Can a foreigner legally build and operate a villa rental business in Bali?

[dernio]

Hey guys,
I’m trying to understand how foreigners are able to set up and manage villa rental businesses in Bali. There’s someone I I been following on Youtube for over a year, a Western guy in his early 40s who moved to Bali with his wife and kids around 2016. He started by building a villa for himself, but over time began helping others do the same. From what he shows, he’s clearly involved in the full process, land scouting, design, construction, property management, guest stays, and rentals.
Everything looks real and professionally handled, not just a surface-level pitch.
So I’m trying to understand:
What legal structures make this possible for foreigners?
Can foreigners lease land long-term and build on it securely?
What kind of company formation or registration (if any) is needed to run such a business?
What kind of visa allows someone to live in Bali long-term while managing such a setup?
Are there any important permits or rules that someone doing this needs to know?

I’m asking purely to understand how some people actually make this work in practice. If anyone here has real experience or knows the process, I would be really grateful for any valuable insights/infos you might share


Thanks in advance.

 

[jstar]

On Bali if you’re both foreigners: Create a PT PMA, forget about HGB and Hak Pakai, but start a leasehold as developer with the owners. They will let you do whatever you want

Then you can after the build, sell the leasehold against a profit (normally 10% tax) or sublease or even make a deal with a management company for daily rentals etc.

 

[infotechweb]

Hey guys,
I’m trying to understand how foreigners are able to set up and manage villa rental businesses in Bali. There’s someone I I been following on Youtube for over a year, a Western guy in his early 40s who moved to Bali with his wife and kids around 2016. He started by building a villa for himself, but over time began helping others do the same. From what he shows, he’s clearly involved in the full process, land scouting, design, construction, property management, guest stays, and rentals.
Everything looks real and professionally handled, not just a surface-level pitch.
So I’m trying to understand:
What legal structures make this possible for foreigners?
Can foreigners lease land long-term and build on it securely?
What kind of company formation or registration (if any) is needed to run such a business?
What kind of visa allows someone to live in Bali long-term while managing such a setup?
Are there any important permits or rules that someone doing this needs to know?

I’m asking purely to understand how some people actually make this work in practice. If anyone here has real experience or knows the process, I would be really grateful for any valuable insights/infos you might share


Thanks in advance.

Excellent query! In my experience, foreigners typically opt for long-term leases (25–30 years, with extensions) rather than directly owning land in Bali. The correct way to operate a villa rental business is to set up a PT PMA, which is a foreign-owned company structure that enables you to manage rentals, hire employees, and conduct business lawfully.

To stay for a long time, many investors use KITAS (work or investor visa). Before beginning construction, it's also critical to verify building approvals, permits, and zoning. For seamless design, construction, and legal documentation, most people collaborate with local experts.

Businesses that specialize in assisting with these steps, such as CoCo Development, make the process easier for foreigners.

 

[pantaiema]

There is a good article highlighting the difference between 'Hak Pakai (HP)' and 'Hak Guna Bangunan (HGB)' written by professionals. Also in many cases, they provide a reference to the authoritative sources e.g the laws/regulations, so not personal opinion.

In many countries, Leaseholds is typically given for 99 years (extendable), but In Indonesia 'Hak Pakai' is given for maximum of 30 years (extendable).

It is in Indonesian but you could use free online translators, such as 'google translate' to translate it into English.

https://www.hukumonline.com/klinik/a/perbedaan-hak-guna-bangunan-dan-hak-pakai-lt657c001024ac9/

 

[centurion]

There is a good article highlighting the difference between 'Hak Pakai (HP)' and 'Hak Guna Bangunan (HGB)' written by professionals. Also in many cases, they provide a reference to the authoritative sources e.g the laws/regulations, so not personal opinion.

In many countries, Leaseholds is typically given for 99 years (extendable), but In Indonesia 'Hak Pakai' is given for maximum of 30 years (extendable).

It is in Indonesian but you could use free online translators, such as 'google translate' to translate it into English.

https://www.hukumonline.com/klinik/a/perbedaan-hak-guna-bangunan-dan-hak-pakai-lt657c001024ac9/

Not so useful. In Bali they give lease based on notarized contract in almost all cases, not Hak Pakai (that can be registered in land agency).

 

[jstar]

In Bali they give lease based on notarized contract in almost all cases

True. It’s a very different world. Main reasons are the Balinese do not want to relinquish control and the sheer amount of foreigners who don’t want something they are not familiar with.

