Bali governor warns hotels and restaurants over failure to use local products

In brief: On 23 October 2026, Bali Governor Wayan Koster said he would step up enforcement of existing local-product requirements in the hospitality sector. He outlined a warning process that could lead to a review of a business's operating permit, but no individual permit withdrawal was announced.

The 2018 rule sets different thresholds for different goods

Hotels, restaurants and catering businesses in Bali have been covered by Governor Regulation No. 99 of 2018 for years. Article 13 requires them to prioritise locally produced agricultural, fisheries and industrial goods. Its thresholds are based on the volume required within each product category, not a percentage of a hotel's total purchasing budget.

Local crops, horticultural products and fish each have a minimum share of 30%. Locally produced livestock products must account for at least 30% of hotel and restaurant requirements, while local industrial goods have a 20% threshold. The regulation also allows businesses to source elsewhere when Bali's farmers or local producers cannot meet the stipulated quantities.

That exception makes the availability of local supply relevant to any assessment of compliance. An imported ingredient, on its own, does not establish that the operator has broken the rules.

Koster signals three warnings followed by a possible permit review

Speaking at the Temu Wirasa Bank Indonesia Bali event in Denpasar on 23 October, Koster said some hospitality operators were still failing to follow the existing regulation. He proposed issuing first, second and third written warnings, known as SP1, SP2 and SP3. Continued refusal to use Bali products could then prompt officials to reconsider the operator's permit.

The governor did not identify the hotels, restaurants or cafés concerned, give a number of alleged offenders, or announce a start date for the warnings. His remarks describe an enforcement intention, not a newly enacted local-sourcing law or evidence that permits have already been revoked.

Article 29 of the 2018 regulation provides for administrative sanctions but leaves their form and procedure to other applicable legislation. It does not, by itself, establish automatic permit cancellation at a specified sourcing shortfall. The three-warning sequence comes from Koster's latest statement.

Purchasing records may become more important for operators

Businesses reviewing their exposure should distinguish product volumes from spending totals and be able to trace which purchases meet the local-origin criteria. Where supply from Bali producers falls short, purchase records and evidence of the shortfall may be relevant. The regulation also covers partnerships with local suppliers, extending the issue beyond menu descriptions.

The announcement could make the hospitality market more accessible to Bali farmers, fishing businesses and manufacturers if the proposed enforcement materialises. Yet the governor's comments create no guaranteed purchase orders or higher prices. Any action against a particular business would still require an assessment of its conduct under the applicable legal process.