Bali Closes Business Licensing for Foreign Investment in 18 Sectors to Protect Local Enterprises

The Provincial Government of Bali has closed access to the integrated licensing system (OSS) for 18 Standard Classifications of Indonesian Business Fields (KBLI) for foreign investment (PMA). Bali Governor Wayan Koster in Denpasar on Thursday explained that this was carried out based on the results of a business licensing evaluation of PMA business activities in low and medium-low risk KBLI categories, which were ultimately taking over business spaces belonging to local communities. “The Bali provincial government’s licensing evaluation team sought to find indications of misuse of the risk-based business licensing system by investors to enter business sectors closely related to MSMEs (micro, small, and medium enterprises),” he said. A number of foreign investors exploited low-risk KBLI categories, which only require a Business Identification Number (NIB), as a loophole to conduct business activities without significant capital investment obligations. Consequently, several PMAs established businesses that threatened MSMEs, including by using virtual offices. “This condition has the potential to create unfair business competition and exert significant pressure on the sustainability of local business actors, especially MSMEs, in sectors that should encourage partnerships with cooperatives and MSMEs,” Governor Koster stated. After obtaining approval from the Minister of Investment and Downstreaming/Head of the Indonesian Investment Coordinating Board (BKPM), the Bali provincial government immediately closed access to the OSS system for a number of low and medium-low risk business sectors.