In my videos and articles, I often specify that those who buy “pictures” by making online property deals and hoping to profit from “unique” Balinese real estate (also called investors here) are not yet true investors for five key reasons:
Online property deals in Bali, while seemingly a convenient idea, are not legal. Online “investors” are currently throwing away millions of dollars without any protection for their investments.
The cost of construction on the island is roughly three times lower than the final sale price. This margin clearly shows that it is far more profitable to build and sell independently rather than relying on intermediaries like inexperienced developers.
Setting up a construction or development company does not require financial or technical expertise. Most developers are just a title, lacking the necessary skills or resources to deliver quality results.
Not all land is suitable for investment purposes. Over 50% of what you see may not be suitable. The process of verifying a property is extensive, takes around three weeks, and is often overlooked, leaving funds unprotected. HOW TO CHECK LAND.
An overly high level of trust in developers and their promised returns (25–35% per year???), contracts, and financial stability. Many fail to thoroughly verify the developer or contract terms, resulting in losses of up to 70% of the investment. HOW TO VERIFY A DEVELOPER YOURSELF.
The inability to analyze these points, along with the fact that these claims often contradict one another, already indicates that the goals of such "investors" are unlikely to be achieved. For instance, how can an investment offering a 25% annual return in USD be considered “risk-free”?
Low risk = low returns.
High risk = high returns.
Bali hasn’t reinvented economics =).
HOW CAN A FOREIGNER ORGANIZE THE ENTIRE CONSTRUCTION PROCESS WITHOUT MISTAKES? - https://bali-legal.com/en/kupit-i-postroit-nedvizhimost-na-bali-inostranczu-en.
In most cases, these individuals or companies make four critical mistakes:
Believing that real estate investments in Bali are LOW-RISK simply because property is traditionally seen as a safe asset — MISTAKE.
Investing more than 20% of their capital into high-risk residential properties in Bali — MISTAKE.
Skipping the Due Diligence process for transactions, trusting developers to handle all the paperwork independently, and signing deals online, thereby forfeiting any rights to protect their interests — MISTAKE.
Relying on promised high returns from passive property management in Bali — M I S T A K E ! ! !
Right now several developers are on the verge of bankruptcy, facing government crackdowns, or risking the loss of their investors’ capital. There is no protection for foreign investors in Bali, which means all money invested could be completely lost — THIS IS THE REALITY!
If you need assistance in vetting a developer in Bali or want to ensure the quality and safety of your investment, CONTACT US VIA Telegram or WhatsApp FOR QUICK COMMUNICATION.
To avoid confusion and misunderstandings, I emphasize the concept of a "qualified investor". By qualified investors, I typically refer to those who are already capable of considering the outlined factors. These are usually:
Developers themselves,
Entrepreneurs who open businesses for expats or the local market on the island,
Those who invest in Indonesia's infrastructure and specifically in Bali.
The Bali market is high-reward and high-risk. This article is written for those who understand this reality, for qualified investors, and for those who have found this material at the right time.
BUSINESS AND INVESTMENT CONDITIONS IN INDONESIA (BALI) COMPARED TO TOP GLOBAL ECONOMIES
1 - Low Operational Costs for Running a Business (Rent, Salaries)
Many major companies are relocating their offices to Indonesia.
Interestingly, Bali itself may not always be the most attractive option—it’s a relatively small tourist island where salaries are rising disproportionately to the increasingly inflated property prices.
GREAT CITIES FOR OPTIMIZING OPERATIONAL COSTS:
Surabaya (Java Island, Indonesia)
Mataram (Lombok Island, Indonesia)
Yogyakarta (Java Island, Indonesia)
These locations maintain an average salary level of $100–150 per month, making it relatively easy to hire staff for entry-level positions.
Advantages: Lower fixed business expenses allow investors to allocate more funds toward growth and marketing.
Disadvantages: Limited infrastructure, underdeveloped banking services in certain regions, and logistical challenges (especially on Bali) compared to developed countries.
RENT COSTS
USA (New York, San Francisco): Commercial Office Space: Average cost is approximately $500–1,000 per square meter per year in central areas. In premium locations, it can go up to $2,000–3,000 per square meter per year.
Europe (London, Paris): :In central business districts, rent ranges from $600–1,500 per square meter per year. In London, areas with high business activity often exceed this range.
Bali, Indonesia: Renting an office or commercial property on Bali costs approximately $100–200 per square meter per year, significantly lower compared to Western countries.
SALARIES
USA (New York, Los Angeles): Average monthly salary for an office employee: $4,000–6,000 depending on qualifications. Salaries for programmers or marketers can exceed $7,000–8,000 per month.
