The Moratorium’s Impact on Business in Bali

Bali, the crown jewel of Indonesia’s tourism industry, has long been a hub for economic activity, attracting both local and international businesses.

However, introducing a moratorium policy has raised significant questions about its impact on Bali’s business environment, including foreign investments (PMA) and domestic investments (PMDN).

This article delves into the details of the moratorium, its effects on Bali’s economic landscape, and the opportunities it offers for sustainable growth.

Key Takeaways

• Business Licensing Moratorium: Bali enforces a two-year moratorium on new permits for tourism-related businesses in Sarbagita and Nusa Penida, limiting PMA to medium-high and high-risk projects.
• Eco-Friendly Development: Land conversion for tourism is capped at 5% per year, with measures to reduce plastic use by 25% annually.
• Streamlined Licensing: New KBLI codes for Beach Clubs and River Clubs were introduced, with improved coordination between central and regional governments.
• Revised Visa Policies: Visa on Arrival was replaced with stricter visa processes for high-risk countries to ensure compliance and boost high-quality tourism.
• Enforcement of Regulations: Enhanced measures target legal violations by tourists, aiming to reduce incidents by 20% annually.
• Sustainability Focus: Policies aim to balance economic growth with environmental conservation and community well-being.

Why Keep Up with Bali’s Moratorium Rules?

A moratorium refers to a temporary suspension or restriction on specific activities. Bali’s policy primarily targets new hotel developments and certain land-use projects, aiming to address environmental concerns, overdevelopment, and socio-economic imbalances.

This policy has far-reaching implications for businesses in Bali, particularly those involving PMA (Foreign Direct Investment) and PMDN (Domestic Direct Investment). While it restricts certain developments, it also encourages stakeholders to rethink their strategies and align with sustainability goals.

Effects on New and Existing Businesses in Bali

The government has issued Coordinating Minister for Maritime Affairs and Investment Decree No. 163 of 2024, which establishes a Quality Tourism Task Force to oversee sustainable tourism management in Bali, particularly in the Sarbagita area (Denpasar, Badung, Gianyar, and Tabanan) and the Nusa Penida area. Here are some key points we need to know regarding the decree:

A. Moratorium Policy and Investment Risk Classification

This decree imposes a two-year moratorium on new permits for hotels, villas, restaurants, bars, and beach clubs in SABARGITA and Nusa Penida to preserve tourism quality and control land use conversion.

Foreign investment (PMA) is also restricted to medium-high and high-risk projects, encouraging investments with long-term positive impacts.

B. Eco-Friendly and Spatial Planning Initiatives

To maintain environmental balance, the conversion of agricultural land to tourism use is limited to 5% per year, and spatial planning adjustments are made to support quality tourism.

The decree also promotes a 25% annual reduction in plastic usage and aims to enhance waste and wastewater management facilities in the tourism sector by 15% per year.

Investors are expected to align their projects with spatial plans that support environmental conservation, such as eco-friendly resorts.

C. Facilitation and Administrative Support

1. Areas of Focus for the Business Licensing Moratorium and Land Use Control

• Adding new KBLI codes for Beach Clubs and/or River Clubs.
• Evaluating business licensing and foreign investment in the tourism sector within SABARGITA.
• Adjusting PMA investment risk to medium-high and high risk only.
• Improving the business licensing system.
• Harmonizing licensing regulations issued by the Central and Regional Governments.
• Increasing inter-agency coordination related to land-use changes.
• Controlling land use according to authority and assisting Regional Governments.
• Reviewing spatial planning effectiveness for quality tourism development.
• Facilitating the acceleration of spatial planning formulation or revision.
• Evaluating compliance with spatial land use permits (KKPR) in the field.
• Achieving a minimum of 90% compliance with spatial utilization according to the Regional Spatial Plan (RT/RW).

2. Optimization of the Foreign Visa on Arrival Policy

• Replacing Visa on Arrival with a standard visa process for countries whose tourists frequently violate local regulations.
• Strengthening inter-agency coordination to ensure tighter oversight in the visa application process for visiting tourists.
• Integrating tourist residence permit data between central and regional authorities to facilitate monitoring of residence status and activities.
• Ensuring the smooth enforcement of tourist regulations and spatial planning.
• Increasing the ratio of high-quality tourists by at least 10% per year.
• Achieving an average tourist satisfaction score of at least 4.5 out of 5.
• Strictly enforcing the law against violations by foreign tourists.
• Reducing legal violations by tourists by up to 20% per year.
• Eradicating the consumption, production, and sale of narcotics by tourists.
• Conducting investigative, security, and spatial planning functions to regulate foreign tourists and manage spatial order in Bali.

Challenges to Anticipate and Overcome

While the moratorium creates opportunities, it also introduces challenges that investors must navigate:

• Compliance with New Regulations: Both PMA and PMDN businesses must stay informed about regulatory changes and ensure their projects meet government standards.
• Balancing Profit with Sustainability: Investors need to adopt strategies that prioritize long-term sustainability over short-term financial gains.
• Community Integration: Businesses must actively involve local communities in their operations to foster trust and ensure mutual benefits.

Conclusion: Building a Sustainable Future for Business in Bali

The moratorium is more than a regulatory measure—it’s a call to action for stakeholders to rethink development strategies in Bali. By focusing on long-term goals and aligning with Bali’s vision for sustainability, businesses can contribute to a balanced and prosperous future for the island.

If you have questions or need guidance about doing business in Bali, don’t hesitate to contact us via WhatsApp or fill out the form below. Our team is ready to assist you in navigating Bali’s dynamic business landscape.