Starting a Lifestyle Business in Bali

Introduction

Doing business in Bali has become the forefront for digital nomads in the past few years due to a relatively low cost of living compared to the western world, having a thriving digital nomad culture, and therefore making it a great place to network and do business. The food atmosphere is second to none – you can find a restaurant that offers almost any cuisine imaginable at very affordable prices. And of course, the most famous thing in Bali is its natural beauty. In this article, we will discuss the lifestyle business in Bali, the challenges that foreigners usually face and clear up some of the common misconceptions about doing business in Bali.

Common Lifestyle Businesses in Bali

These are a few examples of common lifestyle businesses in Bali amongst foreigners:

• Food and beverage industry, e.g. restaurants, bars, cooking workshops, etc

• Recreational and recreational activities (yoga, surfing, diving, golf)

• Short-term rentals, e.g. villas and bungalows

• Travel agent or tour operator

• Clothing and jewellery design and distribution

• Spiritual, holistic and wellness services

• Consulting services, e.g. marketing, graphic design, and social media management

• Photography and videography

Challenges in Starting a Lifestyle Business in Bali

Minimum capital and investment requirements

There are several requirements that you must follow in order to incorporate a foreign-owned company (PT PMA). Some of the major ones that are holding back most investors to start a lifestyle business in Indonesia are the minimum paid-up capital of IDR 2.5 billion and the investment plan of at least IDR 10 billion. These requirements are quite challenging and somewhat unrealistic for most lifestyle businesses.

One investment requirement for each business classification (KBLI)

Several business classifications can be registered under one PT PMA and an investment of IDR 10 billion is required for each business classification that you register. For instance, if you plan to open a restaurant (KBLI #56101) and a bar (KBLI #56301), your investment value must be IDR 20 billion. It is tough for lifestyle businesses that usually run multiple business activities on a small scale. Moreover, there are limitations that restrict registering some business classifications under one PT PMA, e.g. manufacturing and distribution—in this case, you need two separate PT PMAs.

A limited percentage of foreign ownership

Although many business classifications are open to 100% foreign ownership, some of them only allow partial foreign ownership. This requires having a local partner. Below you will find some examples of such business classifications:

One alternative solution is to use a nominee service to incorporate a local company (PT PMDN).

Common Misconceptions: Business in Bali

Foreigners cannot be Directors of the company – This is highly misleading. A foreigner can be a director in a PT PMA or PT PMDN company. In the case of PT PMDN company, however, the company must be a medium-sized company with a minimum paid-up capital of IDR 500 million. 

Foreign-owned companies pay higher taxes – This is not true at all. All types of companies, whether it is PT PMA or PT PMDN, pay the same tax rates. The corporate income tax rate ranges from 0.5% – 22% for 2020 and 2021 financial years.

Related Article: 4 Types of Corporate Tax in Indonesia

The company incorporation process is faster if you have a local partner – There is no difference in the company incorporation process for PT PMA with or without a local partner. The incorporation process takes approximately 2-3 weeks.

Local companies cannot provide work permits to foreigners – Both PT PMA and PT PMDN companies can sponsor foreigners and provide work permits to them. However, only medium-sized PT PMDN companies can employ foreigners, just as previously mentioned above. There are also 19 job positions that foreigners cannot hold and you can find the list in this article.

Closing Thoughts: Business in Bali

We have helped incorporate hundreds of businesses in Bali. With years of experience, we are certain that we are able to deliver holistic services to you. If you have any concerns regarding company incorporation or getting business licences in Bali, do not hesitate to reach out to us at anita@permitindo.com or by filling out this form. We look forward to hearing from you.