The dream of owning a chic cafe or a bustling eatery on the Island of the Gods is a powerful draw for many investors. Visions of serving sunset cocktails or artisanal brunches to a global crowd are enticing, but the reality of the Indonesian legal system can quickly dampen that enthusiasm. Many aspiring restaurateurs find themselves trapped in a web of confusing regulations, unsure if they are building a legacy or a liability.
The risks of getting it wrong are severe, ranging from frozen assets to immediate deportation. Stories of foreigners losing their businesses due to “nominee” disputes or zoning violations are all too common in the expat community. Without a clear understanding of the investment requirements and licensing procedures, your culinary passion project could turn into a financial nightmare before the first dish is served.
Fortunately, the path to legal ownership is clear if you follow the correct steps. By establishing a compliant foreign-owned company and securing the necessary permits, you can build a sustainable and profitable food and beverage business. This guide outlines exactly how to Open a Restaurant in Bali safely, often starting with the foundational support of a visa agency in Bali.
Table of Contents
- Who Can Legally Own a Restaurant in Bali?
- Choosing the Right Structure and Capital
- Registering Your PT PMA via OSS
- Securing Location, Zoning, and Building Permits
- Real Story: Luca’s Zoning Nightmare in Canggu
- Obtaining Operational and Alcohol Licenses
- Managing Manpower and Work Permits
- Tax Registration and Ongoing Compliance
- FAQ's about Opening a Restaurant
Who Can Legally Own a Restaurant in Bali?
For foreign investors, the first rule is that you cannot hold a standard local company (PT Biasa) for a restaurant business. The only compliant route to Open a Restaurant in Bali is through a Foreign Investment Company, known as a PT PMA. This structure allows you to legally own the business and its assets, providing a layer of security that informal arrangements cannot offer.
Under the current regulations (Perpres 10/2021), the restaurant sector (KBLI 56101) is generally open to 100% foreign ownership. This means you do not need a local partner to hold shares, giving you full control over your direction and profits. However, this privilege comes with strict investment requirements that must be met to satisfy the Investment Coordinating Board (BKPM).
It is crucial to avoid the “nominee” trap, where a local person holds the license on your behalf. While this was common in the past, it is legally risky and essentially leaves you with no enforceable ownership rights. Legal advisors widely flag this as a high-risk strategy that can lead to total loss if the relationship sours or authorities investigate.
Choosing the Right Structure and Capital
Establishing a PT PMA requires a significant financial commitment. The general guideline for foreign investment is a minimum plan of IDR 10 billion per business classification (KBLI). This does not mean you need to spend it all on day one, but you must have a credible plan to invest this amount into land, building, equipment, and operations over time.
Of this total, the paid-up capital must be at least IDR 2.5 billion. This amount needs to be injected into the company’s bank account once established. Meeting these capital rules is non-negotiable for obtaining your business license. Under-declaring capital is a common mistake that leads to problems with banking and future permit applications.
When drafting your Articles of Association, ensure you select the correct KBLI codes. For a standard restaurant, this is usually 56101. If you plan to serve alcohol or have a bar section, additional codes may be required. Correct classification at this stage prevents mismatches during future tax audits and inspections.
Registering Your PT PMA via OSS
The establishment process has been digitized through the Risk-Based Online Single Submission (OSS) system. Once your company deed is approved by the Ministry of Law and Human Rights, you will register in the OSS to obtain your Business Identification Number (NIB). The NIB acts as your primary business ID and basic import license.
For restaurants, which are generally classified as medium-risk businesses, the OSS will issue a Standard Certificate. This document is not an immediate green light; it is a commitment to fulfill specific standards regarding hygiene, safety, and environmental management. You must verify these commitments to convert your certificate into a full operational license.
This stage is critical for compliance. The OSS system links your business data across various government agencies, including tax and immigration. Ensuring your data is consistent and accurate here is the foundation for a hassle-free operation.
Securing Location, Zoning, and Building Permits
Before signing any lease, you must verify the zoning of the land. Bali distinguishes strictly between residential, tourism, and commercial zones. You cannot legally Open a Restaurant in Bali in a “green zone” (agricultural land) or a purely residential area. Operations found in the wrong zone face immediate closure.
