If you run a management consulting business in Bali or are planning to start one, you may have heard about the recent Governor’s Circular affecting KBLI 70209 (Other Management Consulting Activities). The circular reflects a shift in how authorities oversee businesses registered under this classification.

In simple terms, KBLI 70209 can no longer be used as a “catch-all” for companies that do not engage in productive economic activity. Authorities observed that some foreign investors were using the Identification Business Number or Nomor Induk Berusaha (NIB) mainly as a residency tool, without purchasing land, building facilities, or obtaining necessary environmental and building permits. Many of these businesses operate only through virtual offices, contributing little to the local economy.

For new businesses, this means stricter scrutiny. Companies applying under KBLI 70209 must demonstrate that they genuinely provide management consulting services. Existing businesses should review their licenses and ensure that their actual operations match the registered classification. Misalignment could lead to warnings, activity restrictions, or, in serious cases, license revocation.

Foreign-owned companies, PMA entities, freelancers, and digital professionals are particularly affected, as the circular emphasizes that business classifications must reflect real contributions, such as investing in infrastructure, creating jobs, or engaging with the local economy.

The misuse of KBLI 70209 has broader implications. This practice has resulted in the loss of regional revenue from taxes and levies, an increase in foreign population density without proper spatial planning, weaker environmental oversight, and minimal absorption of local workers. It has also contributed to an unhealthy investment climate, where businesses prioritize residency or flexible classification over meaningful economic participation.

Authorities are concerned that this trend could disrupt Bali’s balanced development, negatively affect local communities, and hinder sustainable economic growth. The Governor’s Circular aims to ensure that businesses registered under KBLI 70209 are genuinely active and make a positive economic contribution.

There are alternative KBLI codes available for businesses that can no longer rely on KBLI 70209. Companies are advised to review their operations, update their licenses where necessary, and seek legal guidance to ensure compliance. Proactive steps will help businesses continue operating in Bali while meeting regulatory expectations.

In summary, the termination of KBLI 70209 in Bali does not ban management consulting entirely, but it requires businesses to operate transparently and contribute meaningfully to the local economy. Compliance is no longer optional, it is essential for sustainable operations and a healthy investment environment in Bali.

Navigating Indonesia’s regulatory framework can be complex for businesses, particularly foreign investors entering the market. Schinder Law Firm has extensive experience assisting domestic and international clients with regulatory compliance matters, including business licensing and KBLI classification alignment. For further information or consultation regarding regulatory compliance or business operations in Indonesia, please contact us at info@schinderlawfirm.com.

Author:
Dewi Susanti