Investing in Bali legally: property, PT PMA and tourism businesses under Indonesian law

Bali attracts investors from all over the world: villas, boutique hotels, restaurants, tour companies, wellness centres. The island's tourism numbers keep growing, but the law is strict and enforcement is increasing. This guide summarises the main legal routes in plain language. It is general information, not legal advice — always work with a licensed Indonesian notary (notaris/PPAT) and lawyer.

1. Who can own land?

Indonesia's Basic Agrarian Law (Law No. 5 of 1960, "UUPA") reserves Hak Milik (freehold ownership) for Indonesian citizens only. Foreigners and foreign-owned companies cannot hold Hak Milik, directly or indirectly.

The other land rights you will hear about:

2. Hak Pakai for foreign individuals

Under Government Regulation No. 18 of 2021, foreigners who hold a valid Indonesian residence permit (for example a KITAS or KITAP) may own a house or apartment under Hak Pakai (or an apartment unit built on HGB land). Key points:

• The right is granted for an initial term (commonly 30 years) that can be extended and renewed, up to a total of 80 years.
• It is for residential use, and minimum purchase prices apply per region, set by ministerial regulation — check the current threshold for Bali with your notary.
• The property can be inherited, but heirs must also qualify or sell within the legal time limit.

3. Leasehold

The most common route for foreigners buying "a villa in Bali" is a long-term lease of land or a villa from an Indonesian owner — often 20 to 30 years with an extension option. Lease agreements should be made before a notary, describe the certificate number precisely, and ideally be registered. Check that:

• the certificate is genuine and free of disputes (a notary can check at the land office, BPN),
• the land's zoning (RDTR/RTRW) allows the intended building and use,
• the building has or can obtain an approval (PBG) and a certificate of fitness (SLF).

4. Setting up a PT PMA (foreign-owned company)

To run a business — rental villas, a restaurant, a travel agency — a foreign investor normally needs a PT PMA registered through the government's OSS risk-based licensing system. Rules were updated by BKPM / Ministry of Investment Regulation No. 5 of 2025 (issued 1 October 2025):

• Minimum issued and paid-up capital: Rp 2.5 billion per company (down from Rp 10 billion), unless a sector rule requires more. Paid-up capital must stay in the company account for at least 12 months, except for asset purchases, construction and operations.
• Minimum investment value: more than Rp 10 billion per business line (five-digit KBLI) per project location, excluding land and buildings — with exceptions for some sectors such as F&B, wholesale trade and construction services, where the location scope is calculated differently.
• The business line must be open to foreign investment under the Investment List (Presidential Regulation No. 10 of 2021 as amended by No. 49 of 2021); some lines have foreign ownership limits or are reserved for Indonesians and cooperatives.
• Regular investment activity reports (LKPM) must be filed with the authorities.

A PT PMA can hold HGB over land for hotels and villas, and its directors and shareholders may qualify for investor stay permits.

5. The nominee trap

"Just put the land in your Indonesian friend's name" is still common advice — and dangerous. Under Law No. 25 of 2007 on Investment (Article 33), agreements in which a person holds shares or property on behalf of a foreigner are null and void. If the relationship breaks down, the foreigner can lose everything with little legal protection. Courts and the government have become stricter.

6. Licences for tourism accommodation

Renting out a villa to tourists is a business: it needs the right business licence through OSS, tax registration (including regional hotel/restaurant tax), and building approvals. Bali's provincial and regency governments have been inspecting unlicensed villas and foreign-run businesses more often, and listing platforms are under pressure to remove illegal properties. Protection of productive rice fields also limits where new buildings may go. In January 2025 the governor stated there would be no general moratorium on new hotels and villas, but emphasised stricter supervision and permits — rules can change, so check the latest status with the regency office before buying.

7. A practical checklist

1. Define the purpose: personal residence, investment rental, or operating business.
2. Hire an independent notary and lawyer — not one recommended only by the seller.
3. Verify the certificate, owner identity, zoning and access road.
4. Choose the structure: Hak Pakai, leasehold, or PT PMA with HGB.
5. Budget for taxes (BPHTB, PPh, VAT where relevant), notary fees and licences.
6. Get every permit before operating; keep reports up to date.

Investing in tourism services

Tourism businesses do best when they follow Tri Hita Karana — respect for the community, culture and environment. Partnering with established local operators (transport, tours, events) is often a smarter start than building new properties. If you are exploring a partnership with a licensed Bali tour and transport company, contact our team at the email on our website.

This article is general information based on Indonesian regulations as of October 2026 and is reviewed periodically. It is not legal or tax advice.