Recent developments in Bali’s policy landscape could have a significant impact on expats running or planning to start businesses on the island. Here’s a review of some of the recent policy shifts to know:
Moratorium on New Tourism Developments: What Does It Mean for Expats?
The Indonesian government has introduced a temporary freeze on new tourism-related developments in Bali’s most developed regions. These measures are designed to address the growing pressures of overtourism and infrastructure strain in Bali’s busiest tourist areas.
The freeze, which has been agreed on in September and is expected to take effect in late 2024, will focus on limiting new construction and permits for tourism-related businesses, including hotels, villas, restaurants, and other tourism establishments. The government is particularly concerned about regions like Denpasar, Badung, Gianyar, and Tabanan — collectively known as the Sarbagita area — which includes popular tourist destinations like Kuta, Seminyak, Canggu, Uluwatu, and Sanur.
These regions, home to the island’s most popular destinations such as Kuta, Seminyak, Canggu, Uluwatu, and Sanur, will not see new tourism-related businesses receive permits for the next two years.
In the past few weeks, key figures such as former Minister of Investment Luhut Binsar Pandjaitan have publicly emphasized the urgency of these measures.
“We believe that the absence of a verification process on low and medium-risk business permits has opened the opportunity for misuse,” Pandjaitan said in his letter to the Ministry of Investment.
His warning highlights concerns over the unchecked growth of tourism businesses, which has led to environmental damage and infrastructure strain, especially in southern Bali.
For expats currently running or looking to start businesses in these key areas, the policy presents both challenges and opportunities. On one hand, it means a temporary freeze on opening new tourism ventures, especially in Bali’s most developed tourist zones.
Expats who were planning to open new hotels, restaurants, or cafes in these areas will need to look elsewhere, particularly to less congested parts of the island like Nusa Penida or the northern and eastern regions, which are not included in the moratorium.
However, existing projects that have already received approval will still be able to proceed. This includes high-end developments such as the Regent Hotel Canggu and The Anantara Ubud Bali Resort. Expats currently involved in these ongoing projects will see their businesses continue to develop as planned, despite the freeze on new permits.
Tighter Scrutiny for Foreign-Owned Businesses
In addition to the tourism moratorium, the government is also introducing stricter regulations on business licenses for foreign-owned small and micro enterprises (UKUM). This move comes as part of an effort to address concerns about foreign businesses bypassing regulations meant to protect local enterprises.
Pandjaitan emphasized the need for more rigorous oversight, stating, “We believe that the absence of a verification process opens opportunities for misuse, especially in the hospitality and food sectors,” referring to the Standard Classification of Indonesian Business Fields (KBLI) for the provision of accommodation and food. He called for closer monitoring of foreign-owned businesses to ensure they contribute positively to the local economy without displacing local businesses.
This could mean delays in obtaining business licenses for foreign entrepreneurs, as authorities implement more stringent checks on business plans, documentation, and overall compliance with local regulations.
For expats planning to start new businesses in Bali, particularly in the food, beverage, or tourism sectors, the process for securing permits will likely be more complicated and time-consuming than before.
Support from Bali’s Tourism Leaders
While the moratorium and new regulations have raised concerns among foreign entrepreneurs, Bali’s tourism leaders have expressed support for the policy. Ida Bagus Agung Partha Adnyana, Chairman of the Bali Tourism Board (BTB), explained that the freeze is necessary to manage the pressures of rapid tourism development in Bali’s south.
“We understand that this step aims to maintain environmental balance, improve the quality of tourism, and encourage equitable development in Bali,” Adnyana said.
He emphasized that the moratorium will help spread development more evenly across the island, directing investment into areas that are not yet overwhelmed by tourism. For expats, this could open up opportunities in areas outside the main tourist hubs, as development is redirected.
Adnyana also noted that the moratorium is in line with efforts to ensure that tourism remains sustainable and offers long-term benefits for local communities.
Looking Ahead: What Expats Should Do
For expats already running businesses in Bali, especially those in the tourism and hospitality sectors, there is little immediate concern.
However, for those planning to expand or start new ventures in Bali’s prime tourist locations, the moratorium means that growth will be temporarily stunted in the most sought-after areas. Expats should consider exploring new business opportunities in areas outside the Sarbagita region or pivot to sectors less impacted by the freeze, such as tech or services for the growing digital nomad community.
The government’s heightened scrutiny of foreign-owned businesses also suggests that expats should expect a more thorough and potentially slower application process for business licenses. It will be crucial for foreign entrepreneurs to ensure they meet all local requirements and regulations to avoid delays.
With recent comments and actions from key government officials, including Luhut Binsar Pandjaitan and tourism leaders like Ida Bagus Agung Partha Adnyana, it is clear that Bali is entering a period of significant change aimed at balancing tourism growth with environmental and infrastructural sustainability.
Expats in Bali should stay informed about these new policies, as they will likely affect both the pace of business expansion and the regulatory landscape for foreign-owned enterprises.
The next two years could bring a shift in the local business environment, particularly in tourism, and expats looking to invest in the island should prepare for a more complex regulatory landscape moving forward.
