Well, they are not that different from other countries, Bali has the normal traffic laws, criminal laws, tax laws, licensing laws, company laws, and banking laws. Indonesia has every law here that you will find in a Western country, many laws here date back to the Dutch Occupation.…
But Bali does have other local laws based on traditions, religious beliefs and local cultures, which we have explained in previous blogs.
To refer back to the Balinese government list of DO’s and DON’T’s under, remind you to DON’T:
- Enter the main area of scared places unless for praying by wearing Balinese traditional clothes and not having a period
- Climb sacred trees
- Take pictures with unpolite clothes around sacred places
Now, this is when a tourist can find themselves in trouble, simply by not following another rule from the Bali Government list, Remind you to DO:
E. Travel with a licensed tour guide if needed
It's not just Influenzas that break the local laws, sometimes it’s a tourist that has a driver from another Island, the driver tells the tourists they can enter, climb, take pictures etc. The Tourist has no idea that they are being given incorrect information. That is why it is so important to only go with Balinese to sacred places or a Guide that has studied the Balinese beliefs to become a Guide, and that takes years of study, don’t we know it.
Sometimes even Domestic Indonesian tourists break the rules by not understanding Bali’s unique culture and beliefs.
But what about the most common law broken in Bali?
Working or running a Business Illegally.
This is a mammoth task for Immigration Offices around the world, not just in Bali. The manpower needed to catch these people takes a huge chunk out of the budget and the logistics involved require so many government departments. The Balinese Immigration department has had to set up a special combined task force and “Dob in” lines, where Balinese can report illegal foreign workers...and Foreigners just behaving badly.
So, what are the most common illegal businesses in Bali?
Villa Rentals, Tour companies, Tattoo Parlors and small coffee shops
However, there are not just illegal businesses, there are a lot of individuals who offer their services on Instagram, Facebook etc. We call these Shitpreneurs. Many Shitpreneurs start as Sheepreneurs, but after a while, they work out that what they are doing is highly illegal and they become Shitpreneurs by changing their social media pages so they cannot be found easily by the authorities. Many started using Telegram as WhatsApp was the only commutation method used here, but now the locals use Telegram as well.
These offer Yoga lessons, Photography, or their service as models.
Here is one example: Modelling shoots for clothing brands etc. not only do they break the law, but they take money away from a local by using a foreign photographer. You will see these kinds of Shitpreneurs on the beaches doing their modelling shoots and you may think they are just Influenzas, but they are doing this as a regular income, they live here and advertise for work here, without visas and legal business to do so.
So, what about Tattoo Parlors/ Spas, coffee shops etc., where they say “Western owned”
Okay, so, this is how it works here. Any business, small or large, that has any Foreign investment (money from a foreigner to start or boost a business) must be a PT PMA (Foreign Investment Company). But some foreigners, hide in the background and have their local friends start a PT (local company).
Small businesses are no longer allowed by Foreign Investment Companies, so you can’t start a small café, small spa, tattoo parlour, small boutique, etc.
Now, back some 15 years ago, you could start a smaller business, but since around 2010, this has not been allowed, only large companies can now be started by a foreigner, or a business with foreign partners, investors, etc. (even loaning a local can sometimes mean it must be changed to a foreign business), Even 1 % share by a foreigner.
Also, don’t forget many foreigners are married to locals, so their spouse can own the business, the foreigner cannot work in the business, but he/she could help their spouse with for example administration…But they cannot be out doing a tattoo or a massage, colouring hair etc.
Villa Rentals. Many Sheepreneurs do this one illegally and do not even live here. Airbnb is the big problem here, or just word of mouth and a Facebook page. Maybe even a pretty little website for their single villa.
Now, the Balinese Government is getting pretty sick of these Sheepreneurs and they are doing a lot of Villa sweeps at the moment…so, you may also find yourself on the street if you rent one of these villas. Or, you may find your booking is cancelled before you even arrive.
So, what to look for if you want to rent a villa as a tourist? Easy. Paying to personal bank account. The Airbnb host is a Westerner, they advertise themselves on Facebook and say contact me, it's pretty easy to spot.
Sheepreneurs and Shitpreneurs are pretty unpopular at the moment after a survey done in 2023 of the tax losses to Bali alone was published. These two are considered by the government to have zero respect for Indonesian laws and only care about making money. So, they are under the radar at the moment.
