The most dangerous phrase in Bali property right now is “just use this KBLI code.” Since Indonesia’s new business classification system went live in the OSS platform on 15 June 2026, the market has filled with confident answers to questions the regulation has not yet finished answering. Buyers are being told a foreign-owned company can no longer hold a villa. Others are being told the opposite, that one specific code unlocks everything. Both camps are selling certainty that does not exist.
KBLI 2025, established under BPS Regulation No. 7 of 2025, reduced Indonesia’s five-digit business activity codes from 1,789 to 1,559 and reorganised how property and accommodation activities are classified. The system adjustment deadline of 18 June 2026 has passed, and every licence issued before implementation remains valid in full force under the transition’s grandfather clause. The rules themselves are clearer than they have ever been. The confusion sits in the gap between what the regulation says and what the market believes it says.
The Rumours Outrunning the Regulation
Four claims are circulating through buyer WhatsApp groups and agency offices this month, and each deserves a direct answer.
The first is that a PT PMA can no longer own a villa in Bali because “there is no KBLI for it.” This is a distortion of something real. On 13 May 2026, following a formal request from the Governor of Bali, the Ministry of Investment blocked new low-risk and lower-medium-risk business classifications for foreign-owned companies across the province. The governor’s letter cited 19,262 PT PMA registrations in Bali between 2021 and 2025, with nearly half of all registered projects sitting in low-risk categories that required nothing more than a business identification number. The province concluded that too many foreign companies were holding classifications rather than running businesses. Existing companies are not affected. The passive shell route is what closed, not foreign ownership itself.
The second rumour is that notaries pushing purchases into private personal names is a safe workaround. It defers the problem rather than solving it, and the deferred version is usually more expensive.
The third is that registering a PT PMA in Jakarta while operating in Bali sidesteps the provincial restrictions. The entire stated purpose of the May directive was to end exactly this practice. A registered address that does not match the operational footprint is now the profile regulators are looking for, not a shelter from them.
The fourth is the magic code itself, the persistent whisper that some specific classification, an apartment code, a hotel code, a management code, lets a foreign company do everything. It does not exist, and the most credible legal voice in this series says so on record below.
The View from the Market Floor
Terje H. Nilsen, co-founder of Seven Stones Indonesia, has spent two decades inside Indonesian property transactions, and his current read is blunt: the market is slowing because of confusion, not because of the regulation itself. Buyers who cannot get a straight answer do not proceed. He describes cases where one arm of government approves a land title conversion and another then refuses the building permit, and companies whose provisional registrations leave them unable to open the bank accounts they need to operate.
His observation on buyer sentiment is the one that matters most. Leasehold transactions continue with confidence because buyers understand the structure. It is the ownership-adjacent structures, the company vehicles and title conversions, where hesitation has set in. The market is not rejecting Bali. It is waiting for clarity.
The View from the Legal Framework
Adv. Dipo Farizi, S.H., CLA., Legal Partner at Cleon Business Consulting (cleonbusinessconsulting.com), has anchored this series since the reform took effect, and his answers to the questions above are the clearest statement yet of where compliance actually stands.
On the residential leasing classification that many buyers hope will carry their rental plans, his position is precise. The spirit of the reform is that a foreign-owned company should conduct real business activity, not hold assets passively, and a company routinely acquiring and leasing residential property fits that spirit. But the code has not yet been assigned its risk category in the licensing system, “so compliance cannot be further confirmed at this stage,” he notes. That is not evasion. That is the honest state of a system still being wired.
On the villa accommodation code, his answer is final: it cannot be used by a foreign-owned company, as its allocation is reserved for local business. There is no generalised accommodation classification for foreign companies at all. “Accommodation KBLI for foreign businesses cannot be generalised. It depends entirely on the type of accommodation to be operated,” he explains. Cleon builds specific structures for specific clients, typically capital-intensive operations run through partnership agreements with locally owned licensed companies, and none of them transfer from one buyer to the next.
On the banking difficulties circulating in the market, his firm’s experience points to the underlying cause. Cleon does not encounter the problem, he says, because every client it assists is capitalised to the minimum the law requires. The account refusals happening elsewhere are not a system malfunction. They are the system declining structures that were never properly funded. The banks, in effect, arrived at enforcement before the regulators did.
One Principle Both Perspectives Share
Where the market view and the legal view meet is on a single structural principle: the asset and the business must never be mixed.
Terje’s caution operates at title level. A right of use granted for personal residence was granted for exactly that, and an owner should not assume it can simply be commercialised afterwards. Dipo’s resolution operates at structure level. Ownership and operation are kept separate, the operating entity is fully compliant in its own right, and the relationship between owner and operator is properly documented. “As long as the business entity conducting operations is fully compliant and there is a clear asset utilisation relationship, no issues arise,” he says.
These are not competing answers. They are the same discipline applied at two different layers of a transaction, and a buyer who respects both layers is the buyer who sleeps well.
What This Means If You Are Buying One Villa
Strip away the noise and the practical picture for the typical international buyer, someone wanting one or two villas, part personal use and part rental income, or rental income alone, resolves into three honest statements.
If you do not intend to run a business, do not build a company. Dipo’s guidance here is unambiguous: mapping the buyer’s objective comes before everything else, and a buyer whose goal is a home with rental income is better served by a clean personal structure with the operation handled by a licensed villa management company. That market, he notes, is improving and now offers owners genuinely varied options.
If you do intend to invest actively, acquiring, leasing, and reselling, the structure is a business decision that must be designed before the purchase, not retrofitted after it. “Even slight differences in client planning, whether in capital placement or business model, result in different structures. At present it is almost impossible to provide general guidance,” Dipo says. Read that sentence twice, because it is the single most important thing a lawyer has said about this reform. Anyone offering you a universal answer is offering you their answer, not yours.
And whichever path applies, the sequence is fixed: structure first, property second. The buyers navigating this period without stress are not the ones who found a clever code. They are the ones who sat down with independent legal and tax counsel before they viewed a single property, mapped their residency, intended use, and exit, and let the structure determine the search rather than the other way around.
What Is Not Yet Settled
Honesty requires naming what remains open. The risk categorisation of the residential leasing classification is not finalised, which means its full licensing pathway for foreign companies cannot yet be confirmed. The mapping of the accommodation category’s sub-codes into the risk-based licensing system is still being completed through ministerial regulation, and provisional registrations made in the interim may be subject to later verification. These gaps will close in the coming months. Until they do, any advice presented as final on these specific points should be treated with caution, whatever its source.
The Fundamentals Have Not Moved
Bali’s underlying case is unchanged. Demand from international buyers remains strong, the island’s rental economy continues to mature, and the regulatory direction, for all its friction, points toward a market where verified compliance becomes the dividing line between assets that hold value and assets that hold problems. A reform that filters out passive shells and under-capitalised structures is uncomfortable in transition and healthy in outcome.
The buyers who will look back on 2026 as the year they bought well are the ones treating structure as the first decision rather than the last. There is no magic code. There is only the discipline of doing it properly, and that discipline begins before the search does.
Cleon Business Consulting
https://cleonbusinessconsulting.com/
Seven Stones Indonesia
https://sevenstonesindonesia.com/
Fullers Properties
https://fullersproperties.com/services/
