Billy Bagus
Jun 05, 2025
In a sweeping move to regain control over its tourism-driven economy, Bali has established a special task force to crack down on illegal foreign-owned businesses operating on the island. The initiative marks the most aggressive enforcement effort yet by provincial authorities to address the growing number of unlicensed foreign entities that are skirting investment regulations, undermining local enterprises, and fueling social discontent.
The initiative marks the most aggressive enforcement effort yet by provincial authorities
Auditor Deployment
The task force, spearheaded by Bali Governor I Wayan Koster, is being deployed to audit business permits across the island, focusing on high-tourism areas like Badung Regency, where hundreds of foreign-owned businesses — particularly in the car rental and travel agency sectors — are reportedly operating without valid documentation or proper oversight.
The move comes amid increasing concerns that Bali is facing a cascade of challenges tied to overtourism, including traffic gridlock, unmanaged waste, proliferation of illegal villas, and rising incidents involving unruly tourists. Officials believe that the influx of improperly registered foreign-run businesses has further destabilized the island’s fragile tourism ecosystem.
A Bureaucracy Breach
According to provincial authorities, many foreign investors are exploiting Indonesia’s Online Single Submission (OSS) system — a platform introduced in 2018 to simplify business licensing — by using local nominees or falsified documentation to gain permits meant exclusively for domestic small and medium-sized enterprises (SMEs). Indonesian law mandates that foreign investors must inject a minimum of 10 billion rupiah (approximately USD 791,000), excluding land and building assets, to qualify for business licenses. Despite this, numerous businesses operated by foreigners fall below that threshold, violating investment regulations.
One of the most glaring examples cited by the provincial administration is the discovery of over 400 foreign-operated car rental companies and tour services in Badung Regency alone, many of which lack physical offices or legal residence in Bali. The absence of transparency and enforcement has allowed such businesses to operate unchecked, intensifying competition for local entrepreneurs and distorting fair market dynamics.
New Regulations and Joint Operations
To counteract this, the new task force — composed of government officials, local tourism associations, civil and criminal police units — will be backed by updated regulatory frameworks. A new circular letter is expected to be released, detailing enforcement mechanisms and procedural changes that will empower the Bali Public Order Agency (Satpol PP) and Bali Police (Polda Bali) to conduct joint operations against violators.
The circular will also mandate that all travel agencies and tourism-related businesses operating within Bali — including those owned by foreign nationals — formally register with local tourism associations. This step aims to ensure greater accountability and facilitate the process of monitoring business legitimacy across the province.
“Ghost” Companies Elimination
Additionally, authorities plan to implement a stringent verification process targeting so-called “ghost” companies — businesses that appear compliant on paper within the OSS system but lack any operational footprint in Bali. These entities often serve as fronts for illegal business activities by foreign nationals, sidestepping Indonesian laws under the guise of domestic ownership.
The crackdown comes on the heels of a broader national directive to strengthen oversight of foreign investment in key economic zones. President Prabowo Subianto has signaled support for increased regulation in Bali, following revelations of widespread permit violations and tax evasion by foreign-owned companies.
Visa Rules Enforced
Immigration authorities have already been taking parallel action. Since early 2025, over 300 foreign nationals have been detained in Bali for visa-related violations, including misuse of tourism, pre-investment, and work visas. Earlier in 2024, the government revoked licenses of 267 foreign-owned businesses that failed to meet capital requirements.
While Bali continues to welcome foreign investment, officials stress that it must be conducted legally, transparently, and in a way that benefits the local economy. The establishment of the special task force represents a significant escalation in efforts to restore order in Bali’s tourism industry — ensuring that the island’s economic lifeblood does not become a liability to its residents.