 

[jstar]

That’s a bit the problem with all these ‘juridical and legal’ websites, they are focused on domestic residential regions and locals. Suburban developments in Tangerang or PIK or so. The moment you step foot on the island, you see a very different picture.

A Balinese person wanted to sell a property and to avoid issues with the family he proposed a swap; the potential buyer would buy another house that the Balinese wanted and then they would exchange. To avoid going against family values and his duty. Risky for the buyer of course.

 

[janista]

Hey guys,
I’m trying to understand how foreigners are able to set up and manage villa rental businesses in Bali. There’s someone I I been following on Youtube for over a year, a Western guy in his early 40s who moved to Bali with his wife and kids around 2016. He started by building a villa for himself, but over time began helping others do the same. From what he shows, he’s clearly involved in the full process, land scouting, design, construction, property management, guest stays, and rentals.
Everything looks real and professionally handled, not just a surface-level pitch.
So I’m trying to understand:
What legal structures make this possible for foreigners?
Can foreigners lease land long-term and build on it securely?
What kind of company formation or registration (if any) is needed to run such a business?
What kind of visa allows someone to live in Bali long-term while managing such a setup?
Are there any important permits or rules that someone doing this needs to know?

I’m asking purely to understand how some people actually make this work in practice. If anyone here has real experience or knows the process, I would be really grateful for any valuable insights/infos you might share


Thanks in advance.

Great question — this setup is more common than most people realize, but the legal path is very specific. Quick answers to your 5 points:

1. Legal structure: Foreigners can't own land freehold. Two working models:
   • Leasehold personal (25‑30 yr) → for lifestyle & small rental
   • PT PMA + HGB → for actual rental business (this is what the YouTuber almost certainly uses)
2. Long‑term lease + build: Yes, via notarial lease agreement (Akta Sewa) with clear renewal clause. Building requires IMB/PBG in your (or PT PMA's) name.
3. Company formation: PT PMA with tourism KBLI (55130 for villa rental). Paid‑up capital ~IDR 2.5 B, authorized IDR 10 B. Timeline 3‑5 weeks.
4. Visa: Investor KITAS (E28A) via your own PT PMA — 1 year, renewable, no local sponsor needed. This is the standard route for foreign villa entrepreneurs.
5. Permits: NIB (via OSS), Pondok Wisata license for short‑term rental, IMB/PBG for the building, quarterly LKPM tax reports.

 

[Dave70]

5. Permits: NIB (via OSS), Pondok Wisata license for short‑term rental, IMB/PBG for the building, quarterly LKPM tax reports.

LKPM is not tax report.

 

[jstar]

Oops, did the AI make a mistake?

 

[jstar]

It can get very messy btw; I’ve seen already quite some properties with sublease. In one case there were two levels of sublease; so the one you have a contract with is leasing from someone who is leasing from someone who is the original leaseholder. You can imagine what will happen if one of the layers is removed.

 

[snpark]

It can get very messy btw; I’ve seen already quite some properties with sublease. In one case there were two levels of sublease; so the one you have a contract with is leasing from someone who is leasing from someone who is the original leaseholder. You can imagine what will happen if one of the layers is removed.

Layers or lawyers lol
Keep those palms greased

 

[centurion]

Great question — this setup is more common than most people realize, but the legal path is very specific. Quick answers to your 5 points:

1. Legal structure: Foreigners can't own land freehold. Two working models:
   • Leasehold personal (25‑30 yr) → for lifestyle & small rental
   • PT PMA + HGB → for actual rental business (this is what the YouTuber almost certainly uses)
2. Long‑term lease + build: Yes, via notarial lease agreement (Akta Sewa) with clear renewal clause. Building requires IMB/PBG in your (or PT PMA's) name.
3. Company formation: PT PMA with tourism KBLI (55130 for villa rental). Paid‑up capital ~IDR 2.5 B, authorized IDR 10 B. Timeline 3‑5 weeks.
4. Visa: Investor KITAS (E28A) via your own PT PMA — 1 year, renewable, no local sponsor needed. This is the standard route for foreign villa entrepreneurs.
5. Permits: NIB (via OSS), Pondok Wisata license for short‑term rental, IMB/PBG for the building, quarterly LKPM tax reports.

