR (Tunjangan Hari Raya) – Religious holiday bonus
• Minimum 12 days annual leave

Minimum Wage (2024):

• Bali Province: ~IDR 2.7 million/month
• Varies by regency/city
• Reviewed annually

Property & Location

Business Location Options:

1. Rental (Most Common)

• Easier to start
• Lower initial investment
• Flexible for testing locations
• Ensure proper rental agreements

2. Purchase (Complex for Foreigners)

• Foreigners cannot own land directly
• Leasehold options available (25-30 years)
• Nominee arrangements (risky)
• Proper legal advice essential

Prime Business Areas:

Seminyak/Kerobokan:

• High-end restaurants and boutiques
• International clientele
• Higher rents but good foot traffic

Canggu:

• Growing expat community
• Good for cafes, co-working, lifestyle businesses
• Digital nomad market

Ubud:

• Cultural tourism hub
• Arts, wellness, organic food
• Spiritual/wellness market

Sanur:

• Established expat community
• Family-friendly businesses
• Steady, loyal customer base

Denpasar:

• Local Indonesian market
• Lower rents
• Good for B2B services

Cultural Business Practices

Important Cultural Considerations:

1. Relationship Building (Silaturahmi)

• Personal relationships crucial
• Invest time in getting to know partners/customers
• Regular check-ins and social visits

2. Respect for Hierarchy

• Understand local authority structures
• Show proper respect to elders and officials
• Use appropriate titles and greetings

3. Religious Considerations

• Respect Hindu ceremonies and holidays (Nyepi, Galungan, etc.)
• Many businesses close during major religious events
• Consider local calendar when planning

4. Community Integration

• Participate in local community (banjar)
• Contribute to local ceremonies when appropriate
• Support local suppliers when possible

Business Etiquette:

• Patience is essential – decisions take time
• Face-to-face meetings preferred over email/phone
• Small gifts appropriate for relationship building
• Business cards exchanged with both hands

Digital Marketing in Bali

Essential Platforms:

1. Instagram

• Most important for visual businesses
• Stories and Reels perform well
• Use local hashtags: #bali #ubud #seminyak

2. Facebook

• Still very popular with locals
• Facebook Pages essential
• Local community groups valuable

3. WhatsApp Business

• Primary communication tool
• Essential for customer service
• Catalog feature for products

4. Google My Business

• Crucial for local search
• International tourists use Google heavily
• Manage reviews and photos

Local Marketing Strategies:

• Word of mouth still most powerful
• Local influencer partnerships
• Community event participation
• Cross-promotion with other businesses

Common Challenges & Solutions

Challenge 1: Bureaucracy & Permits

Solution:

• Hire local permit consultant
• Start paperwork early (can take months)
• Build relationships with local officials
• Keep all documents organized and updated

Challenge 2: Language Barriers

Solution:

• Learn basic Bahasa Indonesia
• Hire bilingual staff
• Use translation apps for documents
• Partner with local businesses

Challenge 3: Seasonal Business Fluctuations

Solution:

• Plan cash flow for low seasons
• Diversify revenue streams
• Target different customer segments
• Offer seasonal promotions

Challenge 4: Competition from Established Players

Solution:

• Focus on unique value proposition
• Build strong local relationships
• Offer superior customer service
• Leverage digital marketing effectively

Challenge 5: Currency Fluctuations

Solution:

• Price in IDR for local market
• Consider hedging for international transactions
• Build buffer into profit margins
• Monitor exchange rates regularly

Resources & Contacts

Government Offices:

Investment Coordinating Board (BKPM)

• One-stop service for business licensing
• Online services available (oss.go.id)

Local District Offices (Kecamatan)

• Location permits
• Local business registrations

Tax Office (Kantor Pajak)

• Tax registration and compliance
• Monthly/annual reporting

Professional Services:

Legal Consultants:

• Essential for business setup
• Ongoing compliance support
• Contract reviews

Accounting Services:

• Monthly bookkeeping
• Tax compliance
• Financial reporting

Permit Consultants:

• Navigate bureaucracy
• Speed up licensing process
• Ongoing compliance monitoring

Business Associations:

Indonesian Chamber of Commerce (KADIN)

• Networking opportunities
• Business advocacy
• Industry insights

Local Business Groups:

• Ubud Business Association
• Canggu Business Network
• Seminyak Business Community

Useful Websites:

• oss.go.id – Online business licensing
• pajak.go.id – Tax information and services
• bkpm.go.id – Investment information
• kemenkumham.go.id – Legal entity registration

Quick Start Checklist

Before You Begin:

• [ ] Research your target market
• [ ] Understand legal requirements for your industry
• [ ] Secure initial funding
• [ ] Find reliable local legal counsel

Month 1:

• [ ] Register business entity
• [ ] Obtain tax number (NPWP)
• [ ] Open business bank account
• [ ] Secure business location

Month 2:

• [ ] Apply for necessary permits
• [ ] Set up accounting system
• [ ] Register with social security (BPJS)
• [ ] Design marketing materials

Month 3:

• [ ] Hire and train staff
• [ ] Launch soft opening
• [ ] Begin digital marketing
• [ ] Join local business networks

Final Tips for Success

1. Start Small, Scale Gradually Begin with minimal viable product, test the market, then expand based on actual demand.

2. Invest in Local Relationships Your success depends heavily on community acceptance and local partnerships.

3. Understand Your Market Local Balinese customers vs. Indonesian tourists vs. international visitors all have different needs and spending patterns.

4. Stay Compliant Keep up with changing regulations. The cost of compliance is always less than the cost of violations.

5. Embrace the Culture Bali’s business culture values patience, respect, and relationships over pure efficiency. Adapt your approach accordingly.

6. Plan for the Long Term Building a successful business in Bali takes time. Focus on sustainable growth rather than quick profits.

This crash course provides foundational knowledge. Always consult with local legal and financial professionals for your specific situation and current regulations.

Ready to start your Bali business journey? Register on Bali.Business and connect with the local business community!