How Foreigners Can Open a Company in Bali – Complete Legal Process Guide

Bali has become a prime destination for foreign entrepreneurs seeking to establish businesses in Southeast Asia. Its booming tourism industry, vibrant culture, and strategic location make it an attractive choice for startups, hospitality ventures, and investment opportunities. However, for foreigners, setting up a company in Bali requires careful understanding of Indonesian law, business regulations, and legal procedures.

At The Bali Lawyer, a trusted law service based in Bali, we specialize in guiding foreign investors and entrepreneurs through the entire legal process of establishing a business in Bali. This guide provides a comprehensive overview of how foreigners can open a company in Bali, the types of legal entities available, the step-by-step process, and key compliance requirements.

Understanding Business Ownership Laws in Indonesia

Indonesia regulates foreign investment through specific legal frameworks to ensure proper compliance, protect local employment, and maintain economic stability. Foreigners cannot simply register a company in their name without meeting regulatory requirements.

Foreigners can legally operate a business in Indonesia through the following legal structures:

  1. PT PMA (Perseroan Terbatas Penanaman Modal Asing – Foreign Investment Company)

  2. Representative Office (KPPA/Representative Office of Foreign Company)

  3. Local Partnership with an Indonesian Citizen

Among these, the PT PMA is the most common and recommended structure for foreigners seeking to establish a full-fledged business in Bali.

What is a PT PMA?

A PT PMA is a limited liability company that allows foreign investors to hold shares and manage business operations in Indonesia. It provides a legal framework for foreigners to conduct commercial activities, hire staff, and own assets under Indonesian law.

Key features of a PT PMA:

  • Allows 100% or partial foreign ownership depending on the business sector and negative investment list regulations.

  • Can operate in sectors approved by the Indonesian Investment Coordinating Board (BKPM).

  • Provides legal recognition for contracts, permits, and taxation purposes.

  • Allows foreign directors and shareholders to manage business operations.

The PT PMA structure ensures that your company operates legally and enjoys full access to business rights and protections under Indonesian law.

Step-by-Step Process to Open a Company in Bali

Setting up a company in Bali involves several steps, from initial planning to obtaining licenses and permits. Below is a detailed breakdown of the process.

Step 1: Determine the Business Sector and Investment Eligibility

Indonesia has a Negative Investment List (DNI) that outlines sectors restricted or prohibited for foreign ownership. Before establishing a company:

  • Identify the business sector you intend to operate in.

  • Verify if it allows full foreign ownership or requires local partnership.

  • Consult with a legal expert to ensure compliance with investment regulations.

Common sectors open to foreign investors in Bali include:

  • Tourism and hospitality (villas, resorts, travel agencies)

  • Food and beverage

  • Export-oriented trading

  • IT and digital services

Step 2: Choose a Company Name and Legal Structure

Your PT PMA must have a unique company name that is registered with the Ministry of Law and Human Rights (Kemenkumham).

Key considerations:

  • The name should reflect the business activity.

  • It must not conflict with existing registered company names.

  • Obtain approval from Kemenkumham before proceeding with the next steps.

The legal structure for foreign investors is usually:

  • PT PMA (Limited Liability Company)

  • Minimum share capital requirements must be met according to Indonesian regulations.

Step 3: Draft and Notarize the Company Articles of Association

The Articles of Association (Akta Pendirian PT PMA) outline your company’s purpose, shareholders, directors, capital structure, and operational rules.

Key elements included:

  • Company name and address

  • Shareholders and directors’ details

  • Capital distribution (foreign vs. Indonesian ownership)

  • Scope of business activities

  • Company management structure

Once drafted, the Articles of Association are notarized by a registered notary in Bali and submitted for approval to Kemenkumham.

Step 4: Obtain Investment Approval from BKPM

The Indonesian Investment Coordinating Board (BKPM) is the government agency responsible for approving foreign investment.

Process:

  • Submit PT PMA Articles of Association, shareholder details, and business plan.

  • Provide proof of minimum capital investment as per business sector requirements.

  • Receive Investment Registration Certificate (PMA Approval) confirming legal authorization to operate.

This step is crucial as it legitimizes your foreign-owned company in Indonesia.

Step 5: Register for Tax Identification (NPWP) and Business Identification Number (NIB)

Every company in Indonesia must obtain:

  • NPWP (Tax Identification Number) for corporate tax compliance.

