Bali, often called the Island of the Gods, has become a global destination for its diverse cultural heritage, scenic landscapes, and welcoming atmosphere. Over the years, it has attracted both local and international entrepreneurs keen on establishing businesses in Bali’s thriving tourism sector. This popularity, however, has also led to a rise in foreign-owned villas operating illegally, which can harm local entrepreneurs, diminish the island’s economic gains, and undermine Balinese culture.
How Illegal Villas Are Disrupting Local Entrepreneurs
The concept of bali villa investment has become more common as visitors worldwide seek unique, private accommodations. When properly licensed, a villa investment in Bali can be lucrative and contribute to the island’s economy. But some foreign investors neglect essential regulations, paying only minimal fees through the Online Single Submission (OSS) platform and ignoring local permits and taxes. They often set up unregistered villas in popular areas—such as Canggu Kuta Utara, Uluwatu Kuta Selatan, and Ubud in Gianyar—blending in with legitimate businesses while bypassing important regulations.
Local journalist Marsellus Nabunome Pampur has covered this issue extensively, noting that many of these villas appear legal to the casual observer. Behind the scenes, however, they often fail to meet government requirements or follow standard environmental policies, resulting in unlawful advantages over properly licensed properties.
According to I Kadek Adnyana, Chairman of the Bali Villa Rental and Management Association (BVRMA), “They [the foreign nationals] are profiting in Bali without healthy competition.” Legitimate villas usually pay fees that fund local services and tourism infrastructure. Illegal operators skip these obligations and can lower their rates significantly, which hurts local entrepreneurs who comply with regulations and pay all necessary taxes.
Moreover, the rise of these unlawful accommodations can distort local business data. Official statistics may reflect high occupancy, but a significant chunk of visitors stay in unregistered villas. This discrepancy can cost the local government vital revenue, ultimately affecting the upkeep of roads, public services, and cultural preservation efforts. Beyond this financial impact, illegal villa owners may ignore environmental guidelines, leading to improper waste management or construction practices that harm Bali’s landscapes—one of the island’s most valuable assets.
Socioeconomic and Cultural Consequences
Many prospective investors ask: is villa a good investment? Generally, if you follow the rules, respect local customs, and engage in responsible business practices, the answer is yes. Another common question is whether buying a villa in Bali is a good investment. Again, the answer depends on adhering to the legal framework. Without proper adherence, villas can not only disrupt the local tourism industry but also disrespect the island’s cultural heritage.
Balinese culture is deeply intertwined with its environment, evident in daily offerings, religious festivals, and local traditions that revolve around nature and communal harmony. Illegal businesses often disregard cultural norms, creating friction in neighborhoods. Some communities report that unlicensed villas cause noise pollution, fail to provide space for religious ceremonies, or violate temple proximity guidelines. Such disregard for local customs chips away at the essence of Balinese spirituality.
I Nyoman Giri Prasta, Vice Governor of Bali, highlights the importance of local ownership and awareness: “Balinese people should be the host in their own land.” He advocates for stronger legal mechanisms to ensure that foreigners who invest in Bali’s tourism sector do so in accordance with local rules. This stance is supported by the government’s plan to introduce stricter regulations on nominee agreements, which foreign investors sometimes use to circumvent property ownership restrictions.
BVRMA data shows clusters of illegal villas in high-demand areas, where competition is fierce and the allure of quick profits can drive unethical behavior. These unlawful establishments often draw a significant number of tourists, but contribute little to the local community or economy. By contrast, fully licensed villa investment partners typically collaborate with local suppliers, employ local staff, and pay required taxes, fostering a healthier environment for economic growth and cultural respect.
Government Responses and the Path Forward
Seeing the detrimental effects of illegal properties, Bali’s provincial government has intensified efforts to enforce regulations. One key proposal is the Perda Nominee, which targets foreign nationals who use local “nominees” to conceal ownership, effectively creating shadow operations. Vice Governor I Nyoman Giri Prasta asserts, “With this regulation, these unauthorized villas can be dealt with.” Under the law, genuine foreign investors must be transparent about their business interests, while the government gains legal footing to shut down unlicensed properties.
The Bali Villa Rental and Management Association plays a crucial role as well, uniting around 70 legitimate villa management companies overseeing more than 1,000 properties. The organization helps identify suspicious developments, tracks business compliance, and coordinates with authorities to facilitate investigations. I Kadek Adnyana’s leadership ensures that BVRMA remains aligned with official policies, sharing information to protect honest operators from those who cut corners.
Many wonder about the broader question: is buying a villa a good investment, especially if you are looking at a long-term venture? If done the right way—securing proper permits, respecting local zoning laws, and preserving environmental integrity—owning a villa can indeed yield substantial returns. The tourism market in Bali remains robust, driven by the island’s international reputation and year-round influx of visitors. However, circumventing regulations comes with significant risks, both financially and legally.
Local officials urge potential buyers and villa investment partners to remain vigilant and do their due diligence. In many areas, staff from local villages (banjars) and district offices are authorized to inspect new constructions for irregularities. Village leaders also collaborate with local governments to report suspicious activities and ensure that farmland is not converted illegally. These steps form part of a broader strategy to maintain a balanced approach to tourism, preserving both economic vitality and cultural integrity.
Ultimately, the health of Bali’s tourism sector hinges on the island’s cultural appeal, community well-being, and natural beauty. Legally compliant investment villa projects help sustain this balance by supporting local resources and adhering to regulations. By contrast, illegally operated villas disrupt social harmony, evade tax obligations, and threaten Bali’s future as a world-class destination. Through tightened enforcement and collaboration between the government, associations like BVRMA, and the community, Bali aims to strike a responsible equilibrium where business can thrive without sacrificing the island’s unique heritage.
Important Reminder for Prospective Buyers and Renters
Do not purchase illegal villas. For a legitimate and secure transaction, buy or rent a villa in Bali from Kibarer Property, which is officially recognized and trustworthy. All lawyer services and permits for the villas we sell or lease are authorized, ensuring you can stay there comfortably and confidently. By choosing legally compliant properties, you help protect local culture, preserve Bali’s environment, and secure a sustainable future for everyone involved.