The discourse surrounding a potential moratorium on hotel and villa development in Bali has generated significant attention.
While such a moratorium could potentially impact the tourism and hospitality sector, it’s crucial to recognize the broader investment opportunities that Bali offers.
Moratorium’s Limited Impact on Business in Bali
Concerns have been raised that a hotel and villa development moratorium in Bali could hinder investment and business growth. However, according to Satria Wei, a property consultant at Colliers, the overall impact may not be as significant as initially feared.
“This will mainly affect investors planning to invest in South Bali. However, for those who have already secured permits and appropriate locations, particularly in compliance with regulations, the impact will be minimal,” Satria stated in a recent analysis shared on TopBusiness Magazine.
It’s important to note that the moratorium is focused on preventing overdevelopment in South Bali, while still allowing for creative expansion of existing properties.
“This doesn’t mean hotel businesses are hindered. Entrepreneurs can still creatively expand existing properties,” explained I.G.A Dewi Hendriyan, Head of Communications at the Ministry of Tourism and Creative Economy, in an interview with Kontan.
Moreover, the moratorium could have positive effects on other areas of Bali by encouraging development in regions like North and West Bali. “We believe this policy will not significantly disrupt ongoing hotel construction but may have more noticeable effects in the future,” Satria added.
The government also emphasizes the importance of complying with licensing regulations for unregistered accommodation businesses. “We encourage property owners to formalize their business permits to ensure legal protection and contribute to local tax revenue,” Dewi noted.
While the moratorium aims to control overdevelopment and prevent environmental degradation in South Bali, it simultaneously opens new avenues for investment in other regions of the island.
Bali Remains an Attractive Investment Destination
Despite the moratorium, Bali remains an attractive investment destination for global investors. According to Bank Indonesia, Foreign Direct Investment (FDI) dominated Bali’s investment realization in 2024, with a value of IDR 10.6 trillion, representing 59.2% of the total investment in the Island of the Gods, which reached IDR 17.99 trillion.
Unfortunately, 88% of investment is still concentrated in South Bali, covering Badung Regency, Denpasar, Gianyar, and Tabanan (Sarbagita). To address this imbalance, central and provincial governments have implemented measures to promote equitable development across Bali.
For example, President Prabowo Subianto confirms his plan to build a second airport in Buleleng, North Bali. This development aims to shift the tourism hub to North Bali, diversifying investment and boosting the local economy, according to Detik.
Bali is also running strategic infrastructure projects, including the construction of the Light Rapid Transit (LRT) and improved road networks, aimed at enhancing connectivity and easing the concentration of activities in South Bali. These initiatives are expected to drive investment in central and northern regions, fostering economic equity.
“We hope investors will look beyond the southern region and explore the potential in central and northern Bali,” said Ida Bagus Gede Arjana, Assistant for Economy and Development at Badung Regency.
To encourage investment in the central and northern regions, the Badung Regency Government is simplifying processes by offering convenient services such as Public Service Malls and an Online Single Submission (OSS) licensing system.
Bali’s Strong Business Growth in Q3 2024
The limited impact of the moratorium is also reflected in Bali’s strong business growth in Q3 2024. Bank Indonesia reported a Weighted Net Balance of 65.08%, up from 40.60% in the previous quarter. Real estate activities have also shown growth, supported by public and private projects.
“Real estate activities saw growth in line with ongoing public and private projects throughout Q3 2024,” Erwin stated in a press release cited by Bisnis.com on Monday (4/11/2024).
Looking ahead, business activities in Bali are expected to maintain a positive trajectory in Q4 2024, with a projected Weighted Net Balance of 65.54%.
Starting a Business in Bali
The Prabowo administration aims for 8% economic growth and has introduced policies to streamline business licensing through the Online Single Submission (OSS) system, which connects businesses with multiple ministries to attract foreign investment.
Edy Priyono, Deputy Chief of the Presidential Staff, emphasized the importance of foreign investment because it is crucial to close the savings-investment gap, as domestic savings alone cannot meet the growing capital requirements of the Indonesian economy. When local funds fall short, foreign investment becomes essential to fuel economic growth.
So, don’t hesitate to start your business in Bali with Seven Stones Indonesia as your trusted local partner. We offer comprehensive company incorporation and seamless legal processes. Reach out to us now to book a free 30-minute consultation with our team today to explore how you can establish a successful business in Bali.
