Bali has long been a dream destination for Australians, not just as a holiday haven but also as a hotspot for entrepreneurship. With its stunning landscapes, thriving tourism industry, and a growing local economy, Bali presents incredible business opportunities for foreigners. However, starting a business in Bali involves navigating Indonesia’s legal framework, which may seem complex without proper guidance.
This comprehensive guide outlines the steps Australians need to take to register their business in Bali quickly and legally.
1. Why Choose Bali for Your Business?
Bali’s position as a global tourism hub offers a wealth of opportunities for businesses targeting both local and international markets. Australians, in particular, are well-suited for success in Bali due to the existing cultural familiarity and the large number of Australian tourists who visit annually. Popular business ideas include hospitality ventures, retail shops, wellness centers, tour and travel, etc
Understanding the local culture and legal system is crucial to leveraging Bali’s business potential effectively. This makes careful planning and the right strategic approach essential.
2. Deciding on the Right Business Structure
Selecting the appropriate business structure is the first major decision when setting up a business in Bali. For foreign investors, there are two primary options:
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Foreign-Owned Company (PT PMA)
PT PMA is the most common structure for foreigners who want full control over their business. However, it comes with a minimum capital requirement of IDR 10 billion (~AUD 1 million) for many sectors. This structure allows direct foreign ownership and is ideal for long-term investments in Bali.
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Local Partnership or Nominee Arrangement
For those looking to avoid the high capital requirement, partnering with an Indonesian citizen to establish a local company is another option. This approach requires a high level of trust, as the local partner will legally own the business under Indonesian law. Otherwise, you can engage a professional to provide you with the nominee services.
Each structure has its benefits and risks, so seeking advice from a legal consultant or business advisory firm is recommended before proceeding.
3. Understanding Indonesia’s Positive Investment List
The Positive Investment List outlines which business sectors are open to foreign investment. While many opportunities exist in Bali, certain small-scale businesses, such as local retail stores, remain restricted to Indonesian nationals. Industries such as tourism, hospitality, and wellness often allow foreign participation, but with specific regulations.
Researching whether your business idea aligns with Indonesia’s Positive Investment List is a critical step to ensure compliance.
4. Getting the Right Visa
To legally operate a business in Bali, you’ll need the right type of visa. Common options include:
- Investor Visa/KITAS: Suitable for business owners who invest in a PT PMA and want to manage their operations directly.
- Work Permit and Limited Stay Permit (KITAS): suitable for a foreign employee who works and reside in Bali
- Business Visa: Designed for individuals conducting business activities but not managing day-to-day operations.
Both visas have specific requirements, so consulting with an immigration specialist is advisable to avoid complications.
5. Document Preparation for Business Registration
Registering a business in Bali requires a range of documents, including:
- Shareholders
- For foreign individual shareholder: color scanned of passport showing identity page and signature
- For Indonesian individual shareholder: color scanned of KTP and NPWP
- For foreign company:
- Copy of Articles of Association;
- Director Listing
- scanned color a valid passport of one of Director
- For Indonesian company:
- Copy of Articles of Association and Ministry of Law and Human Rights Approval (its establishment and all its amendment)
- Copy of NPWP of Indonesian company
- scanned color of KTP and NPWP of Director
- Director and Commissioner:
- Foreigner: color scanned of passport showing identity page and signature
- Indonesian: color scanned of KTP and NPWP
- Office Address: office address, rental agreement, and building domicile letter
- Statement Letter. Shareholders sign statement letter regarding the capital injection, the statement of the address of the PT PMA is true, etc
Gathering these documents in advance can significantly speed up the registration process.
6. Registering Your Business Name
In Indonesia, all businesses must register their names with the Ministry of Law and Human Rights (Kemenkumham). Your chosen name must meet these requirements:
- It must be unique and not already in use.
- It should comply with Indonesian naming conventions.
After approval, you can proceed with registering your business in Indonesia.
7. Preparing Articles of Association and Getting Approval from Ministry of Law and Human Rights (“MOLHR”)
If the required documents are completed, the next process is to draft the Articles of Association (“AOA”). The outline of the AOA are about the objective and business purposes, the domicile of the PT PMA, the capital, the dividend distribution, voting rights, etc.
If you have a business partner in establishing a PT PMA, it is important to understand correctly how the AOA is written as it will be the basis rules for all the parties. If the partnering required a modification to the standard AOA terms, it will be permitted in so long as not contradictory to the Indonesian Company Law. For example, the majority shareholders want to have the right to nominate the director, etc. If no modification, you can use the standard AOA terms which have been compiled and align with the Indonesian Company Law.
If the AOA has been set, you can apply to the MOLHR to get the approval of the establishment of a PT PMA. Once it is approved, it means that your company is already legally established in Indonesia.
8. Licenses and Permits: The Next Steps
Securing licenses and permits is a critical step in establishing your business. Key permits include:
- Operational License (OSS-RBA): All businesses must register through Indonesia’s Online Single Submission system.
- Sector-Specific Licenses: For example, restaurants need hygiene permits, and spas require additional certifications.
- Tax Identification Number (NPWP): Necessary for fulfilling tax obligations.
Having a consultant handle these processes can ensure all requirements are met correctly and efficiently.
9. Tax Obligations for Foreign-Owned Businesses
Foreign-owned businesses in Bali are subject to Indonesia’s corporate tax system. This includes:
- A standard corporate tax rate of 22% out of 50% profit.
- Additional levies depending on the sector and revenue.
Regular tax compliance is essential to avoid penalties. Hiring a local tax advisor who understands Indonesian regulations can help streamline this aspect of your business operations.
10. Hiring Employees: What You Need to Know
If you plan to hire staff, you must adhere to Indonesian labor laws, including:
- Registering employees with the Social Security Program (BPJS).
- Providing fair wages and ensuring compliance with minimum wage laws in Bali.
- Securing work permits for any foreign employees.
Understanding these requirements will help you build a compliant and productive team.
Also Read: How an Employer of Record Can Simplify Global Expansion
11. Building Local Partnerships and Networks
Success in Bali often depends on building strong local connections. Joining expatriate business groups or attending networking events can provide valuable insights into operating in Bali. Additionally, working with local consultants can help navigate challenges related to cultural nuances and legal requirements.
Conclusion
Starting a business in Bali as an Australian entrepreneur is an exciting opportunity, but it requires careful planning and legal compliance. By choosing the right business structure, preparing essential documents, and working with trusted professionals, you can navigate the process quickly and effectively. Bali offers a unique blend of opportunities, making it an excellent destination for your business endeavors.
Navigating Indonesia’s legal system can be daunting, but with CPT Corporate, you don’t have to do it alone. Our team of experts specializes in business registration and compliance, ensuring your venture in Bali starts on the right foot. From document preparation to obtaining licenses, we handle every detail so you can focus on building your dream business.
Contact CPT Corporate today to learn how we can help you register your business in Bali quickly and legally. Your journey to becoming a successful entrepreneur in paradise starts here!
