Kompas and the State News Agency ANTARA report that the Bali Provincial Government has declared 18 business sectors are now officially closed to foreign direct investment (FDI). The ban on foreign investment applies to micro, small, and medium enterprises (MSMEs), where provincial authorities view foreign investment as “unfair business competition.”
Investment in the designated 18 “no-go” sectors of the economy is now disabled from accessing the Online Single Submission (OSS) System under the Indonesian Standard Industrial Classification (KBLI) system that fall into the “low and low-medium risk categories.”
The change in policy stems from the Bali Provincial Government’s evaluation of FDI business licensing. Their evaluation revealed indications that foreign investors were exploiting the risk-based licensing system to enter business sectors that had traditionally been the exclusive domain of local communities.
”The Bali Provincial Government’s licensing evaluation team identified indications that investors were misusing the risk-based business licensing system to enter sectors closely linked to MSMEs,” Governor Koster announced on Thursday, 23 July 2026. According to Koster, some foreign investors exploited loopholes in the OSS System by registering businesses under low-risk categories, which require only a Business Identification Number (NIB). This scheme allows business operators to obtain permits automatically, without the complicated obligations of securing standard certification or additional permits.
Koster said these “loopholes” enabled some FDI entities to enter business sectors that directly overlap with MSMEs, with some even operating via virtual offices. “This situation has the potential to create unfair business competition and place significant pressure on the viability of local businesses—particularly MSMEs—in sectors that ought to be fostering partnerships with cooperatives and MSMEs,” he stated.
After receiving approval from the Minister of Investment and Downstreaming/Head of the Investment Coordinating Board (BKPM), the Bali Provincial Government immediately blocked OSS access for the designated 18 business sectors. The restricted sectors include:
- Small-scale hotels
- Real estate (Owned or Leased Real Estate)
- Car and motorcycle rental
- Retail trade of clothing and textiles
- Food trade
- Accommodation services
- Drinking establishments (bars) or cafes
- Tailoring services
- Fitness centers
- Traditional medicine shops
- Sports facilities
- Sports event promoters
- Industrial management consultancy services
Koster confirmed the new OSS access restrictions have been in effect across Bali since the third week of May 2026.
Under the revised investment policy, foreign investors (PMA) can no longer apply for new business licenses via the OSS System for the designated 18 sectors until further notice.
However, companies already in operation remain required to submit Investment Activity Reports (LKPM) until the relevant KBLI (Standard Industrial Classification) Codes are deactivated or removed from the licensing system.
Koster emphasized that the local government would take firm action against any licensing violations. Nevertheless, Bali remains open to investment that is high-quality, responsible, and beneficial to the local economy.
”Incoming investment is expected to align with Bali’s development vision, respect local wisdom, and support the strengthening of the community-based economy driven by MSMEs,” said Koster.
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