Bali Business and Land Owners, Take Note: Two New Laws That Could Affect You

If you're doing business in Indonesia or own land in Bali, there are two recent developments in the law that might affect you: the reclamation of unused or abandoned land, and music royalty obligations for businesses. Although these laws have actually existed for some time, they are now being enforced more widely, meaning that they could affect your business. Here’s a roundup of everything you need to know about these two laws, and what you need to do to make sure you’re in line with them. 

Bali authorities are increasing their scrutiny of land development projects, raising the risk of penalties for those that fail to meet compliance requirements.

1. Land Utilisation Requirements: 

In July 2025, Minister Nusron Wahid announced that approximately 1.4 million hectares out of 55.9 million hectares of land in Indonesia has been identified as potentially underutilised or abandoned. In an attempt to ensure that land is used according to its correct purpose, the government plans to more actively enforce Government Regulation No.20, issued in 2021, which gives authorities the right to reclaim any unused land in Indonesia.  

If you have land in Indonesia, the timing of whether the government will review your land or not depends on if: 

• The land was titled before February 2021: Government can start reviewing it anytime

• The land was titled after February 2021: the Government must wait 2 years from when you received your title before they can start their review

For these land rights, if there's no development, or if you don’t actively use the land for 2 years, your land could be flagged for review: 

• Rights to Build (HGB)

• Rights to Use (HP)

• Rights to Manage (HPL)

• Cultivation Rights (HGU)

• Grounds for Land Control (land held under DPAT)

Right of Ownership (Hak Milik) has different criteria as it's only likely to be reviewed if it's not serving its social function or has been controlled by people other than you for 20+ years.

Stages Involved in Land Reclamation: 

Unused or abandoned land is land that is left idle, not used according to its designated purpose, poorly maintained, or where the owner neglects obligations like taxes and permits.

If your land does get flagged, it doesn’t mean that you’ll lose your land. The government has to then conduct a lengthy process which includes several stages: 

Evaluation

• The government will conduct a 180 day assessment of your land

• If they find that it's not being used, you will get an additional 180 days to start developing on the land, from when you initially got the formal notification. 

Written Warnings

• First warning: 90 days to comply (for titled land) / 180 days (for licensed land)

• Second warning: 45 days to comply (for titled land) / 90 days (for licensed land)

• Third warning: 30 days to comply (for titled land) / 45 days (for licensed land)

Final Verdict

• Officials submit abandonment proposal to Ministry within 30 business days

• Once the proposal is submitted, you cannot sell, transfer, or mortgage the land

• Ministry makes final abandonment decision

• If declared abandoned, you have 30 calendar days to vacate

The land reclamation process involves identifying unused or abandoned land, notifying the owner, and evaluating compliance.

This means that from the first review to the potential loss, there’s plenty of time to remedy the situation if you stay on top of official correspondence and any plans for development. 

Consequences

If your land is declared as abandoned, that means: 

• Your land title will be permanently canceled

• You have to vacate in 30 days 

• You won't be given compensation

• The land will be then owned by the state 

There are exemptions in the case that the land is:

1. Under legal dispute

2. Affected by spatial planning changes

3. Unusable due to natural disasters

4. In a conservation area

   2. Music Licensing: Businesses Must Pay Royalties 

Businesses that use music in commercial settings, such as hotels, shops and restaurants, now need to pay formal licensing fees for the music they use. Many businesses in Bali will have already received invoices, and enforcement is ongoing. This applies even for those who play nature sounds, such as birdsong or forest sounds, as this still counts as recorded content. 

Types of Businesses Affected: 

• Restaurants and cafes with background music

• Hotels providing entertainment

• Retail stores using music

• Businesses with music in advertising

Technically, businesses in Indonesia should have been paying for a blanket license, which would mean they pay a flat rate regardless of which songs they use. Indonesia’s rates for music royalties are especially low compared to those of other countries. In the future, the SILM (Song and Music Information Centre) will calculate what’s owed by businesses based on the actual songs played. Some businesses are calling for clearer guidelines about the charges involved, as not complying with the regulations can result in criminal charges. 

Businesses in Indonesia are required to pay music royalties, typically through a flat-rate blanket license, and non-compliance can result in legal penalties.

Other Options: 

• Find royalty free music 

• Pay for a subscription service 

• Work with local musicians 

• Collectively pay for music licenses with other businesses to split the costs 

Next Steps: 

If you own land that hasn’t been used for a while, we would recommend: 

• Reviewing development timelines 

• Document any development or construction

• Keep an eye out for official communication

• Start using your land for its intended use 

If you currently run a business that uses music: 

• Assess the music you use in your business

• Find a cost-effective strategy like those listed above 

• Budget for music licensing as operational expense

Going forward, try to stay proactive and maintain compliance by regularly assessing your business. It’s best to keep your addresses up to date so that you don’t miss any important correspondence, and stay up to date with the latest regulations so you can plan ahead. If you’re curious about other news in the property and business sector, check out more of our blog posts here.

We are Bali Solve, one of Bali’s leading business consulting and visa agencies, and we aim to provide neutral, factual information about the ever-changing regulatory and business landscape in Indonesia. If you need business consulting services, assistance or advice, simply reach out to us via Whatsapp or visit our office in Pererenan and allow one of our experts to help you find solutions to your business needs.

Written by Bali Solve Team
September 24th 2025