Guarding Bali's Economy: Lessons from Saudi Arabia's War on Tasattur
By : Ahmad Dumyathi Bashori
Senior Lecturer at Faculty of Economics and Business (FEB) UIN Syarif Hidayatullah Jakarta
Former Hajj Consul (2014-2018) at the Consulate General of Republic of Indonesia (KJRI) Jeddah
Bali Governor I Wayan Koster delivered a fresh salvo in the fight against hidden foreign ownership: his administration has delisted 18 business categories from the government's Online Single Submission (OSS) licensing system, closing a loophole that let foreign-owned operators register under low-risk classifications to dodge the capital requirements normally imposed on them (The Jakarta Post, July 25, 2026). The move follows last year's disclosure that more than 400 car rental and tour businesses in Badung regency were controlled by foreign nationals, many without so much as a physical office on the island. Together, the two episodes reveal an uncomfortable truth: what looked like a booming local tourism economy was, in significant part, an economy borrowed from Bali's own residents and quietly repatriated abroad.
Indonesia is not the first nation to confront this problem. For decades, Saudi Arabia grappled with tasattur tijari, or commercial concealment, in which expatriates ran shops, restaurants and service businesses under the names of Saudi citizens who lent their identity for a fee. Profits flowed out of the kingdom, ownership opportunities were denied to citizens, and the credibility of Saudi regulation eroded, until Riyadh launched what it openly called a "war on tasattur." Bali's crackdown, if it is to succeed, needs the same clarity of purpose: this is not a bureaucratic tidy-up, but a defense of economic sovereignty.
The Hidden Costs
Nominee-style arrangements are corrosive in ways that go beyond the individual violation. Profits repatriated abroad shrink the multiplier effect that would otherwise circulate through local suppliers, landlords and labor. Genuine local entrepreneurs face lopsided competition against foreign operators with deeper capital and international networks. And each unpunished violation chips away at the credibility of Indonesia's investment law itself, turning regulation into a suggestion rather than a rule. Left unaddressed, this dynamic risks reducing Bali to an enclave economy: locals employed in, but no longer owning, their own island, with the cultural cost of an authenticity hollowed out for an economy staged for outsiders rather than sustained by its own community.
What Riyadh Did Differently
Saudi Arabia's campaign worked because it combined four elements Indonesia has so far applied only partially. First, real deterrence: heavy fines and prison terms for both foreign operators and the citizens who lent their names. Second, digital transparency: mandatory e-invoicing and online licensing that made concealment structurally harder to sustain, precisely the kind of loophole Koster's OSS delisting is now trying to close. Third, an alternative: financing and training schemes that gave citizens a real path to ownership, not merely a threat of punishment for foreigners. Fourth, and most important, framing: tasattur was cast not as petty fraud but as a threat to national sovereignty, making compliance a matter of pride rather than paperwork.
Bali's delisting of 18 categories is a genuine structural step forward, the first time Indonesia has attacked a licensing loophole itself rather than chasing individual violations storefront by storefront. But an administrative order alone will not survive without the other three legs of the Saudi model: consistent enforcement with real penalties, digital verification of ultimate beneficial ownership rather than business licenses alone, and financing that lets Balinese entrepreneurs actually fill the vacuum, rather than watching foreign capital simply migrate to the next unregulated category.
Beyond Bali
The temptation is to treat this as an island-specific problem. It is not. Jakarta's restaurants, retail outlets and creative industries sit inside the same OSS system and the same industrial classifications that Bali's foreign operators exploited; Lombok and Labuan Bajo, following Bali's tourism trajectory by several years, are simply earlier in the same cycle toward foreign-run enclaves. A crackdown confined to one province will only push the practice sideways. This must become a national reform of licensing architecture, not a provincial circular.
None of this is a rejection of foreign capital, which Indonesia still needs for infrastructure, technology and industrial growth. The distinction that matters is not between foreign and domestic, but between transparent and concealed. Investment conducted openly, under the rules that apply to it, strengthens the economy. Investment smuggled in under someone else's identity does the opposite: it substitutes intrusion for participation, however clean its paperwork looks on the surface.
Sovereignty in the marketplace deserves the same seriousness Indonesia gives sovereignty in its politics and its borders. Saudi Arabia's experience shows that a sustained campaign of fines, digitization and citizen empowerment can genuinely shift who owns a country's small businesses. Indonesia has just taken its first comparable step. Whether it grows into a war on concealed ownership, or fades into a headline once Koster's task force moves on, will depend on whether Jakarta extends the same logic nationally, and whether financing for local entrepreneurs arrives as fast as enforcement does.
Bali's beaches, cafes and villas will keep filling with capital regardless of who signs the paperwork behind them. The delisting quietly poses a sharper question than compliance: when the profits from this island's beauty are counted at year's end, in whose account do they actually land? A nation that cannot answer that question for its own tourism capital has not secured its economic independence; it has only rented the appearance of one. Indonesia now holds the tools Saudi Arabia once lacked, and the precedent Riyadh has already proven can work. What remains untested is not the method, but the will to carry it beyond a single press conference, and turn a delisting into a declaration: that in Indonesia, the archipelago's wealth answers to no name but its own.
