Part of the series: Bali Property Compliance
- SLF, KBLI 2025, and Short-Stay Villas
- Nominee Arrangements in Property Monetisation
- KBLI 2025: The Classification Migration Every PT PMA Must Complete by 18 June 2026
- Indonesia Residence Pathways: A Decision Framework for Foreign Nationals Planning Long-Term Stays
- Property Acquisition in Bali: A Due Diligence Framework for Foreign Nationals
- PT PMA Restrictions in Bali: Why the Property Workarounds No Longer Work
Provincial enforcement in Bali through 2025 and early 2026 produced administrative sanctions against 423 foreign-owned companies for licensing violations. The Ministry of Investment has opened a dedicated Investment Desk in Bali to coordinate monitoring. A block on new foreign-company registrations took effect inside the Online Single Submission (OSS) system, Indonesia’s risk-based business licensing platform, in May 2026.
A foreign-owned company, in Indonesian law a Perseroan Terbatas Penanaman Modal Asing (PT PMA), that trades in a field reserved for domestic investors or for smaller enterprises now sits inside a tighter set of PT PMA restrictions in Bali. The exits that advisers used to recommend close one after another. Each closure carries a verification mechanism that makes the workaround visible to the regulator.
01 · The starting point
The market that grew in the grey area
Bali accounts for close to 40 per cent of the foreign direct investment companies registered across Indonesia. Between 2021 and 2025 the province recorded over 19,000 foreign-owned companies and over 55,000 registered projects, a large share in low-risk fields that needed only a Business Identification Number (Nomor Induk Berusaha, or NIB) to begin operating. Real estate and accommodation are the fields where foreign companies most often trade outside their lawful lane.
Four structures carry most of that activity.
- In the Indonesian title nominee, land sits under the right of ownership (Hak Milik) in the name of an Indonesian individual, while a foreign funder supplies the capital and relies on side letters, debt papers, sale undertakings, and powers of attorney to simulate control.
- The local licence front places the accommodation NIB and code with an Indonesian citizen, leaving the foreign party in command of pricing, distribution, staffing, and profit.
- A third route, the nominee shareholder, presents a domestic investment company (Perseroan Terbatas Penanaman Modal Dalam Negeri, or PT PMDN) with Indonesian shareholders on paper, while a foreign sponsor directs operations and takes the economics.
- The KBLI code-mismatch route keeps a lawful-looking code over an activity that has moved into a different economic category.
The common thread is a divergence between the registered legal actor and the real economic actor. The 2025 to 2026 framework has built a verification mechanism against each version of that divergence.
02 · The accommodation route
Why a change of KBLI code is no exit from the PT PMA restrictions in Bali
The measure that reset the position is the Governor of Bali letter numbered B.27.000/642/PM/DPMPTSP, dated 28 January 2026. The letter asked the Ministry of Investment to close new foreign-company registrations in every low-risk and medium-low-risk business classification across the province, without exception, and to stop accepting virtual office addresses for foreign companies. The Ministry applied the request inside OSS, and the block took effect in May 2026. The measure is an administrative directive applied through the licensing system, rather than a change to the underlying statute. Its target is the population of foreign companies registered in fields that local small and medium enterprises usually serve. A new foreign-company application now needs a verifiable commercial address that follows the zoning for the activity, which removes the private villa or residential house as a registered business seat.
The simplest response an adviser proposes is a move into an accommodation code in the 55xxx range of the Indonesian Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia, or KBLI). That move does not clear the block. The accommodation codes a small operator would reach for sit in the same lower risk levels that the block closes, or in fields reserved to Indonesian actors.
The classification turns on building area. The official tourism standards place every star and non-star hotel at medium-low risk where the building area is 6,000 square metres or less, and at medium-high risk where the building area exceeds 6,000 square metres. The block closes the medium-low level to foreign companies, so a hotel code stays open to a foreign company only where the building exceeds 6,000 square metres. A villa, with a small building, sits well below that line.
The building-area line
A star or non-star hotel reaches the medium-high risk level, the level that stays registrable for a foreign company in Bali, only where its building area exceeds 6,000 square metres. At or below that building area, the hotel sits at medium-low risk, inside the provincial block. Apartment hotel activity (KBLI 55204) sits at medium-high risk in its own right.
