Bali Tourism Offices Jointly Criticise OSS System for Fuelling Illegal Accommodation Growth
DENPASAR — Tourism offices across Bali have united in criticising the Online Single Submission (OSS) system, which they say has triggered problems in the tourism accommodation sector. The complaints were raised directly to the Ministry of Tourism in Denpasar on Monday (28/4/2025).
Deputy for Industry and Investment at the Ministry of Tourism, Rizki Handayani Mustafa, chaired a Coordination Meeting on Optimising Regulation and Oversight of the Accommodation Sector in Bali Province at the Bali Tourism Office in Niti Mandala, Denpasar. Representatives from district and municipal tourism offices across Bali, the Indonesian Tourism Industry Association (GIPI), the Indonesian Hotel and Restaurant Association (PHRI), Statistics Indonesia (BPS) and other relevant parties were in attendance.
Tourism office representatives from across Bali commented on how easily low-risk real estate development permits can be obtained through the OSS system. With just a Business Identification Number (NIB), a permit can be issued immediately. This becomes problematic when the leniency is exploited to build properties that do not conform to their designated land use. Moreover, construction frequently commences before legality requirements are fulfilled, with no verification process in place.
This situation is believed to have fuelled the proliferation of villas in Bali. Villas are being built on rice paddies and productive agricultural land, and properties submitted for permits as private villas are covertly operated as commercial establishments. The OSS loopholes have also created opportunities for nominee practices, whereby foreign nationals use Indonesian citizens' names to invest illegally. This has accelerated land-use conversion due to rapid accommodation growth driven by well-capitalised foreign nationals investing covertly.
District and municipal tourism offices also reported difficulties in enforcement due to confusion over the Indonesian Standard Industrial Classification (KBLI). On paper, permits are filed under the KBLI code for private villas, yet in practice the buildings function as commercial tourism villas that should be classified under the tourism accommodation KBLI code.
In response, Deputy Rizki Handayani Mustafa said the issue involves two ministries: the Ministry of Investment and Downstream Industries/Investment Coordinating Board (BKPM) and the Ministry of Housing and Settlements (PKP).
"We will discuss with BKPM what needs to be improved within the OSS system so that these field-level problems can be minimised. The system is good because it simplifies things, but on the ground there are several issues that need further discussion," Rizki Handayani told NusaBali.com after the meeting.
The Ministry of PKP's involvement is needed because of practices that blur KBLI classifications in villa construction intended for tourism purposes. Operators exploit housing or private villa permits to build commercial tourism accommodation villas.
"It is not the permit that is wrong, but the misuse of the permit applied for. This is why oversight is needed," Rizki Handayani added.
The senior Ministry of Tourism official also stressed that regional governments have a role to play in addressing the problem, particularly in enforcement. Governor Wayan Koster has already pushed for the formation of illegal accommodation oversight teams.
"The Governor has established several teams — an acceleration team, an illegal accommodation oversight team and others. Those involved include GIPI, IHGMA and other relevant parties," said Head of the Bali Tourism Office, Tjok Bagus Pemayun, after the meeting.
Tjok Pemayun said the teams are currently in the process of being formalised through official decrees. Their primary objective is to compel unlicensed tourism accommodation operators to obtain permits in accordance with prevailing regulations.
Deputy for Industry and Investment at the Ministry of Tourism, Rizki Handayani Mustafa, chaired a Coordination Meeting on Optimising Regulation and Oversight of the Accommodation Sector in Bali Province at the Bali Tourism Office in Niti Mandala, Denpasar. Representatives from district and municipal tourism offices across Bali, the Indonesian Tourism Industry Association (GIPI), the Indonesian Hotel and Restaurant Association (PHRI), Statistics Indonesia (BPS) and other relevant parties were in attendance.
Tourism office representatives from across Bali commented on how easily low-risk real estate development permits can be obtained through the OSS system. With just a Business Identification Number (NIB), a permit can be issued immediately. This becomes problematic when the leniency is exploited to build properties that do not conform to their designated land use. Moreover, construction frequently commences before legality requirements are fulfilled, with no verification process in place.
This situation is believed to have fuelled the proliferation of villas in Bali. Villas are being built on rice paddies and productive agricultural land, and properties submitted for permits as private villas are covertly operated as commercial establishments. The OSS loopholes have also created opportunities for nominee practices, whereby foreign nationals use Indonesian citizens' names to invest illegally. This has accelerated land-use conversion due to rapid accommodation growth driven by well-capitalised foreign nationals investing covertly.
District and municipal tourism offices also reported difficulties in enforcement due to confusion over the Indonesian Standard Industrial Classification (KBLI). On paper, permits are filed under the KBLI code for private villas, yet in practice the buildings function as commercial tourism villas that should be classified under the tourism accommodation KBLI code.
In response, Deputy Rizki Handayani Mustafa said the issue involves two ministries: the Ministry of Investment and Downstream Industries/Investment Coordinating Board (BKPM) and the Ministry of Housing and Settlements (PKP).
"We will discuss with BKPM what needs to be improved within the OSS system so that these field-level problems can be minimised. The system is good because it simplifies things, but on the ground there are several issues that need further discussion," Rizki Handayani told NusaBali.com after the meeting.
The Ministry of PKP's involvement is needed because of practices that blur KBLI classifications in villa construction intended for tourism purposes. Operators exploit housing or private villa permits to build commercial tourism accommodation villas.
"It is not the permit that is wrong, but the misuse of the permit applied for. This is why oversight is needed," Rizki Handayani added.
The senior Ministry of Tourism official also stressed that regional governments have a role to play in addressing the problem, particularly in enforcement. Governor Wayan Koster has already pushed for the formation of illegal accommodation oversight teams.
"The Governor has established several teams — an acceleration team, an illegal accommodation oversight team and others. Those involved include GIPI, IHGMA and other relevant parties," said Head of the Bali Tourism Office, Tjok Bagus Pemayun, after the meeting.
Tjok Pemayun said the teams are currently in the process of being formalised through official decrees. Their primary objective is to compel unlicensed tourism accommodation operators to obtain permits in accordance with prevailing regulations.