Recent developments in Bali have brought increased attention to the use of KBLI 70209, particularly for foreign-owned businesses.
While the classification remains valid under Indonesian law, its use is now being more strictly assessed in practice. For businesses operating in Bali, the key issue is no longer what KBLI 70209 is, but whether its use accurately reflects the actual business activity.
What Is KBLI 70209 and How It Is Used?
KBLI 70209 refers to Other Management Consulting Activities, a classification intended for advisory and non-operational consulting services.
In practice, this classification has often been used broadly to cover
- business consulting
- operational advisory
- market entry support
- ongoing business assistance
Its flexibility has made it widely used, particularly by foreign investment companies seeking a general classification.
What Is Happening in Bali?
Authorities in Bali are increasingly applying a substance over form approach, focusing on the actual nature of business activities rather than formal classification alone.
The use of KBLI 70209 is being questioned where
- the business conducts operational activities
- the classification is used as a general or umbrella license
- there is a mismatch between registered KBLI and actual activities
This does not indicate a formal removal of KBLI 70209, but a limitation in how it is accepted in practice.
Why This Is Happening?
Legal Basis and Explanation
Government Regulation No. 5 of 2021 on Risk-Based Business Licensing
Establishes that business licensing in Indonesia is determined based on the level of risk and the specific business activity conducted.
This means that each business must operate in accordance with its registered KBLI. Licensing, permits, and supervision are all tied to the actual activity performed in practice, not merely what is stated in the registration.
BPS Regulation No. 2 of 2020 on KBLI 2020
Defines the scope of each business classification, including KBLI 70209 as a consulting activity.
As a result, the use of KBLI 70209 for operational or revenue-generating activities outside consulting creates a mismatch between classification and actual business activity.
Law No. 25 of 2007 on Investment as amended by Law No. 6 of 2023
Requires that investment activities comply with applicable laws and licensing requirements.
This includes the obligation to ensure that the structure of the business and its activities are aligned with its registered licensing.
Presidential Regulation No. 10 of 2021 as amended by Presidential Regulation No. 49 of 2021
Regulates which business sectors are open or restricted for investment.
Using a broad classification such as KBLI 70209 to conduct activities in regulated or restricted sectors may lead to closer regulatory scrutiny.
Practical Reason Behind Bali’s Approach
Within this legal framework, authorities in Bali are responding to how KBLI 70209 has been used in practice.
In particular, they are addressing situations where
- consulting classifications are used to conduct operational business
- business activities do not match registered licensing
- foreign investment structures rely on overly broad classifications
- regulatory supervision becomes difficult due to unclear activity scope
Limiting the use of KBLI 70209 in certain contexts helps ensure that business activities are properly classified and aligned with regulatory requirements.
Where This Applies?
The legal framework is national, but enforcement may vary by region.
At the national level, KBLI 70209 remains valid.
In Bali, authorities apply stricter interpretation and focus on actual business substance.
Who Is Affected?
- foreign-owned companies
- businesses relying on KBLI 70209 as their main classification
- companies conducting activities beyond consulting
- businesses undergoing licensing updates or expansion
When This Becomes Critical?
- company establishment or restructuring
- changes in business activities
- licensing updates through OSS
- regulatory review or supervision
How Indonesian Law Approaches This Issue?
The current regulatory approach emphasizes substance over form.
Where a mismatch is identified, authorities may require adjustment of licensing, reclassification of activities, or further administrative review.
How Businesses Should Respond?
- review KBLI classification in the NIB
- assess alignment between registered and actual activities
- identify any activities outside consulting scope
- evaluate whether additional or revised KBLI is required
- ensure compliance with the OSS risk-based licensing framework
The Role of Legal Assessment in Practice
In practice, this assessment is typically carried out by qualified Indonesian legal practitioners.
A proper legal assessment allows for
- identification of compliance gaps
- alignment between business activities and licensing
- mitigation of regulatory exposure
Conclusion
The developments in Bali reflect a broader regulatory direction toward greater alignment between business structures, licensing, and actual operations.
As enforcement becomes increasingly substance-driven, businesses are expected to ensure that their regulatory position accurately reflects the reality of their activities.
In this environment, clarity of structure and accuracy of classification are essential elements of sustainable and compliant business operations.
