Bali Governor Wayan Koster has proposed that foreign nationals wishing to establish Micro, Small, and Medium Enterprises (MSMEs) in Bali should have their minimum investment increased to Rp100 billion.
Koster made this suggestion after observing that several foreign investors have been able to easily open MSMEs through the Online Single Submission (OSS) system, or risk-based business permits. This system is managed directly by the central government, which currently sets a minimum investment of Rp10 billion for establishing Foreign Direct Investment (PMA) in Indonesia.
According to Koster’s records, there are more than 400 foreigners in Badung Regency alone who own vehicle rental businesses, not including building materials and culinary businesses operating on land owned by local residents.
“With just Rp10 billion in capital, many foreign investors can freely enter. However, this figure is often only recorded on paper. In practice, it’s less than Rp1 billion, but they already dominate various types of small-scale businesses,” Koster said in a written statement on Friday, the 10th of September.
Furthermore, Koster noted that this situation has had a negative impact on the economic development of local residents.
“If left unchecked, outsiders would flood our economic sector [instead]. Business opportunities for Balinese youth would be taken away, and the people’s economy would be crippled,” he continued.
Koster emphasised the need for reforms to the risk-based licensing system to ensure quality foreign investment in Bali and to protect local residents. One possible approach, he said, would be to adapt the system to regional characteristics and propose to the central government that the Foreign Direct Investment (FDI) limit be increased to Rp100 billion.
“For Bali, with its high economic value, Rp10 billion [as MSME investment] is too low. We propose raising it to Rp100 billion to ensure that the foreign investors who come in are truly qualified,” Koster concluded.
Meanwhile, University of Indonesia economist Ninasapti Triaswati believes that Koster’s proposal to require foreign nationals to invest Rp100 billion demonstrates a preference for local MSMEs. According to Triaswati, the proposal would indirectly make the government more selective in choosing investors, thereby preventing harm to local businesses. However, the effectiveness of the proposed policy remains to be seen.
“The impact on the investment climate can only be measured once the policy is implemented,” she added.
ADDITIONAL NOTE: As published by ASEAN Briefing on their website on the 6th of October, Indonesia has actually moved to ease one of its most persistent entry barriers. The government has reduced the paid-up capital requirement for foreign-owned limited liability companies, known as PT PMAs, from Rp10 billion (US$640,000) to Rp2.5 billion (US$160,000) under Minister of Investment Regulation No. 5 of 2025.