KBLI 55130 for villa rental is like more than 5 years prohibited for PMAs and large scale Indonesian companies. So your structure is not correct. Same is for Pondok Wisata.
Also, in Bali, the real estate activity for new companies is forbidden (ex 68111). So you have been misled.

 

[centurion]

It can get very messy btw; I’ve seen already quite some properties with sublease. In one case there were two levels of sublease; so the one you have a contract with is leasing from someone who is leasing from someone who is the original leaseholder. You can imagine what will happen if one of the layers is removed.

These contracts are actually pretty strong, and survive the death of the lessor.

 

[Mr Fiqri Consultant]

Hey guys,
I’m trying to understand how foreigners are able to set up and manage villa rental businesses in Bali. There’s someone I I been following on Youtube for over a year, a Western guy in his early 40s who moved to Bali with his wife and kids around 2016. He started by building a villa for himself, but over time began helping others do the same. From what he shows, he’s clearly involved in the full process, land scouting, design, construction, property management, guest stays, and rentals.
Everything looks real and professionally handled, not just a surface-level pitch.
So I’m trying to understand:
What legal structures make this possible for foreigners?
Can foreigners lease land long-term and build on it securely?
What kind of company formation or registration (if any) is needed to run such a business?
What kind of visa allows someone to live in Bali long-term while managing such a setup?
Are there any important permits or rules that someone doing this needs to know?

I’m asking purely to understand how some people actually make this work in practice. If anyone here has real experience or knows the process, I would be really grateful for any valuable insights/infos you might share


Thanks in advance.

Hi, you’re asking the right questions. The answer is that foreigners can structure villa-related businesses in Indonesia, but the legal structure depends heavily on what they actually want to do for example, whether they are simply leasing a property, developing and operating villas as a business, or providing property management services.


For a villa rental business, you generally need to look at several things together: the appropriate company structure, foreign investment requirements, the land arrangement, zoning and building requirements, tourism/business licensing, taxation, and the immigration status of the foreign owner or director.


The important part is that these should be checked together before committing to a property or signing a long-term land agreement.


I work with a legal and business consultancy in Indonesia, and we regularly deal with company establishment, licensing, and legal matters for foreign clients. If you’re interested, I’d be happy to share some general information about how the process is structured in practice.

 

[centurion]

Hi, you’re asking the right questions. The answer is that foreigners can structure villa-related businesses in Indonesia, but the legal structure depends heavily on what they actually want to do for example, whether they are simply leasing a property, developing and operating villas as a business, or providing property management services.


For a villa rental business, you generally need to look at several things together: the appropriate company structure, foreign investment requirements, the land arrangement, zoning and building requirements, tourism/business licensing, taxation, and the immigration status of the foreign owner or director.


The important part is that these should be checked together before committing to a property or signing a long-term land agreement.


I work with a legal and business consultancy in Indonesia, and we regularly deal with company establishment, licensing, and legal matters for foreign clients. If you’re interested, I’d be happy to share some general information about how the process is structured in practice.

Yes, you can share. Bali is a separate enigma as the KBLIs for real estate ownership are forbidden now.

 

[Mr Fiqri Consultant]

Yes, you can share. Bali is a separate enigma as the KBLIs for real estate ownership are forbidden now.

I agree that Bali is a particularly complicated case at the moment. There has been a significant change in how certain business activities can be structured for foreign investors.

From what I understand, however, it is more accurate to say that access to certain KBLI registrations for PMA has been restricted in Bali, rather than saying that foreign real estate ownership itself is generally forbidden.

KBLI 68111 is particularly relevant here, as the Bali government has closed OSS access for PMA applications under this KBLI. The authorities have also raised concerns about cases where 68111 was used for villa development on leased land, while the actual activity was essentially short-term tourist accommodation.

So for someone wanting to develop and operate villas as a rental business, I think the important question is not simply whether 68111 can be used. The actual business model needs to be identified first, and then the appropriate KBLI, PMA eligibility, land arrangement, zoning, building requirements, and accommodation licensing all need to be checked against the current Bali rules.

That is probably why Bali is a bit of a different situation compared with other parts of Indonesia.

 

[snpark]

Don't forget your visa IMTA KITAS and your tax NPWP since you are earning money in Indonesia as rental income. Pay your dues and fair share. Also remember the best you can do is lease it. You are never the owner of the land or the villa. So the real owner of the land will be grateful for you to build a lovely fancy new villa for his family to take back from you in a couple of decades