The Indonesian government is stepping up efforts to regulate tourism services marketed through digital platforms, particularly foreign Online Travel Agents (OTAs) operating without a legal business entity in the country. The move is part of a broader initiative to ensure fair competition, consumer protection, and sustainable tourism development.
“The Ministry of Tourism is seriously addressing the issue of illegal accommodation marketing through various digital platforms, including foreign OTAs,” said Deputy Minister of Tourism Ni Luh Puspa, as quoted by Antara on Monday, June 23, 2025.
The ministry is focusing on foreign companies promoting accommodations via digital channels without complying with Indonesian business regulations. According to Ni Luh, the regulation process requires cross-agency coordination, involving the Investment Coordinating Board (BKPM), the Ministry of Trade, and the Ministry of Communication and Digital Affairs.
As part of this effort, the Tourism Ministry will host dialogue forums with domestic and foreign tourism businesses to review regulatory compliance and issue warnings before taking stricter actions.
“We’re safeguarding the level playing field. All businesses, both local and foreign, must follow the same rules. Our principle is collaborative but firm—toward quality and sustainable tourism in Indonesia,” she added.
Under Trade Minister Regulation No. 31/2023, foreign OTAs operating in Indonesia are required to establish a permanent business entity and obtain relevant permits, including a tour and travel agency license under Tourism Minister Regulation No. 4/2021. Failure to comply could lead to access being blocked.
The ministry has already started verifying and mapping accommodation businesses in Bali and is holding discussions with associations to shape policies that reflect on-the-ground realities.
Indonesian Hotel and Restaurant Association Speaks Out
The Indonesian Hotel and Restaurant Association (PHRI) is calling on the government to block foreign OTAs that fail to establish legal entities or obtain business permits.
“These foreign OTAs sell services via digital platforms without a valid Electronic System Trading License, which harms the domestic tourism industry,” said PHRI Secretary General Maulana Yusran.
He stressed this practice violates Indonesia’s Income Tax Law No. 36/2008, which requires foreign entities operating more than 183 days in Indonesia to form a local business entity for tax compliance.
“It’s time for the government to act decisively. This is not just a legality issue—it’s about economic sovereignty. The state loses tax revenue, local workers miss job opportunities, and domestic businesses suffer from unfair competition,” Yusran stated.
He also urged the government to enhance legal enforcement and supervision, not just focus on promotion and investment. “If this continues unchecked, our people will suffer. Foreign companies profit while giving nothing back,” he warned.
Since May, the Ministry of Tourism has raised concerns about the rise of illegal accommodations listed on foreign platforms, especially in Bali and other major cities. Rizki Handayani Mustafa, Deputy for Industry and Investment at the Ministry, said these listings—often private homes or villas without licenses—have led to declining hotel occupancy rates.
Source: Antara
Photo Credit: cottonbro studio (pexels.com)