Europe (London, Berlin): Salaries range from €3,000–5,000 per month depending on the role. IT and marketing professionals may earn €6,000–8,000 per month.
Bali, Indonesia: The average monthly salary for a local office employee is $300–500. Even high-skilled professionals rarely earn more than $1,000–1,500 per month.
TAXES
To understand the tax situation and incentives for foreign investors, check out this detailed article: Taxes in Indonesia - https://bali-legal.com/en/nalogi-v-indonezii-en.
Monthly PROMO
till 30.11.2024
Submitting mandatory tax reports for only 500,000 IDR per month!
Special conditions for companies with zero turnover when paying for the year
Take part
2 - The Rapidly Growing Economy of Southeast Asia
Advantages: Indonesia offers new opportunities for startups and business expansion, particularly in creative industries, tourism, and technology. Tax incentives are available for foreign players, making it an attractive market for global businesses.
Disadvantages: Market regulations and economic conditions are still developing and can lack stability. Additional costs may arise for representing business interests in "gray zones."
GDP GROWTH RATES
USA:
Over the last decade, the U.S. GDP growth rate averaged 2–3% per year. In 2020, GDP fell by -3.4% due to COVID-19, but rebounded to 5.7% in 2021.
European Union:
Before the pandemic, the EU's GDP growth averaged 1.5–2% per year. In 2020, the economy contracted by - 6.3%, followed by a recovery of approximately 5.3% in 2021. Forecasts for 2023–2024 are more conservative, expecting 1–2% growth.
Bali, Indonesia:
In recent years (pre-pandemic), Indonesia's GDP growth was around 5–6% annually. The economy started recovering in 2021, recording a 3.7% growth. Projections for the near future (2024–2025) suggest GDP growth in Indonesia could reach 4–5%.
INFLATION RATE
USA:
In 2022, inflation in the U.S. surged to record levels of 7-9% per year, driven by post-pandemic recovery and supply chain disruptions.
Europe:
Inflation in the EU also spiked to 6-8% in 2022, although it typically fluctuates between 1-2% under normal conditions.
Bali, Indonesia:
Indonesia’s inflation rate has ranged from 2.5-4.5% in recent years. In 2022, it rose slightly to 4.2-4.5%, partly due to global increases in raw material and energy costs.
UNEMPLOYMENT RATE
USA:
Before the pandemic, the U.S. unemployment rate was around 3.5%. In 2020, it spiked to 8-10%, but by 2022, it dropped back to 3.6-3.8%.
Europe:
In EU countries, unemployment averaged 6-8% in recent years. However, countries like Spain and Greece faced rates exceeding 15%.
Bali, Indonesia:
Before the pandemic, Indonesia’s unemployment rate was about 5-6%. During 2020-2021, it rose to 7-8% but began to decrease in 2022, reaching 5.8-6%.
PUBLIC DEBT
USA:
In 2022, the U.S. national debt reached approximately 130% of GDP, raising concerns about long-term sustainability.
Europe:
EU countries also have high debt levels, averaging around 90-100% of GDP, with countries like Italy and Greece exceeding 150%.
Indonesia:
Indonesia's public debt remains relatively low compared to Western countries, at approximately 40% of GDP in 2022, making its economy more resilient to external shocks.
3 - Consistently Growing Tourist Influx
Distinctive Features: Bali is one of the world’s most popular tourist destinations, serving as a hub for consumer activity in the tourism and hospitality sectors.
Advantages: Fast ROI for tourism-related businesses, which can be harder to achieve in regions with less active tourist sectors. New niches consistently emerge due to the economy's slower response to increasing cash inflows.
Disadvantages: Strong dependence on seasonal tourist flows. Vulnerability to local government regulations – learn more about Bali's local governing body (Banjar) here - https://bali-legal.com/en/bandzhar-glavnaya-vlast-na-ostrove-en.
INTERNATIONAL TOURISM
2019: Before the pandemic, Bali welcomed approximately 5.1 million international tourists, with major sources including Australia, China, India, and Japan. This marked a peak year for the island.
2020-2021: The COVID-19 pandemic caused a sharp decline in international tourism, reducing arrivals to just a few thousand due to closed borders.
2022: Tourism began to recover, with 2.1 million international visitors arriving in Bali.
2023: Bali hosted 5.27 million international tourists, showcasing strong recovery compared to 2022. This accounted for 45.16% of all international tourists in Indonesia. Key source countries included Australia, India, and Singapore.
