Bali’s KBLI Shift: What Foreign Investors Need to Understand Now

Indonesia’s regulatory environment around foreign investment in Bali’s property sector is evolving again.

Much of the confusion stems from misunderstanding three different layers: how things were commonly structured before, what the regulations technically require today, and what may change in the near future.

Below is a simplified but comprehensive breakdown.

How Things Were Commonly Done Before

For years, many foreign investors who wanted to operate short-term rental villas in Bali used a PT PMA (foreign-owned company) structure. The most common business classification used was:

KBLI 68129 – Owned/Leased Non-Residential Real Estate Activity

In simple terms, this allowed a PT PMA to:

• Lease or control property
• Operate it as a short-term rental (Airbnb, Booking.com, etc.)
• Receive rental income through the company

At the same time, PT PMA formation required:

• A minimum total investment value of IDR 10 billion
• But only IDR 2.5 billion (25%) needed to be injected as paid-up capital

The remaining IDR 7.5 billion could theoretically be covered by non-cash contributions such as intellectual property, brand value, or equipment. In practice, however, many investors injected more cash to avoid complications.

This became the standard structure for foreign villa operators.

What the Rules Actually Say Today

Two regulatory developments are important.

First, under BKPM Regulation No. 5 of 2025, a PT PMA must have a minimum total investment value of IDR 10 billion, excluding land and buildings. At least 25% of that amount (IDR 2.5 billion) must be injected as paid-up capital.

It is critical to distinguish between these two figures:

• IDR 2.5 billion is the minimum capital injection
• IDR 10 billion is the minimum total investment value

If the total investment does not reach IDR 10 billion, the company cannot process or obtain business licenses through the OSS system.

Non-cash contributions are allowed, but they must be properly appraised and defensible. If they do not meet the required valuation, the difference must be covered with additional cash injection. In practice, this has made compliance more technical and more strictly reviewed.

Second, there is a significant development regarding KBLI 681.

Bali’s TRAP Task Force has submitted a petition to BKPM requesting that KBLI 681 and its subcategories be removed from eligibility for PT PMA companies in Bali.

If approved, this would mean:

• Foreign-owned companies could no longer use KBLI 681 to operate short-term rental real estate activity
• The standard Airbnb-style PT PMA model would be significantly restricted

While this proposal has not yet been fully implemented, it signals clear regulatory tightening around foreign participation in the short-term rental sector.

How Structures May Be Done Going Forward

If KBLI 681 becomes unavailable to PT PMA companies, alternative structures may become more common. One example is:

KBLI 68299 – Other Fee-Based or Contract-Based Real Estate Activity

This classification applies to property management services.

Under this model:

1. The foreign investor personally acquires or leases the property.
2. The investor establishes a PT PMA under KBLI 68299.
3. The investor’s PT PMA signs a management agreement to manage the property.
4. Revenue flows through the PT PMA as management income.

This creates a separation between property ownership or lease and operational management.

The objective is to:

• Ensure revenue is properly recorded through a licensed entity
• Avoid additional tax penalties
• Maintain regulatory alignment under management activity rather than ownership activity

However, this structure will depend heavily on how authorities interpret and enforce the rules going forward.

What This Means in Practical Terms

The direction is clear.

• Regulatory oversight is tightening
• Business classifications are being reviewed more strictly
• Minimum investment compliance is being enforced more technically
• Short-term rental structures under PT PMA may face increased limitation

For foreign investors, this means:

• Structure matters more than ever
• Capital planning must be realistic
• Regulatory advice must be precise and up to date
• Assumptions based on how things were done before may no longer apply

Bali remains investable. But the environment is becoming more structured and more regulated.

Understanding how the framework is shifting is not simply legal housekeeping. It is fundamental to long-term strategy, tax efficiency, and asset security.

A deeper look at how these regulatory shifts may affect villa developers, short-term rental operators, and passive investors differently will follow — because the impact is not the same for everyone allocating capital into Bali.

For a deeper discussion on structuring your Bali property investment correctly under the latest KBLI and PT PMA regulations, connect directly with Fathi Talib.
👉 Explore his full profile and insights here:
https://harcourtspurbabali.com/blog/agent/fathi-talib/