  • NIB (Nomor Induk Berusaha), issued through the Online Single Submission (OSS) system, which serves as a business registration certificate and allows access to permits.

Obtaining NPWP and NIB is mandatory before starting business operations and opening corporate bank accounts.

Step 6: Obtain Required Business Licenses and Operational Permits

Depending on your business sector, additional permits may be required. Common licenses include:

  • Trading License (SIUP) for commercial businesses

  • Restaurant or F&B Permits for food-related businesses

  • Tourism or Hospitality Licenses for resorts, villas, and travel agencies

  • Environmental permits (AMDAL or UKL-UPL) for certain projects

A legal service like The Bali Lawyer helps ensure that all licenses are obtained correctly and efficiently.

Step 7: Open a Corporate Bank Account

A PT PMA must have a corporate bank account in Indonesia to:

  • Deposit minimum capital

  • Conduct transactions legally

  • Manage operational finances in compliance with Indonesian law

Banks will require company registration documents, NIB, and shareholder identification to open the account.

Step 8: Hire Staff and Register Employment

If your business requires employees, you must comply with Indonesian labor laws, including:

  • Employment contracts

  • Mandatory social security and health insurance

  • Work permits (KITAS) for foreign employees

Proper registration ensures compliance with labor regulations and protects your business from legal disputes.

Legal Requirements and Compliance

Operating a foreign-owned company in Bali requires adherence to Indonesian regulations, including:

  • Minimum capital requirements: PT PMAs must meet sector-specific investment thresholds.

  • Shareholding rules: Foreign ownership is subject to restrictions in certain industries.

  • Annual reporting: Companies must submit financial reports to government authorities.

  • Tax compliance: Corporate income tax, VAT, and other obligations must be fulfilled.

  • Work permits: Foreign directors and employees require valid KITAS and work authorizations.

Failing to comply with these requirements can result in fines, suspension, or revocation of your business license.

Benefits of Opening a PT PMA in Bali

Establishing a foreign-owned company in Bali offers several advantages:

  1. Legal Recognition

    • PT PMA status provides legal protection for your business, contracts, and assets.

  2. Operational Flexibility

    • Conduct commercial activities, hire employees, and manage operations within a legal framework.

  3. Access to Financial Services

    • Corporate bank accounts, loans, and investment channels are accessible to PT PMA companies.

  4. Investment Opportunities

    • Owning a PT PMA allows participation in tourism, F&B, trading, and export-oriented businesses.

  5. Long-Term Residency Benefits

    • Foreign shareholders or directors can obtain KITAS linked to the company, enabling legal residency in Bali.

Common Challenges and How to Overcome Them

Foreign investors may face challenges when setting up a company in Bali, including:

  • Complex regulatory requirements: Navigating BKPM, Kemenkumham, and OSS processes requires legal expertise.

  • Capital and ownership restrictions: Certain sectors have strict foreign ownership limits.

  • Permits and licenses: Obtaining the right permits for your business type can be time-consuming.

  • Cultural and legal differences: Local business practices may differ from what foreign investors expect.

Working with The Bali Lawyer ensures that these challenges are addressed efficiently, minimizing delays and legal risks.

Why Choose The Bali Lawyer

  1. Expert Legal Guidance

    • We provide comprehensive legal services for establishing PT PMA companies, business licenses, and compliance.

  2. Customized Solutions

    • Our team tailors legal advice to your business goals, ensuring optimal structure and ownership.

  3. End-to-End Support

    • From company registration to permits, bank accounts, and work authorizations, we handle the entire process.

  4. Local Expertise

    • Being based in Bali, we understand local regulations, authorities, and industry-specific requirements.

  5. Compliance Assurance

    • We ensure your company operates within Indonesian law, reducing the risk of legal or operational issues.

 

Foreigners can legally open a company in Bali by following the proper legal channels, most commonly through establishing a PT PMA. This process involves multiple steps, including determining business eligibility, drafting Articles of Association, obtaining investment approval, registering for taxes and permits, and hiring staff legally.

At The Bali Lawyer, we specialize in guiding foreign investors and entrepreneurs through every stage of company formation in Bali. With expert advice, full legal support, and compliance assurance, we make establishing and operating a foreign-owned business in Bali straightforward, secure, and legally compliant.

Contact The Bali Lawyer today to start your journey toward opening a company in Bali and taking advantage of the island’s thriving business opportunities.