The building itself must have the correct permits. You need a PBG (Building Approval) that matches the function of a restaurant. If the building has an older IMB, check if the stated purpose allows for commercial use. Additionally, an SLF (Certificate of Worthiness) is increasingly required to certify that the structure is safe for public use.
Smart investors request a copy of the zoning confirmation (PKKPR) and the building permit (PBG/IMB) before committing any funds. This due diligence prevents the heartbreak of building a venue that can never be licensed.
Real Story: Luca’s Zoning Nightmare in Canggu
Luca, an Italian chef, found a stunning plot of land in a quiet part of Pererenan. The view of the rice fields was perfect for his farm-to-table concept. Relying on the verbal assurance of the landowner that “everything is fine,” he signed a 20-year lease and began construction immediately.
Six months later, when applying for his operational license, the local office rejected his application. The land was zoned as “Green Belt” (agricultural), meaning no permanent commercial structures were allowed. Luca had already spent $50,000 on the build. He tried to negotiate, but the regulations were strict to protect the island’s environment.
Luca was forced to halt construction and abandon the site. He eventually restarted in a designated commercial zone in Berawa, but the loss of capital was a painful lesson. His experience highlights that in Bali, written zoning confirmation is worth more than any verbal promise.
Obtaining Operational and Alcohol Licenses
Once your structure is ready, you need specific operational approvals. This includes a Food & Beverage License issued via the OSS with input from the local tourism office. You will also need to pass health and hygiene inspections to ensure your kitchen meets food safety standards.
If you plan to serve alcohol, the process becomes more complex. You must obtain a separate alcohol license (SKPL-A, B, or C depending on alcohol content). This is subject to quota approvals and strict national rules. Many restaurants hire local legal consultants to navigate the specific quota system in their regency.
Operating a “soft opening” without these final licenses is risky. Authorities frequently inspect new venues, and operating without a valid health or alcohol permit can result in fines and the sealing of your premises.
Managing Manpower and Work Permits
Foreign owners often misunderstand their role. Holding a business visa or an investor KITAS does not automatically allow you to work hands-on in the restaurant. You cannot serve tables, cook in the kitchen, or mix drinks behind the bar. These roles are reserved for Indonesian nationals.
To work as a General Manager, Executive Chef, or Marketing Director, you must obtain a specific working KITAS (RPTKA notification) with a job title aligned with the Ministry of Manpower. Enforcement is strict, and foreigners caught working illegally face deportation and blacklisting.
Your local employees must be employed under Indonesian Labour Law. This includes providing written contracts, paying at least the minimum wage (UMK), and registering them for BPJS (social security). Compliance here builds a loyal team and prevents disputes.
Tax Registration and Ongoing Compliance
Tax compliance is a major focus for authorities in the F&B sector. Your PT PMA will be subject to Corporate Income Tax (CIT) on net profits, currently set at 22%. Once your gross revenue exceeds IDR 4.8 billion per year, you must register as a taxable entrepreneur (PKP) and charge VAT (PPN) on eligible supplies.
Additionally, Bali regencies levy a Hotel and Restaurant Tax (PB1), which is typically 10% of the bill. This is a service tax collected from the customer and remitted to the local government. It is crucial not to confuse this with the service charge distributed to staff.
To ensure you are reporting correctly and avoiding retroactive fines, it is highly recommended to engage a trusted tax management company. They can handle your monthly filings and ensure your separation of service charge and tax is clear, keeping your business audit-ready.
FAQ's about Opening a Restaurant
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Can a foreigner own a restaurant 100% in Bali?
Yes, under the current investment list, foreigners can own 100% of a restaurant business through a PT PMA structure.
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What is the minimum capital required?
The minimum investment plan is IDR 10 billion (excluding land and buildings), with a paid-up capital requirement of IDR 2.5 billion.
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Can I cook in my own restaurant?
Only if you have a working KITAS specifically for the role of "Chef". An investor KITAS does not allow for hands-on operational work like cooking or serving.
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Do I need a liquor license to sell beer?
Yes, selling any alcohol, including beer, requires a valid alcohol license (SIUP-MB) appropriate for the class of alcohol you are serving.
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What happens if I use a nominee?
Using a nominee is legally risky. You have no legal ownership of the assets, and if the nominee disputes your arrangement, you could lose the entire business.
