Bali Shuts a Licensing Door for Foreign-Owned Small Businesses
Bali's provincial government has moved to close a regulatory gap that allowed foreign nationals to set up small tourism and lifestyle businesses without meeting the capital thresholds normally required of foreign investors. Eighteen business categories, ranging from small hotels and hostels to cafes, car rental services, and fitness centres, have been removed from Indonesia's Online Single Submission (OSS) licensing system. The restriction has been in force since May, according to details first reported by the Jakarta Post.
How the Loophole Worked
Indonesia launched the OSS platform in 2018 to streamline business registration by consolidating permits into a single online portal. Businesses classified as low risk within the Indonesian Standard Industrial Classification could obtain licences automatically, without additional certifications, and were permitted to list virtual offices as their registered addresses.
Bali Governor I Wayan Koster said some foreign-owned businesses had exploited this classification to avoid the minimum investment threshold of Rp 10 billion (approximately US$556,000), excluding land and buildings, that normally applies to foreign investment companies. Because low-risk categories triggered no manual review, operators could register and begin trading without satisfying that capital requirement.
Koster cited a striking example: more than 400 car rental and tour businesses in Badung regency, one of Bali's busiest tourism districts, were found to be foreign-owned, and many had no physical office on the island at all.
Which Sectors Are Affected
The full list of categories now blocked from new OSS licences includes hotels with a building area under 6,000 square metres, hostels, property rental businesses, car and motorcycle rentals, bus and truck rentals, clothing retailers, textile businesses, restaurants, cafes, traditional medicine shops, stadiums, fitness centres, and management service companies.
Koster framed the decision as a protection measure for local micro, small, and medium enterprises, which he said were struggling to compete against foreign-owned operators that had entered the market without equivalent regulatory burdens. He added that Bali remains open to investment that aligns with the island's development vision, respects local cultural values, and strengthens community-based economic activity.
Why It Matters for Hosts
Independent hospitality operators in Bali, particularly those running small guesthouses, villas, cafes, or vehicle rental services, should review their own licensing status now rather than wait for enforcement. The governor explicitly stated that the provincial government will take firm action against businesses found in violation of licensing and investment regulations. For locally owned operators, the change levels the competitive field; for any foreign-owned business already operating in one of the 18 affected categories, confirming full compliance with PMA capital requirements and physical-address rules is an urgent practical step. Operators uncertain about their classification should consult a licensed Indonesian business consultant or notary familiar with OSS and KBLI categories.
Details in this post were first reported by the Jakarta Post, as cited by The Star.
First reported by Bali Travel.