Hotel Operators Left Perplexed by the Proliferation of Illegal Accommodation
Jakarta, CNBC Indonesia - Secretary-General of the Indonesian Hotel and Restaurant Association (PHRI) Maulana Yusran questions the continued presence of illegal accommodations in several areas, including Bali. He says the appearance of these unregistered units reflects weak government oversight as regulator, despite clear business licensing rules.
“So here’s the thing, when we set up a business in Indonesia, there is a legal basis underpinning everything. It is regulated in laws, government regulations, and ministerial regulations. There are many ministries/agencies involved in this,” Maulana told CNBC Indonesia, quoted on Saturday (7/3/2026).
He emphasised that the most fundamental aspect of starting a business is ensuring a business license first.
“The context is, building a business requires a business license, that is the most important thing,” he said.
Maulana explained that the government has the authority to issue or revoke licenses, as well as to supervise.
“The government as regulator holds control in granting or revoking a business license. And then supervision should be like that as well,” he said.
He explained that although licensing is now centralised through the Online Single Submission (OSS), supervision must still continue, particularly by local governments.
“Now in the OSS era licensing is centralised. So through OSS there is the central government, through that system, but it still relates to the ministries and agencies relevant to the region. And then supervision must be by regional governments,” Maulana clarified.
Therefore, he sees the emergence of informal accommodations as a sign that there is negligence in monitoring by local government.
“So what is happening with those so-called illegal accommodations? We need to look at that. Why did it arise? That means there is neglect or negligence by the government itself, which is responsible for monitoring or evaluating the emergence of a business entity in its respective area,” he said.
Maulana noted that many informal accommodations arise because they do not have licenses in accordance with their business type.
“If we look at the complaints from the accommodation sector, many of the informal accommodations do not have business licences that correspond to their type of business. Yet the licensing rules already regulate this,” he said.
He stressed that a business license contains clear details, including the identity and classification of the business.
“There is the Indonesia Standard Classification of Business Fields (KBLI), there is the NIB, the business activity number, and then there are safety equipment requirements and so on,” Maulana said.
However, he regards the government as regulator as failing to carry out oversight consistently.
“Now the question is, why does the government as regulator appear to be lax? If I say lax, someone might be angry, ‘why are you saying we are lax’? Well, proof is that some exist. If something exists, it means someone is lax, right?” he said.
Maulana emphasised that the government should not only issue licenses but also supervise the enforcement of the rules so there is legal certainty for law-abiding operators.
“The government must also supervise, not only grant licences but must supervise, because regulation is the government’s product. If there is no legal certainty, those who hold licences will not be competitive, because their rivals are those who operate without licences,” he added.
Therefore, PHRI has urged the government to urgently fix the issue so competition can return to a healthy level.
“That’s why we always tell the government, please fix this part, because we will never be able to talk about quality tourism or a quality destination as long as the government is not committed to creating competitiveness in its sector. Because if law enforcement is not truly enforced,” he concluded.
(fsd/fsd)