Bali’s idyllic beaches and breathtaking scenery may be enough to entice holidaymakers, but its the emerging start-up ecosystem and low overhead costs that are pulling in swathes of entrepreneurs.

The Indonesian island is home to a growing number of coworking spaces and regular events that focus on entrepreneurship, tech, and innovation. Perhaps unsurprisingly, Bali hosts one of the world’s largest remote work conferences, Running Remote.

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“Bali is an incredibly exciting place to be. We have a plethora of coworking spaces, events, access to super talented and experienced people, and social and business networks,” says Lavinia Iosub, the managing partner of Liv.It, a hub for disruptive businesses building sustainable remote work structures. 

Entrepreneurial fabric

Bali’s entrepreneurial layers are distinctly made up of two cohorts: native entrepreneurs, who are somewhat limited by the constraints of the local market, and expatriates, who can plug into knowledge and funding overseas. 

The island’s economy relies mostly on tourism and agriculture, and it is unsurprising that these industries are heavily interwoven with the island’s entrepreneurial fabric.

“Transportation, hospitality, agriculture, education, food and waste management are the most common things you hear at every start-up pitching event,” says Vitto Christaldi, a project manager at the Coworking Indonesia Association.

“The reason why most start-ups are focused on these sectors is because these are the main challenges that we have on the island,” he adds. 

Indonesia has a well-documented problem with plastic and waste management. This also helps to explain Bali’s heavy focus on green initiatives, ranging from campaigns such as ‘Bye Bye Plastic Bags’, all the way through to companies including Avani Eco, which produces sustainable packaging and hospitality products made from renewable and fully compostable natural ingredients. 

Thanks to the remote working opportunity, dropshipping is also gaining momentum among Bali’s expats, particularly in Canggu, a resort village on the island’s south coast. Dropshipping is a fulfilment method which entails sourcing products, typically via the Chinese e-commerce platform AliExpress, and selling them to European or American consumers at a profit. 

Living and working in Bali

Expats are further swayed by Bali’s affordable living standards. A homestay, a private studio apartment with a shared kitchen and pool, can cost as little as $300 a month.

Thanks to improvements and the introduction of 4G and fibre optics in recent years, connectivity and paradise are not mutually exclusive. Wi-Fi is readily available in hotels and cafes, and although connectivity varies by location, it is usually better in the south and central part of the island, says Mr Christaldi, adding that many internet providers in Bali are now offering speeds of up to 100Mbps. 

Despite the obvious advantages, entering the Indonesian market is not always cheap, especially for expats. “There are legal requirements for registering a foreign-owned business or building a startup. For example, the minimum capital investment is Rp10bn ($700,000), with 25% of that needing to be paid upon company registration,” Ms Iosub explains. 

Those seeking to work in Bali must also take into account visa and permit requirements.

Small fish in a big pond

It would be a mistake to look at Indonesia’s start-up ecosystem as a whole, as there are clear differences between its many islands and provinces. 

Developed hubs such as Jakarta — home to various unicorns including ride-hailing service Gojek, travel tech business Traveloka and e-commerce giant Tokopedia — benefit from the support of large corporations and the existence of a healthy funding environment, and attract the bulk of the country’s venture capital investment. 

In stark contrast, Bali’s entrepreneurs are being held back by a lack of funds.

“There’s still a trust issue when it comes to investors backing non-hospitality businesses in Bali,” explains Mr Christaldi.

“There’s still a stigma. People think that because Bali is where you come to relax, entrepreneurs don’t work as hard as those living in big cities,” he says.

For decades, presenteeism has been synonymous with productivity. Thanks to technology and the rise of flexible working, some employers (and employees) have quickly realised that environmental cues can have a considerable impact on creativity and productivity at work. In fact, a 2019 study by Oxford University’s Saïd Business School found that happy workers were 13% more productive — dispelling the myth that productivity is solely confined to offices or corporate culture.

Thinking globally

A research project led by Bain & Company, in collaboration with Google and Temasek, forecasts that the south-east Asian internet economy will grow to $100bn by 2025 — but in Bali’s case, its shortcomings must first be addressed.

The lack of local funding is hurting the ecosystem in more ways than one. Not only is it hindering the creation of homegrown companies, it is also perpetuating the lack of scalable projects targeting global markets. 

A business idea may be born in Bali, but if it is to get off the ground, the likelihood is that it will need to look for funding elsewhere. 

“It’s a lot easier for start-ups to validate their products and get traction in Jakarta than it is in Bali,” states Melvin Hade, a partner at Global Founder Capital.

David Soukhasing, managing director at Angin — Indonesia’s first and largest investment network — says access to suppliers, business partners and talent also needs to improve. Mr Soukhasing would also like to see greater support at the angel investor level: “The money is there, we just need additional capacity and vehicles to channel it to local entrepreneurs.”

A change in mindset is also necessary. “We need to help entrepreneurs think beyond the island, to build scalable products that could work at the archipelago level and abroad,” he continues. Incubators and leadership networks could prove crucial here. 

There is also the issue of talent drain. “Local developers should be encouraged to remain in Bali and not move to Jakarta or Jogja,” Mr Soukhasing adds. Many leave enticed by the higher salaries available elsewhere.

To continue feeding the talent supply, technology and innovation need to come to the fore as attractive fields of study. Considering that the government is motivated to bolster the area’s digital economy, it seems only natural that these sectors will soon compete on par with more traditional employers, such as hospitality and business management. 

The symbiotic relationship between locals and expats could spell further improvements for the island’s talent pipeline; with foreigners creating jobs for and and training the local workforce.

For Bali to become a serious player in the country’s tech development vision, it must shed its ‘vacation island’ reputation and tap into the opportunities for scale in nearby markets.

As remote work becomes more normalised, the island is uniquely positioned to attract a new wave of digital nomads and entrepreneurs seeking to work in beautiful surroundings and enjoy a quieter pace of life — now it just needs to become a logical choice for those wanting to build a solid entrepreneurial career and create scalable solutions at a fraction of the cost.

This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.