🅿️ Many foreigners think opening a small guesthouse or café in Bali is as simple as renting a space and putting up a sign 😌 But when it comes to the sole proprietorship model (Usaha Dagang), the situation gets tricky—especially if you’re not an Indonesian citizen.
🅰️ Some expats get convinced by locals to put the business under their partner or friend’s name, thinking it’s just “how things are done here.” But this shortcut can lead to serious problems—like losing your business, getting reported to immigration, or even being deported 😓 Without legal ownership, you have no protection under Indonesian law.
🆂 The truth is: foreigners cannot legally operate a sole proprietorship (Usaha Dagang) in Indonesia. These businesses are strictly reserved for Indonesian citizens. If you want to run your own business in Bali, you need to go the proper route—like forming a PT PMA, which is a foreign-owned limited liability company.
🆃 “I thought I was safe,” says Marco, an Italian digital nomad who ran a juice bar in Ubud under his local girlfriend’s name. “But once we had a fight, she shut me out and reported me. I lost everything overnight.” Marco’s story isn’t unique—it’s a warning to every foreigner considering the easy way out.
🅴 A British yoga teacher wanted to open a retreat in Canggu and was advised to register it under her local driver’s name. Luckily, she sought a second opinion and ended up opening a legal PT PMA instead. Now, her business is thriving, and she doesn’t lose sleep worrying about immigration checks or local disputes.
🅰️ Thinking about starting a business in Bali? 🧾 Make sure you know what’s legal—and what’s not. This guide will walk you through why sole proprietorship is off-limits for foreigners, and how to set up your business the right way. Let’s get started 💼
Table of Contents
- Can Foreigners Open a Sole Proprietorship in Bali?
- Why Sole Proprietorships Are Off-Limits for Foreigners 🚫
- Real Story: “I Lost My Bali Café Overnight—Because It Wasn’t Legally Mine” 😓
- What Is a Usaha Dagang and Who Can Register One? 🧾
- Legal Alternative: Starting a PT PMA as a Foreigner in Bali ✅
- Benefits of a PT PMA Over Sole Proprietorships 💼
- Step-by-Step Guide: How to Open a PT PMA in Bali 📝
- Common Mistakes Foreigners Make When Starting a Business in Bali ⚠️
- FAQs About Sole Proprietorship & PT PMA for Expats in Bali ❓
Can Foreigners Open a Sole Proprietorship in Bali?
Many foreigners are drawn to Bali’s relaxed lifestyle and dream of opening a guesthouse, small café, or consulting service. But here’s the catch: sole proprietorships (Usaha Dagang) are only legal for Indonesian citizens.
That means foreigners can’t register a business in their own name unless they have Indonesian citizenship. Trying to do so under a friend or partner’s name may seem easy, but it puts your money, brand, and control at serious risk.
Why Sole Proprietorships Are Off-Limits for Foreigners 🚫
Under Indonesian law, a sole proprietorship in Bali must be fully owned by an Indonesian national. This type of micro-business structure is ideal for locals running warungs, homestays (Pondok Wisata), or small retail shops.
For foreigners, this means there’s no legal pathway to directly register a Usaha Dagang. Even if your Indonesian spouse or friend registers the business on your behalf, you hold no legal ownership—and that’s a dangerous position.
Real Story: “I Lost My Bali Café Overnight—Because It Wasn’t Legally Mine” 😓
Charlotte, a young pastry chef from France, opened a cute little café in Ubud with her Balinese boyfriend. “He told me, ‘Don’t worry, I’ll register the business under my name until you settle in,’” she recalls. “Everything went smoothly at first. I handled the menu and customer service, and he dealt with licenses and paperwork.”
But things slowly started to change. “He got distant, colder,” she says. “I felt something was off.” Then one morning, she arrived at the café and found the locks had been changed. “He stood there and said, ‘This is my café. You have no rights here.’ Just like that—I was out.”
Charlotte was devastated. “My equipment, my investment, all the effort—I lost everything.” She tried to fight back legally, but since the business was 100% under his name, she had no legal ground. “I showed our WhatsApp chats, bank receipts, even emails. It didn’t matter. The law only saw him as the owner.”
Lesson learned: No matter how close your relationship is, never put your business under someone else’s name. In Bali, that’s just asking for heartbreak—and financial disaster. Be cautious. Many local men approach foreign women with one goal: money.
What Is a Usaha Dagang and Who Can Register One? 🧾
A Usaha Dagang (UD) is a simple business form for individual Indonesian entrepreneurs. It’s low-cost, requires fewer documents than a PT, and is perfect for locals running:
- Warungs or food stalls
- Guest houses
- Retail shops
- Simple online stores
But for foreigners in Bali, this option is off-limits. The government does not permit non-citizens to own or register Usaha Dagang. Attempting to do so can result in legal trouble or deportation.
Legal Alternative: Starting a PT PMA as a Foreigner in Bali ✅
The only legal way for foreigners to open and operate a business in Bali is by registering a PT PMA (foreign-owned company). This structure gives you legal ownership, allows you to sponsor your own KITAS (work & stay permit), and opens access to an Indonesian business bank account.
You can choose consulting, digital services, hospitality, or other sectors depending on your experience.
Benefits of a PT PMA Over Sole Proprietorships 💼
While setting up a PT PMA takes more effort than a Usaha Dagang, the benefits are clear:
- 💼 100% foreign ownership (in most industries)
- 📄 Legal recognition and protection
- 💳 Ability to open business bank accounts
- 👩💼 Hire staff legally
- 🛂 Apply for KITAS for long-term stay
- 💰 Invoice clients and pay taxes legally
You’re building something secure and professional, not just a short-term hustle.
Step-by-Step Guide: How to Open a PT PMA in Bali 📝
Opening a PT PMA in Bali involves several steps:
- Choose the right KBLI code (business classification)
- Reserve a unique company name
- Draft a Deed of Establishment with a local notary
- Get BKPM approval
- Apply for an NIB (business license)
- Register your tax number (NPWP)
- Open a business bank account
It usually takes 4–6 weeks with the help of a legal consultant. Once you’re registered, you can apply for a KITAS and begin operations.
Common Mistakes Foreigners Make When Starting a Business in Bali ⚠️
- Using a nominee to register a business
- Assuming a tourist or freelance visa is enough
- Skipping legal tax reporting
- Operating informally without licenses
- Not checking zoning and permit rules
If you want to run a real business, get proper legal help from the start.
FAQs About Sole Proprietorship & PT PMA for Expats in Bali ❓
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Can I register a sole proprietorship as a foreigner in Bali?
No, it’s only for Indonesian citizens.
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What’s the best legal structure for a foreign-owned business?
A PT PMA is the safest and most recognized route.
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Is it hard to open a PT PMA?
It takes planning, but local agencies can help you through every step.
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Can I work with just a tourist visa?
No. You’ll need a KITAS tied to your PT PMA to work legally.
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How much does it cost to set up?
Roughly $2,000–$4,000 depending on your agent and business size.
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What’s the minimum capital required?
Around IDR 10 billion (USD 670,000) declared investment—doesn't need to be fully deposited to begin.
