Bali recently played host to an unexpected yet significant joint operation to crack down on some questionable business practices. Spoiler alert: it’s not about catching waves, but catching some rather elusive investors.
Fictitious Investment
In a recent joint operation called Wira Waspada, Indonesia’s Directorate General of Immigration and the Investment Coordinating Board swooped down on Bali.
The operation, which took place in January and February 2025, was a follow-up to the findings by the Investment Coordinating Board that noted a whopping 267 foreign investment companies in Bali had their Business Identification Numbers (BINs) revoked since November 2024.
“The reason for the revocation of the BINs of these 267 companies is that they could not fulfill the investment value commitment of Rp 10 billion and above,” said Acting Director General of Immigration, Saffar Muhammad Godam, during a press conference at I Gusti Ngurah Rai Airport, Friday (February 21, 2025).
At the same press conference, Andy Sugiharto, Director of Region Five for Indonesia’s Investment Coordinating Board, added that the business sectors run by these foreign companies, such as restaurants, often have small investment values that do not reach Rp 10 billion. While others had no investment at all or were completely fictitious.
“The reality in Bali is that many try to operate as investors. However, when we check in the field, one or two companies are non-existent. Even if they exist, their value is insignificant,” said Andy.
Misuse the Business Identification Numbers
Andy Sugiharto added that foreign investment in Indonesia is categorized as large-scale business, which means they have to invest over Rp 10 billion.
He explained that the fact that fictitious foreign investment companies could obtain Business Identification Numbers through the Online Single Submission (OSS) system isn’t something that can be blamed on just one party.
The licensing process involves many parties, including the legal establishment of the company, with a notary deed that goes into the OSS system.
“Anyone can apply for a Business Identification Number in the OSS, but we (the Investment Coordinating Board) can’t process it on our own. The process starts with a notary for the legal establishment of the company, then it moves to the OSS system. They follow the procedures in the OSS, but many misuse it,” Andy explained.
According to data from the Investment Coordinating Board, foreign investment in Bali in 2024 ranked 12th out of 37 provinces in Indonesia, with realized investments reaching USD 1.61 billion spread across 42,926 projects.
63 Deported and Banned
One of the big issues with these problematic foreign companies is that they’re breaking immigration rules too. These businesses act as guarantors for foreigners in Bali, so aside from violating business establishment qualifications, there are also immigration violations.
In the first phase of the operation, they found 74 active foreign companies acting as guarantors for 126 foreigners in Bali. Then, in the second phase, the Directorate General of Immigration found 86 foreign companies with similar problems sponsoring 186 fake investors in Bali.
During the same period, they discovered 43 foreign companies suspected of being fictitious but still sponsoring foreign investors.
These fictitious companies were sponsoring 208 foreigners who turned out to be fake investors in Bali. So, in total, the Directorate General of Immigration netted 520 fake foreign investors in Bali over the 2 phases of the operation.
Most of these foreign nationals came from countries like China, Russia, Pakistan, India, and Australia. So far, 63 of them have been deported and banned from returning to Indonesia. The rest are either soon to face similar punishments or are still undergoing further investigation.
Avoid Unwanted Surprise
It’s important to note that the crackdown on foreign companies in Indonesia doesn’t imply that the government is anti-foreigners. On the contrary, foreign investment plays a crucial role in driving economic growth. The government has provided numerous incentives and eased regulations to help foreign investors develop their businesses here.
However, adherence to the prevailing rules is essential to ensure the legal protection of all stakeholders involved. Compliance with business regulations also minimizes risks and ensures the sustainability and growth of businesses.
And let’s be honest, no one wants a surprise visit from the authorities! Like that joint operation by Immigration and the Investment Coordinating Board we mentioned earlier? Yeah, let’s avoid that.
Seven Stones Indonesia is a trusted local partner to ensure your business’s legal compliance. Navigating local regulations can be complex for foreign businesses in Indonesia, but Seven Stones is here to assist with our compliance check services.
From business permit applications and immigration documents to tax reporting, Seven Stones Indonesia offers comprehensive compliance services. Get in touch with us today to ensure your business aligns with local regulations and avoid any unwanted surprises!
Sources: DirJen Imigrasi, Suara, AntaraNews
Feat. Image: Getty Images
