Bali has experienced a notable surge in foreign investment, driven by its global reputation as a tourism and lifestyle destination.
As international borders reopened and economic recovery gained momentum, foreign investors began eyeing Bali not just for leisure, but as fertile ground for business ventures—particularly in hospitality, real estate, and lifestyle services.
Yet as investment flows intensify, concerns have emerged over how national licensing systems accommodate Bali’s unique local context.
Reforming OSS
Governor of Bali Wayan Koster emphasized the importance of reforming the Online Single Submission Risk-Based Approach (OSS RBA) system to better align with Bali’s dense investment landscape and distinctive socio-cultural structure.
According to Wayan Koster, the online automation system for business licensing in Indonesia—under the authority of the central government—has eliminated the role of local governments. Koster added that permits for foreign direct investment (FDI) can be issued without approval from regency or municipal governments.
In Bali, this has led to many foreign investment practices that are not “honest” regarding initial capital contributions.
“With only 10 billion in capital, many foreign investors can freely enter. Yet that figure is often just recorded on paper. In practice, it’s under 1 billion, but they’ve already taken control of various types of local businesses,” said Koster while leading the coordination meeting to evaluate the OSS system, Thursday (October 9, 2025).
Investment Without Realization
Koster gave an example: in Badung Regency, more than 400 foreign nationals own vehicle rental businesses, not including construction material and culinary ventures on land owned by local residents.
He stated that this situation is a direct consequence of OSS norms being uniformly applied nationwide, without considering the conditions of investment-dense regions like Bali.
He stressed the need for special authority for Bali to adjust investment regulations according to local conditions.
“Bali cannot be treated the same as other regions. We must level up, we need different norms and greater authority at the regional level,” he asserted.
In addition to highlighting the issue of nominal capital in foreign-invested companies, Governor Koster also stated that such capital rarely materializes. Many permits are merely administrative formalities without actual field implementation.
Investment Compliance and Capital Realization
Governor Koster’s strong statement is a direct warning to all foreign direct investment (FDI) companies, known as PT PMA, operating in Bali. For any PT PMA, compliance with Indonesian law is non-negotiable, and the core of the current issue revolves around 2 critical, interconnected obligations:
1. Minimum Investment and Capital Realization
The Indonesian government mandates a minimum investment value of IDR 10 Billion (approximately USD 650,000) for a PT PMA, excluding the value of land and buildings. The Governor’s complaint—that this figure is “just recorded on paper”—highlights the immediate risk facing any investor who has secured a business license (NIB) through the OSS system without fulfilling their commitment.
Foreign companies found to be operating with significantly lower realized capital, or those setting up to take over sectors reserved for local Micro, Small, and Medium Enterprises (MSMEs), face severe administrative penalties.
2. The Mandate to Report: Investment Activity Report (LKPM)
The mechanism the government uses to verify that capital has been realized is the Investment Activity Report (LKPM). This mandatory report must be submitted regularly via the OSS system. By neglecting this duty, a PT PMA confirms the Governor’s suspicion that their permits are “merely administrative formalities.”
Failure to accurately and timely submit the LKPM is not a minor oversight; it is a direct failure to comply with the terms of the business license and serves as evidence of unfulfilled investment commitments.
Secure Your Investment Compliance
Governor Koster’s push for “different norms and greater authority” signals that regulatory enforcement in Bali is about to become significantly stricter.
To future-proof your investment and to manage this complex regulatory environment, expert local guidance is essential. Seven Stones Indonesia specializes in comprehensive legal compliance, ensuring your PT PMA adheres to all mandatory regulations, including timely compliant LKPM and securing all necessary business and immigration permits.
In this era of reform, compliance is not just a cost of doing business, it is the single most important investment in securing your legal foothold in Bali. Contact Seven Stones Indonesia today to ensure your investment is secure and compliant.