Bali’s hotels have been told to buy local or risk their permits. Speaking at a Bank Indonesia event in Denpasar on 23 October, Governor Wayan Koster said hotels and restaurants that do not use Bali’s local products will soon receive a first, second and third warning letter, and then a review of their business permits. The requirement for Bali local products in hotels is not new. It comes from a 2018 regulation that many businesses have never fully followed. What is new is the threat of enforcement, which turns a procurement habit into an operating risk.
Key facts
| Item | Detail |
|---|---|
| Who spoke | Bali Governor Wayan Koster, 23 October 2026 |
| Sanction | Warning letters 1 to 3, then permit review |
| Rule | Bali Governor Regulation (Pergub) 99 of 2018 |
| Food crops, horticulture, plantation products | At least 30% local |
| Livestock products | At least 30% local for hotels and restaurants |
| Fish | At least 30% local |
| Local industrial products | At least 20% local |
| Exception | Other sources allowed if local supply falls short |
| Numbers affected | Not given |
What happened
Koster said the local-products rule is in force but that not all businesses follow it yet. He named rice, eggs, fruit, vegetables, meat, drinks and salt as products Bali can supply. He did not say which businesses, or how many, would receive warnings.
His case is about money staying on the island. He said Bali received about 7.05m foreign and 9.3m domestic tourists in 2025, and that tourism drives about 66% of the provincial economy. In his view, that is a ready market for Bali’s farmers and small producers.
The thresholds are set out in the governor regulation on local products. It also sets rules on payment: cash when buying directly from farmers, subak irrigation groups or farmer groups, and deferred payment only through a regional state-owned company.
Our read: the rule is soft, the enforcement is not
On paper, the regulation is flexible. Hotels must “prioritise” local products, and they can buy elsewhere when local supply cannot meet the quotas. That gives a well-run kitchen room to comply.
The risk is in how it is checked. The regulation measures shares by volume, but few hotels track their purchasing that way by origin. A hotel that cannot show its numbers will struggle to argue it is compliant, even if it buys a lot locally. The permit threat also gives officials leverage over any hotel they choose to inspect.
The payment rule is the practical problem. Many large hotels buy on credit terms. Buying straight from farmers in cash, or routing credit purchases through a regional company, changes cash flow and back-office work.
Why it matters
Food and drink are a large cost line for resort hotels, and Bali’s international guests expect consistent quality. Imported beef, dairy, wine and specialist produce will stay imported. The pressure falls on the categories Bali can supply: rice, eggs, vegetables, fruit, chicken, pork and fish.
Bali’s hotel market is also flat on arrivals and adding luxury supply, as our Bali luxury pipeline analysis shows. A permit review is the last thing an owner needs in a tight year.
What it means for you
1. General managers: measure local share now
Ask purchasing to report the local share of each product group by volume, as the regulation does. Know your number before an inspector asks.
2. Executive chefs: shift the easy categories first
Rice, eggs, vegetables, fruit and fish are where Bali can supply most. Move those to local suppliers and keep imports for what the island cannot produce.
3. Finance: plan for cash or the regional company
Direct purchases from farmers must be paid in cash. Decide whether to buy through a regional company on credit, and build that into supplier terms.
4. Owners: put it in the operator’s reporting
Ask the management company to include local-product compliance in monthly reports. A permit review is an owner risk, even if the operator runs the kitchen.
FAQ
What is Bali’s local products rule for hotels?
Bali Governor Regulation 99 of 2018 requires hotels, restaurants and caterers to prioritise local products, with at least 30% local farm, livestock and fish products and at least 20% local industrial products by volume.
What happens to hotels that do not comply?
Governor Wayan Koster said on 23 October 2026 that they will get a first, second and third warning letter, followed by a review of their business permits.
Can Bali hotels still use imported food?
Yes. The regulation allows other sources when local farmers and industry cannot supply enough.
When will the warnings start?
The governor said they would come soon but gave no date and did not say how many businesses are affected.