Separately from the risk tier, the star certification standards set a service bar that scales with the class. Under Minister of Tourism and Creative Economy Regulation No. PM.53/HM.001/MPEK/2013 on Hotel Business Standards, the minimum standard-room count rises with the class: 15 rooms for one star, 30 for three star, 50 for four star, and 100 for five star, with further suite and facility requirements assessed by an accredited tourism business certification body.
Homestay activity (KBLI 55201) and villa activity (KBLI 55203) sit outside the hotel classification, and their owner-occupied and owner-managed character removes them as direct foreign-company lanes.
A change of code therefore cannot turn a single villa into a registrable foreign-company accommodation lane. The open hotel codes demand a building above 6,000 square metres and a service standard that a villa does not have, and the small-scale codes are either closed under the block or reserved to Indonesian actors.
| KBLI 2025 | Class | Risk position | Position for a foreign-owned company | Physical fine print |
|---|---|---|---|---|
| 55101 | Five-star hotel | Medium-low at 6,000 m² building or less; medium-high above | Open only where the building exceeds 6,000 square metres, as a genuine large hotel | 100 standard rooms, suites, full service facilities |
| 55102 | Four-star hotel | Medium-low at 6,000 m² building or less; medium-high above | Open only where the building exceeds 6,000 square metres; at or below it the code is closed under the block | 50 standard rooms, suites, lobby of 100 square metres |
| 55103 | Three-star hotel | Medium-low at 6,000 m² building or less; medium-high above | Same building-area gate | 30 standard rooms, suites, restaurant |
| 55104 | Two-star hotel | Medium-low at 6,000 m² building or less; medium-high above | Same building-area gate | Room data to follow |
| 55105 | One-star hotel | Medium-low at 6,000 m² building or less; medium-high above | Open only where the building exceeds 6,000 square metres; at or below it the code is closed under the block | 15 standard rooms |
| 55106 | Non-star hotel | Medium-low at 6,000 m² building or less; medium-high above | Open only where the building exceeds 6,000 square metres; at or below it the code is closed under the block | Below the one-star room standard |
| 55201 | Homestay | Lower level, outside the hotel classification | Closed for direct foreign use, owner-occupied in character | Owner-occupied house partly let |
| 55203 | Villa | Lower level, outside the hotel classification | Closed for direct foreign use, owner-managed in character | Private house let to tourists, managed by the owner |
| 55204 | Apartment hotel | Medium-high | Open to foreign companies, subject to live verification | Apartment stock operated as hotel accommodation |
| 55209 | Other short-term | Part sensitive | Treat as sensitive pending screening | Varies by sub-activity |
The building-area line refers to 6,000 square metres of building, not land. A star or non-star hotel reaches the medium-high risk level only above that building area, and that level is the one that stays registrable for a foreign company under the block. Positions for KBLI 55204 and the higher-star lanes require live verification of the field position against the current investment list before a structure is built. The investment-fields list under Perpres 49 of 2021 references KBLI 2020 and has not been reissued for KBLI 2025, so any one-star allocation to cooperatives and smaller enterprises is confirmed against live OSS rather than assumed.
03 · The service route
Why the service codes are not a free pass
The fee-based residential management code (KBLI 68292) stays open to foreign companies, and it sits at medium-high risk, which places it outside the provincial block. The reservation that limits it sits in the standard certificate that the code requires.
Government Regulation No. 28 of 2025 on Risk-Based Business Licensing raised the fee or contract real estate group from low risk to medium-high risk. Minister of Trade Regulation No. 33 of 2025, which amends Minister of Trade Regulation No. 51 of 2017 on Property Trading Intermediary Companies, sets the competency rules for that group. Every property broker in the company must be an Indonesian citizen. The brokerage manager role and the property manager role open to foreign nationals, which lets a foreign company own the management vehicle and sit in a management seat while the broker function stays with certified Indonesian citizens.
The role split
Inside a property intermediary company, the broker who transacts must be an Indonesian citizen. A foreign national may sit only in the brokerage manager or property manager role. The foreigner can own and manage the vehicle, and cannot perform the licensed broker work.
The certificate is verified against named requirements. The company must be an Indonesian legal entity. Its experts need competency certificates from the National Professional Certification Agency (Badan Nasional Sertifikasi Profesi, or BNSP). The company registers with the Indonesian Real Estate Brokers Association (Asosiasi Real Estate Broker Indonesia, or AREBI) and reports its activity to the Ministry of Trade each year. Supervision by the Directorate of Trade Order found that 160 of 216 property intermediary firms reviewed between 2021 and 2024 fell short of the rules, a non-compliance rate of 74 per cent.