You won't hear much about these if deported …as Sheepreneurs will not tell you when they lose money or are deported… Sheepreneurs will sheepishly go quiet…but you may have already seen a few in the media. The easiest ones to catch are the ones living in Bali, and have been given stupid information by agents here…such as they can work on the visa, they have organized for them….An Investor KITAS or a Retirement KITAS….both, you cannot work on either KITAS. Well, an Investor with the title of Director, can direct, as in direct their local staff…but not market anything, they cannot deal directly with clients etc. Shitpreneurs generally try to return to Bali after their blacklisted time has expired to continue to do it all again.
The Villa Rentals is a huge one, as this is a real money earner…for the foreigner, not for the Bali economy.
Why is it illegal for a foreigner to rent out a villa, an apartment etc?
Now, there are legal methods to do a villa rental investment here…. But not the way these Sheepreneurs and Shitpreneurs do. You can buy a leasehold villa in a managed complex and then have it fully managed; they are all licensed and taxes paid here, and you then receive the net income. You are not allowed to market it personally yourself though. When selling, you then also must pay a lot of tax when you sell (20% for a foreigner without an Indonesian tax file number)…some are not aware of that. You could start a Foreign Investment company and build a block of Villas, then you can get the correct license to rent them out daily, as a small hotel license. Your local staff would do all the work, marketing etc. But even if you started a foreign investment company, you could not build one villa and rent it out as you need a Pondok Wisata license (for a single villa) and a property with a Pondok Wista cannot be owned legally by a foreigner or a foreign-owned entity such as a PT PMA.
A foreigner cannot rent out a villa on Airbnb. This is highly illegal and the laws are broken by just one couple who did some Facebook posts in some Bali groups renting out their villas in Bali this year. They entered Bali…and exited Bali quicker than planned. Their planned one or two-month stay in their “Villa they owned” and stay in when not retting it out to tourists, turned into a deported exit and ban for 6 months for breaching quite a few laws, namely immigration, tax, finance/banking and provincial, local and federal government laws.
You cannot cannot market a villa yourself (thus the reason for Sheepreneurs being deported the minute they landed in Bali, is because once you arrive on a VOA and answer any of those villa inquiries or market your villa on Facebook, you are illegally working.). Two other couples were deported and lived here, one on Investment Kitas, and one couple was on Retirement Kitas. You cannot market a villa whether you own it (or your company) or not, on those KITAS types.
Some Shitpreneurs try to bypass all this and buy the property using a Nominee (local name). But a Nominee title is even more illegal than not having the license to rent out. The law states the government can seize the property if a Local Nominee owns it.
Tour companies? Ah, just as easy to check and just as many broken rules.
A travel company here must be licensed, must have a physical office to obtain that license and must have staff. The Travel Agency license is a little stricter than other licenses and the building you rent must have a special license for you to renew your Tourism License. So, we cannot just work out of a house, for example, we need a large commercial space to rent with the correct building license and commercial zoning.
For an Indonesian foreign company (which as a foreigner you can set up, it’s called a PT PMA and requires a paid upfront capital of 10 billion IDR (AU$1 million dollars, yes, that is one million Australian dollars, or USD$670 million). You must have staff and you must pay your staff's BPJS health and Pension insurance (which you cannot do if you aren’t legally registered) and you must also report taxes monthly…oh the list goes on.
A travel company here must be licensed, must have a physical office to obtain that license and must have staff. Now, for this one, if they are based here, they must have a PT PMA company and have paid their capital (again, that huge figure of 10 billion, there are no small businesses allowed by foreigners in Indonesia, not for years). You may have a foreign friend that has opened a small café or boutique, or a tour company that advertises on Facebook in Bali recently. They are a Sheepreneurs, and they will go home soon.
What to look out for as a tourist?
You can usually spot Sheepreneurs easily, as you are asked to pay to a personal bank account or an overseas bank account. Well, that’s just making a Sheepreneur richer and the tax man poorer. And if they live in Bali, well, that’s even worse, they are here working illegally, no matter what they tell you, Sheepreneurs believe other Sheepreneurs and they believe dodgy agents that give them a visa and tell them they can work on it…because they want to believe them.