Many years ago, numerous people did not identify with Lombok. But today Lombok is often referred to as “Bali’s Little Sister”. Therefore, due to its growing prominence and popularity, Lombok has become one of the most common options when it comes to starting a business in Indonesia.
Many tourists have arrived in Lombok over the past few years since the launch of its new international airport in 2011. In addition, being an island east of Bali and west of Sumbawa, Lombok is one of the best in the region in both directions for local and foreign investments. This is especially true for investment in tourism and real estate due to the ever-growing infrastructure and real estate development.
Many people who come to Indonesia looking for a beach holiday choose Bali. Lombok Island is only a short ferry ride away, however, and if you want to get away from the crowds and head to a less commercial location, then Lombok is a great place to start.
Some of the island’s attractions include stunning white sand beaches as well as clear seas and some of the best snorkeling and diving opportunities in Indonesia. It is also home to the famous Mount Rinjani, so if trekking is your thing, then the trip to the top of this active volcano should not be missed. You will also find a slower pace of life here as well as a more relaxed environment, and if you want something special that is still easily accessible from Bali, then Lombok is a perfect choice.
Now let’s look at the reasons why you should invest in Lombok and how you should determine the right type of legal entity for your company.
Starting a Business in Indonesia: Why Invest in Lombok
The earthquakes in August 2018 severely damaged many of Lombok’s tourism businesses. Since then, however, about 90% of tourism operations on the islands have already reopened. In addition, most of the tourism businesses in the south of Lombok are operating as usual, as they were before the earthquake, as the beaches were not severely damaged.
With so many opportunities that you can still take advantage of, here are the reasons why you should invest in Lombok:
- Lombok has become conveniently accessible thanks to the newly built international airports and other infrastructure;
- Cheap flights from low-cost airlines allow more and more visitors to come to the island, expanding opportunities for tourism investment;
- Lombok has become as popular in the past few years as the “new Bali” – for surfers, beach lovers, vacationers, and, of course, investors;
- The investment climate in Lombok is favorable, thanks to the government’s efforts to increase local revenues by attracting investors and visitors;
- Many investors have already started building hotels, bars, restaurants, lounges, and resorts to meet the growing demand.
Options for opening a company in Lombok
With such exciting potentials and opportunities, Lombok is an attractive destination for individuals and companies to invest and start companies.
First of all, you must choose the right type of legal entity that suits your business requirements. If you have no experience in setting up a company in Indonesia, especially if you are a foreigner, it is highly recommended to seek professional advice or expert help.
Foreign investors often use these three types of legal entities in Lombok:
Local limited liability company (PT)
– Has a low minimum investment capital;
– Only locals have the right to own;
– As a foreigner, to set up a PT, you will need a special vehicle contract through a trusted business consultant;
– No restrictions on the list of negative investments (NIL).
Limited Liability Company with Foreign Participation (PT PMA)
– Limited at a zero rate with foreign participation from 1% to 100%. Ownership percentage depends on the type of business you are in;
– It has better conditions if you want to import;
– You are allowed to provide a work permit and sponsorship of a business visa at this institution.
– No transactions or business activities with income/profits are allowed;
– Suitable for business promotion, market presence, and market research.
PMA scheme in Lombok
If you want to buy property in Lombok as a foreigner for investment, you will need to purchase it under the PMA scheme, which is controlled by the Indonesian government. You must provide the following:
- Business plan;
- Proof of documents for your business plan on how it can help communities;
- Confirmation of deposits;
- Other requirements upon request depend on the type of your business.