Indonesia’s central government has opposed Bali’s proposed Airbnb ban, citing tourism and SME risks, while highlighting long-standing tensions between local regulation and national tourism policy.
Indonesia’s central government has moved to counter proposals from Bali’s local authorities to restrict or ban short-term rentals offered through platforms such as Airbnb, warning that an outright prohibition could undermine tourism recovery, small-business livelihoods, and national economic objectives.
According to reporting by The Economic Times, senior officials in Jakarta have publicly defended the role of licensed short-term rental platforms in supporting Indonesia’s tourism ecosystem, particularly in Bali, the country’s most important international destination. The central government stressed that platforms like Airbnb contribute to accommodation capacity, diversify the tourism product, and generate income for local households and micro-entrepreneurs.
The renewed debate follows calls by Bali officials for tighter controls or a potential ban on short-term rentals, driven by concerns over unregulated accommodation, housing affordability for residents, zoning violations and pressure on local communities. Bali has repeatedly argued that the uncontrolled growth of villas and private rentals has distorted the island’s tourism balance and weakened compliance with local regulations.
Long-standing policy tensions between Bali and Jakarta
The dispute reflects a broader, long-running tension between Bali’s provincial government and Indonesia’s central authorities over tourism governance. While Bali has sought stricter local controls to preserve cultural identity, manage overtourism and protect residential areas, Jakarta has traditionally prioritised national tourism growth, investment openness and employment generation.
In previous years, Bali introduced measures such as temporary moratoriums on new hotel and villa developments, stricter licensing requirements, and calls for more vigorous enforcement of illegal rental laws. The central government, however, has consistently favoured regulation over prohibition, arguing that bans could discourage investment, reduce transparency and push activity into informal markets.
Officials in Jakarta have reiterated that the appropriate approach is stronger registration, taxation and enforcement mechanisms rather than blanket bans. They emphasised that digital platforms should be integrated into the formal economy through licensing, data sharing, and compliance with zoning and tax rules, thereby aligning local priorities with national tourism policy.
Implications for Indonesia’s tourism sector
The government’s position comes at a critical time as Indonesia works to sustain post-pandemic tourism growth and attract higher-quality, longer-stay visitors. Bali remains central to this strategy, accounting for a significant share of international arrivals and tourism revenues.
Industry stakeholders warn that abrupt restrictions on short-term rentals could disrupt accommodation supply during peak seasons, drive up prices, and reduce competitiveness relative to regional destinations. At the same time, policymakers acknowledge the need to address community concerns, protect housing stock and ensure that tourism development remains sustainable.
The debate is expected to continue, with Jakarta signalling openness to dialogue with Bali authorities on stricter regulation frameworks. For now, the central government’s stance underscores Indonesia’s preference for balanced oversight rather than bans, aiming to safeguard tourism growth while gradually tightening controls on short-term accommodation.