DENPASAR, Bali — Foreign investors can no longer apply for new business licenses in 18 sectors in Bali after the provincial government restricted access to Indonesia’s online licensing system, saying the move is aimed at protecting local micro, small and medium enterprises (MSMEs).

Governor Wayan Koster announced the policy on Thursday following a review of foreign-investment permits issued in low- and medium-low-risk business sectors.

Koster said an evaluation by the provincial licensing team found signs that some foreign-owned companies had been using simplified licensing rules to enter businesses typically dominated by local entrepreneurs.

Some investors, he said, were taking advantage of low-risk business classifications—which require only a Business Identification Number (NIB)—to avoid Indonesia’s minimum investment requirements for foreign-owned companies.

Because the system automatically issues permits for these categories without requiring additional certificates or operational licenses, Koster said it has become vulnerable to misuse.

He added that some foreign-investment companies had also registered businesses using virtual offices while operating in sectors that compete directly with local MSMEs.

“This situation may result in unfair competition and put significant pressure on local businesses, particularly MSMEs,” Koster said.

After receiving approval from Indonesia’s investment minister, Bali closed access to the Online Single Submission (OSS) licensing system for foreign investors applying in the affected sectors.

The restrictions cover businesses closely linked to the local MSME economy, including accommodation, retail, property rentals, consulting services and vehicle rentals.

The 18 affected business categories include star-rated and budget hotels, owned or leased real estate, management consulting, clothing and textile retail, motorcycle rentals, food retail, mobile agricultural-food retail, bars and cafés, traditional medicine shops, tailoring services, stadium facilities, fitness centres, sports promotion services and industrial management consulting.

The policy has been in effect across Bali since the third week of May 2026, Koster said.

Foreign investors can no longer submit new OSS applications for those business categories until further regulations are issued. Existing companies, however, must continue filing mandatory investment activity reports until the affected business classifications are formally deactivated or removed from the licensing system.

Koster said Bali remains open to investment but wants new projects to support the island’s long-term development rather than compete directly with local small businesses.

“Investment should align with Bali’s development vision, respect local wisdom and strengthen a people-oriented economy based on MSMEs,” he said.