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Private equity activity in Bali operates under Indonesia-wide laws applied by national regulators. Foreign investors typically use a PMA structure (PT Penanaman Modal Asing) to invest in Indonesian targets. In Bali, private equity deals frequently involve hotel groups, tourism services, or local manufacturing tied to the island’s economy. The land ownership framework in Indonesia means foreign investors cannot own land in fee simple; they rely on rights such as hak pakai or hak guna bangunan through a local Indonesian entity. Private equity deals thus combine corporate structuring, asset ownership, and regulatory approvals to ensure compliance with Indonesian law. Practical diligence must cover corporate governance, licensing, tax, and land rights where applicable.
Commercially, Bali-specific considerations include sector licenses for tourism and hospitality, local employment laws, and approvals from regional authorities in Bali. Even though the baseline framework is national, local permitting and land-related issues can complicate transactions. An experienced advokat or pengacara with private equity experience in Bali helps coordinate corporate setup, due diligence, and regulatory approvals across agencies. This guide outlines when legal help is essential and how to navigate the Indonesian private equity landscape from Bali.
The Omnibus Law on Job Creation (Law No. 11 of 2020) aims to simplify licensing and investment procedures in Indonesia, affecting private equity transactions across sectors, including Bali.
Source: BKPM
Foreign private equity in Bali hospitality assets requires a PMA and careful licensing. If you plan to acquire a Bali hotel chain, a private equity attorney can help set up the correct PT PMA, structure the investment, and ensure all BKPM and OSS licenses are in place before closing.
Land and asset rights must be verified before investment. Diligence should confirm underlying land rights and determine whether the target holds hak pakai or hak guna bangunan through a local entity, which affects the deal structure.
Shareholders and governance agreements need protective provisions. A lawyer should draft or review shareholders agreements, pre-emption rights, anti-dilution clauses, and transfer restrictions tailored to Indonesian corporate law (PT).
Regulatory approvals and sector licensing are critical for close. Tourism-related investments often require Izin Usaha Pariwisata and other permits from regional authorities, coordinated via OSS and BKPM.
Cross-border tax and exit planning require precise structuring. Advisers help map withholding taxes, transfer pricing, and the most tax-efficient exit route for a Bali-based target.
Dispute resolution and enforcement in Bali may involve local authorities. A local legal team can handle contract disputes, regulatory investigations, or government claims effectively.
Indonesia regulates private equity primarily through three core frameworks. The first is the general investment regime, the second governs corporate forms used for investment, and the third sets land ownership constraints that affect many Bali deals. Below are the key laws and how they shape private equity transactions in Bali.
This omnibus statute reorganizes and simplifies many investment licensing processes. It broadens the scope for PMA investment and consolidates multiple permit regimes into one regulatory fabric. The law aims to accelerate closing timelines and reduce red tape in Indonesia, including Bali-based deals. Some provisions took effect in late 2020 with implementing regulations following through 2021 and 2022.
For reference and text, see official sources and Indonesian law portals:
This law provides the framework for foreign and domestic investment in Indonesia, including investment coordination, licensing, and protections for investors. The 2020 amendment aligns investment disciplines with the updated licensing regime introduced by UU Cipta Kerja. It remains a central reference for due diligence, capital requirements, and regulatory approvals in Bali transactions.
Official references and texts can be found at:
This acts as the primary corporate statute for Indonesian companies, including private equity targets. It governs share settings, capital structure, corporate governance, and the ability to issue shares to foreign investors through PMA vehicles. The law has been amended to reflect changes brought by UU Cipta Kerja, affecting capital requirements and governance provisions for Bali deals.
Official references and texts can be found at:
Note on land and ownership under these frameworks: foreigners cannot own land in fee simple; land use and control typically require structuring through Hak Pakai (Right to Use) or Hak Guna Bangunan (Right to Build) via Indonesian-entity ownership. Combining corporate vehicles with land rights is a common Bali private equity pattern. See official land and investment resources for deeper details:
Private equity in Bali involves investment funds acquiring equity in Indonesian target companies. Investors typically use a PMA structure to invest and operate under Indonesian corporate and investment laws. Legal counsel coordinates due diligence, licensing, and governance arrangements.
Formation usually requires registering with the Indonesian Ministry of Law and Human Rights and BKPM, then obtaining OSS licenses. A local advokat or pengacara simplifies this process by handling corporate documents, capital structure, and compliance steps.
Hak Pakai is the right to use land for a specified purpose, while Hak Guna Bangunan allows building on land for a set period. Foreign ownership generally cannot hold land in fee simple; these rights are used to control land via Indonesian entities.
Often yes for land rights, but not always. A local Indonesian entity can hold related rights under appropriate licenses, with foreign ownership via PMA. Always verify land certificates and underlying rights before proceeding.
Due diligence for a hotel or tourism target usually takes 4 to 8 weeks, depending on data availability. A detailed check of land rights, licenses, and corporate structure is essential for a clean close.
Key steps include establishing a PMA, obtaining Izin Usaha Pariwisata if applicable, and registering via OSS for investment licensing. Some transactions also require provincial or regency permits in Bali.
Yes. Land rights are critical and can be separate from a company’s corporate chain. Verify titles, underlying rights, and any encumbrances with the National Land Agency (BPN).
Costs vary by deal size and complexity. Expect fees for due diligence, contract drafting, licensing coordination, and possibly a success fee on closing. Clarify hourly rates and milestones in engagement letters.
Typical private equity closes range from 6 to 16 weeks, depending on regulatory approvals and diligence results. Complex land issues or cross-border structures can extend timelines.
In Indonesia, advokat and pengacara are commonly used terms for legal counsel. Advokats represent clients in court; pengacara covers broader advisory roles. Both can assist with private equity matters outside court.
OSS consolidates multiple licenses into a single application portal. It streamlines investment registration and PMA approvals across Indonesia, including Bali.
Indonesian private equity transactions involve corporate tax, value-added tax on services, and possible withholding taxes on cross-border transfers. A tax advisor should map implications for your deal structure and exit plan.
Important: this guide provides general information only. It does not constitute legal advice. For advice tailored to your Bali private equity transaction, consult a qualified Indonesian advokat or pengacara who specializes in corporate and investment law.
