Company foreigners, and is governed by Foreign Capital

Company
Setup in Bali: What Licenses Are Needed

 

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, as Bali, one of the most popular tourist
spots in Indonesia, offers great opportunities to foreigners due to its booming
economy, abundant resources and relatively inexpensive labors.

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With over four million people, and commercial
activities on the rise on this amazing island, 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 company setup in Bali, and provide you information of
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
a business, 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 is
required to own at least 5% of the company’s shares. For a fully
foreigned-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.

 

For extensive information of the formation of PT PMA in Bali, see Everything You
Need to Know about Company Registration in Bali.

 

PT Indonesia

PT (Perseroan
Terbatas), is 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. A PT company can be categorized into three sizes: small, medium and
large. This formation is allowed 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 a partial ownership, you will need to seek a local
partner that you know, or done through professional consulting firm.

 

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 business formation of PT PMA in Bali: Temporary License (or
Principal License) and Permanent Business License.

 

            Temporary Business License in Bali

Also known as Izin Prinsip in Indonesian, it is the primary license
obtained during the incorporation process. You are only permitted to start
investing and perform business activities in Bali.

 

            Permanent Business License in Bali

As for 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, and 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 are
partially closed, or do not allow any commercial activities to foreign
nationals or investments, 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, and 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)

·        
Property

·        
Clothing design and sales

·        
Cosmetics
and beauty products import and sales (foreign popular brands)

·        
Health, spiritual and wellness services (yoga, spa,
Ayurveda, etc.)

 

Of course, Bali’s endless sunshine and beaches mean
there is plenty of demand of these businesses:

 

·        
Recreation and outdoor activities (surfing and diving,
water sports, golf, cycling, etc)

·        
Tourism (hotel and accommodations, tour agency, transportation,
etc.)

 

Other
Recommendations

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 most
importantly be ready to learn. Update yourself with informative business news
in Bali regarding to 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, Jakarta, and Java. Send us your
enquiry now and join the growing list of our clients.