At Bali Law Connection, we specialize in guiding both local and foreign entrepreneurs through the process of registering a company in Bali. With extensive knowledge of Indonesian corporate laws and a thorough understanding of Bali’s unique business environment, our legal team ensures that your business is established in compliance with all relevant regulations. Whether you are setting up a small local business or an international venture, we offer step-by-step assistance to make the process as seamless as possible.
Types of Companies in Bali
Indonesia, including Bali, offers several business entity types for foreign and local investors, each governed by specific regulations under Law No. 40 of 2007 on Limited Liability Companies (UU PT) and Law No. 25 of 2007 on Investment. The main types of companies you can register in Bali include:
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​Local Limited Liability Company (PT)
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A Perseroan Terbatas (PT) is a locally owned company. To establish a PT, the business must be 100% owned by Indonesian citizens or legal entities. This type of company is suitable for local businesses that wish to operate exclusively in the Indonesian market. PTs are subject to Indonesia’s Investment Coordinating Board (BKPM) and require fewer capital requirements compared to foreign-owned companies.
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Foreign Investment Company (PT PMA)
A Foreign Investment Company (PT Penanaman Modal Asing or PT PMA) is a company where foreign investors can own shares. Under Law No. 25 of 2007 on Investment, PT PMAs allow foreign nationals and entities to establish businesses in Bali with ownership ranging from 1% to 100%, depending on the business sector.
The PT PMA is governed by the BKPM and requires higher capital investments, typically a minimum of IDR 10 billion (~USD 700,000), including IDR 2.5 billion (~USD 175,000) in paid-up capital. This structure is ideal for foreign investors looking to operate within Indonesia’s domestic market or export goods/services abroad.
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Representative Office (KPPA)
A Representative Office (Kantor Perwakilan Perusahaan Asing/KPPA) allows foreign companies to set up a non-operational presence in Indonesia. The KPPA is regulated by the Ministry of Trade and is used primarily for market research, promotional activities, and liaison purposes. However, it cannot directly engage in profit-making activities, such as selling goods or services.
This type of entity is ideal for foreign businesses seeking to understand the Indonesian market before establishing a full PT PMA.
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Nominee Company Structure
For sectors that restrict foreign ownership, some foreign investors opt for a Nominee Company structure, where an Indonesian citizen or company holds shares on behalf of the foreign investor. While this structure is not officially recognized under Indonesian law, many investors use it as a workaround for foreign investment limitations. However, this approach carries legal risks and must be handled with extreme caution.
Steps for Registering a Company in Bali
Reservation of Company Name
The first step is reserving the company name through the Ministry of Law and Human Rights’ online system (SABH). The company name must meet certain requirements, including being unique, not violating trademarks, and consisting of at least three words. Bali Law Connection handles this process, ensuring compliance with Government Regulation No. 43 of 2011.
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Deed of Establishment
Once the company name is approved, a Notary Public prepares the Deed of Establishment, which outlines the company’s structure, ownership, and business activities. The deed must be signed by all shareholders and notarized.
For a PT PMA, the deed must be submitted to the Ministry of Law and Human Rights for approval, which generally takes about two weeks.
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Approval from the Ministry of Law and Human Rights
After the deed is notarized, the company must obtain approval from the Ministry of Law and Human Rights, which officially recognizes the company as a legal entity. This is done through the ministry’s AHU Online portal. Once approved, the company is issued a Certificate of Establishment, confirming that the company has legal standing under Indonesian law.
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Obtain a Business Identification Number (NIB)
The next step is obtaining a Business Identification Number (Nomor Induk Berusaha/NIB) through the Online Single Submission (OSS) system, managed by the Investment Coordinating Board (BKPM). The NIB acts as the company’s business license and is essential for starting operations in Bali.
The NIB also functions as the company’s Tax Identification Number (NPWP), Importer Identification Number (API), and Customs Access, allowing the company to conduct legal business activities, import goods, and pay taxes.
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Sectoral Business Licenses
Depending on the industry, additional licenses may be required to operate legally. These licenses are issued by various government bodies, including the Ministry of Trade, Ministry of Tourism, and Ministry of Industry. For example, if your business is in hospitality, you will need a Tourism Business License (TDUP) from the Ministry of Tourism.
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Investment Activity Reporting
All PT PMAs are required to submit Investment Activity Reports (LKPM) to the BKPM every three months. This report outlines the company’s activities, investments, and financial performance. Regular submission of these reports ensures compliance with Investment Law No. 25 of 2007 and avoids penalties.
Capital Requirements and Other Legal Considerations
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For a PT PMA, a minimum total investment of IDR 10 billion (excluding land and buildings) is required, with at least IDR 2.5 billion in paid-up capital.
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The business must also hire at least two Indonesian employees for each expatriate worker, adhering to Ministry of Manpower regulations.
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Any foreigner working in Bali must obtain a Temporary Stay Permit (KITAS), issued by the Directorate General of Immigration under the Ministry of Law and Human Rights.
Legal Challenges in Registering a Company in Bali
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Sectoral Restrictions: Indonesia restricts foreign ownership in certain sectors, as outlined in the Negative Investment List (DNI). Foreign investors must ensure that their business activities are compliant with the list to avoid legal complications.
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Bureaucratic Delays: While Indonesia has streamlined the company registration process through the OSS system, bureaucratic delays can still occur. Bali Law Connection ensures that all necessary steps are followed correctly, minimizing the risk of delays.
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Nominee Structures: While some foreign investors use nominee agreements to bypass foreign ownership restrictions, this practice is risky and not fully recognized under Indonesian law. We advise clients to carefully consider the legal implications before proceeding with a nominee arrangement.
How Bali Law Connection Can Help You Register Your Company in Bali
At Bali Law Connection, we provide comprehensive services for registering companies in Bali. From choosing the right business structure to obtaining the necessary licenses, we ensure your business complies with Indonesian regulations. Our legal team is experienced in navigating the complexities of the BKPM, Ministry of Law and Human Rights, and other government agencies, making the registration process smooth and efficient.
Contact Bali Law Connection for Company Registration Assistance
If you are considering registering a company in Bali, contact Bali Law Connection today. Our expert legal team will guide you through every step of the process, ensuring that your business is legally established and positioned for success in Indonesia.