DOMESTIC TOURISM
2019: In its peak year, Bali attracted approximately 10.36 million domestic tourists.
2020-2021: Domestic tourism experienced a decline but remained more resilient than international tourism due to internal travel restrictions and quarantine measures.
2022: Around 8 million domestic tourists visited Bali, which was 2 million less than in 2019.
2025 Forecast: Domestic tourism is expected to grow further, although exact figures for 2023-2024 are still being consolidated.
"BEHIND THE SCENES" OF BUSINESS LEGALIZATION
4 - Ease of Business Setup for Foreigners (PT PMA)
Advantages: Indonesia offers straightforward legal structures like PT PMA, allowing foreigners to fully own and manage their businesses without barriers. The cost of registering such a company ranges from $1,500 to $2,000, making it one of the most affordable locations for business setup globally.
Disadvantages: Navigating company registration and complying with local regulations can be challenging for those unfamiliar with Indonesian laws.
For detailed steps on company setup, visit THIS LINK - https://bali-legal.com/en/kitas-company-en.
If you need assistance with business registration or support services in Bali, CONTACT US via Telegram или WhatsApp for quick communication.
Start a business in Indonesia at the best price
The lowest price on the market for 2 KITAS + company. Leave your request, and our manager will contact you shortly!
Submit a request
5 - Tax Benefits for Foreign Businesses
Key Differences: Indonesia offers tax rates ranging from 0.5% to 10% during the first three years of business operation. These rates are significantly lower compared to many Western countries, where corporate taxes can reach 30-40%.
Advantages: Small businesses (up to $20,000 monthly turnover) can enjoy a favorable tax environment with rates as low as 3-4% per month. Medium-sized businesses (with a monthly turnover of $100,000 or more) can benefit from tax rates capped at 10%, helping to reduce operational expenses.
Disadvantages: Understanding the local tax system can be challenging for foreigners. Mandatory requirement to hire local professionals for bookkeeping and tax reporting, which costs an average of $70 to $300 per month.
For a comprehensive guide to the tax system and incentives for foreign investors, visit this article - https://bali-legal.com/en/nalogi-v-indonezii.
Or you can use the services of our business management specialist in Bali. To calculate your taxes, CONTACT US VIA Telegram or WhatsApp FOR QUICK COMMUNICATION.
Monthly PROMO
till 30.11.2024
Submitting mandatory tax reports for only 500,000 IDR per month!
Special conditions for companies with zero turnover when paying for the year
Take part
6 - High Returns for Real Estate Investors
Advantages: When funds are strategically allocated for the long term, the Bali market allows for a passive income system with yields of approximately 15-20% annually over the next 10 years. Short-term strategies, however, show slightly reduced real returns, averaging around 10% per annum. This is still higher than in most other countries globally.
Disadvantages: Current government restrictions on construction aim to protect Bali's climate and ecosystem from foreign developers. The absence of a regulated market leads to a self-managed environment for developers. While this creates opportunities for high returns, it also exposes inexperienced investors to potential capital loss, with up to 50% failure rates among newcomers.
BANKING RATES
Many investors use bank loans as a safeguard against government intervention:
Businesses can access loans 2-3 years after establishment (depending on the bank).
Banks cover up to 70% of the collateral's appraised value after independent evaluation.
Unsecured loans are capped at an equivalent of $10,000.
Current loan rates for construction projects hover around 7% annually, while unsecured loans have rates of 11% annually.
The central bank's rate at the time of writing is 6.25% annually.
Indonesian government bonds offer yields between 6.25% and 6.45% annually.
Before investing, ensure you understand the system in detail: - How Developers in Bali Trick Investors.
Legal Protections for Investor Capital in Bali (30-40 min read).
7 - Unique Environment and Emerging Markets
Differences: Unlike many other countries, Bali offers a multicultural environment where integration is straightforward. Expats form a large international network of support for newcomers. Most service industries are in their infancy and face minimal competition.
Advantages: Ease of creating partnerships and connecting with other foreign entrepreneurs. Straightforward market entry. High ROI and growing demand for services of European and international standards.
Disadvantages: Challenges in interacting with local communities and cultural differences that may affect business operations. The influence of corrupt officials, police, and immigration authorities.
Learn more about the challenges of Bali’s “unique” environment here - https://bali-legal.com/en/proverka-immigracii-en.
Or fill out the form below to request a free consultation on safe investments, real estate purchases, and full-service real estate deal support.
Together we will make life on the island comfortable and legal!
Get a cost estimate for support
Leave a request for a free consultation and our manager will contact you as soon as possible