04 · The mechanism
The risk levels make the open codes self-policing
The risk level a code carries decides how the licence issues. A low-risk activity needs only the NIB. A medium-low-risk activity adds a standard certificate that the operator declares for itself, without an agency check. A medium-high-risk activity adds a standard certificate that the government verifies. A high-risk activity needs a full licence with technical and environmental verification.
The low-risk and medium-low-risk levels are the self-declared levels, and those are the levels the provincial block now closes to foreign companies in Bali. The levels that stay open to a foreign company are the verified levels. A foreign company that reaches a registrable accommodation or service code therefore submits to a government check that measures the building function and the size of the operation against the sector standard. The self-declaration shortcut that carried the low-risk market has closed for foreign companies in Bali.
05 · The wider net
The catch behind each surrogate structure
The structures that predate the block each meet a specific control under the current framework.
| Structure | How it is built | The control that catches it |
|---|---|---|
| Indonesian title nominee | Right of ownership registered to an Indonesian individual, with side papers simulating foreign control | The Basic Agrarian Law (Law No. 5 of 1960) reserves the right of ownership to Indonesian citizens, so the side agreements carry no legal effect; the notary verifies beneficial ownership before the deed |
| Local licence front | An Indonesian citizen carries the accommodation NIB while the foreign party runs the operation | Beneficial ownership disclosure, and an audit that compares the registered actor against the economic actor |
| Nominee shareholder | A PT PMDN with Indonesian shareholders on paper and a foreign sponsor behind it | Article 33 of the Investment Law (Law No. 25 of 2007) voids any agreement that shares are owned for another person; the beneficial ownership register under Presidential Regulation No. 13 of 2018 |
| Code-mismatch | A long-stay residential code over a nightly short-stay operation | KBLI 68112 covers long-stay residential operation only; booking-platform activity and building records make the real use visible to the tax authority and the tourism supervisors |
| Jurisdiction move | Registration in Jakarta with a Bali branch added, to escape the provincial address block | Field inspection and the verifiable-address requirement; the registered code must match the operational footprint |
| Management overreach | The whole villa or hotel operation routed through facilities support (KBLI 81100) | KBLI 81100 excludes supplying management and staff to run the client’s whole business such as a hotel; the accommodation principal lane stays separate |
06 · What works
The end-state that works for foreign participation
Foreign participation in Bali property remains workable along defined routes. A foreign company can develop residential product for sale under the development code (KBLI 68111) and the relevant construction code. It can manage property on a fee basis under KBLI 68292, inside the role limits the standard certificate sets. It can act as a booking and distribution intermediary under accommodation intermediation (KBLI 55400). It can support an owner-principal accommodation structure, where an Indonesian citizen is the genuine landowner and accommodation principal, and the foreign company supplies management and intermediation under separately documented agreements.
Where the facts and the building support it, a medium-high accommodation lane remains a candidate. A genuine hotel above 6,000 square metres of building area, or an apartment hotel (KBLI 55204) operated on apartment stock and sitting at medium-high risk, can carry a foreign company, subject to live verification of the field position before the structure is built. Substance governs the outcome, through a verifiable commercial address, genuine activity on the ground, accurate quarterly investment reporting (Laporan Kegiatan Penanaman Modal, or LKPM), and a registered code that matches what the company does.
07 · The next move
The next step for an exposed owner
An owner who suspects exposure can test the structure against the current framework before an inspection does. The test runs in four steps.
- Identify the real economic actor and compare it to the actor on the register.
- Identify the real business lane, whether residence, long-stay residential income, short-stay accommodation, fee-based management, or development and sale.
- Test the land record and the building record against that lane.
- Test the code and the actor against the current investment and licensing position.
A structure and licensing review produces the answer. Some structures need alignment of records and licensing steps. Others need a material restructuring of the legal shell, and the structures built on nominee ownership or on direct participation in a reserved field need a full unwind and re-entry. TraceWorthy conducts that review across the real estate and accommodation fields most exposed to the new measures, and sets out the position a foreign-owned company needs before its next inspection.
This article provides general information on the regulatory position at the date of publication, 20 June 2026. It does not provide legal, tax, or investment advice, and it does not create an adviser relationship. The regulatory position changes, and the public OSS environment continues to reflect transition treatment for earlier projects, so any structure should be tested against the current instruments and live OSS treatment before a decision is taken. PT TraceWorthy Consulting accepts no liability for reliance on this article without specific advice.