When foreign investors consider Indonesia, the decision is no longer limited to Bali. As tourism, real estate, and service industries expand eastward, regions such as Lombok, Sumba, and Labuan Bajo are increasingly positioned as alternatives for new business setups.
However, market potential alone is not enough. Business costs — including land acquisition, office setup, labor, licensing, and ongoing operations — play a decisive role in determining long-term profitability.
This article provides a comparative analysis of business costs in Bali, Lombok, Sumba, and Labuan Bajo, helping foreign entrepreneurs, PMA owners, and investors determine which region is the most affordable — and for whom — in 2026.
Key Cost Components for Foreign-Owned Businesses in Indonesia
Before comparing regions, it is important to understand the main cost categories relevant to PT PMA (foreign-owned companies):
- Land or property acquisition (lease or ownership structure)
- Office, villa, or commercial space rental
- Labor costs and minimum wage levels
- Licensing, permits, and compliance costs
- Infrastructure and logistics
- Operational and living expenses for expatriates
Each region differs significantly across these factors.
Bali: High Cost, High Liquidity Market
Property and Rental Costs
Bali remains the most expensive region:
- Prime commercial land and villas command premium prices
- Long-term leases are costly and competitive
- Office and retail rents continue to rise in southern Bali
Labor and Operations
- Higher average salaries compared to other regions
- Intense competition for skilled labor
- Higher marketing and operational costs
Business Outlook
Bali offers:
- Mature infrastructure
- Strong international demand
- High liquidity for exit strategies
However, Bali is no longer the most affordable option for new or cost-sensitive businesses.
Lombok: Cost-Efficient with Growing Infrastructure
Property and Rental Costs
Lombok offers:
- Significantly lower land and lease prices than Bali
- Availability of larger land plots
- Lower commercial rental rates
Labor and Operations
- Lower regional minimum wage
- Reduced competition for staff
- Lower daily operational expenses
Business Outlook
Lombok is ideal for:
- Hospitality and eco-resorts
- Real estate development
- Tourism-support businesses
It combines lower costs with improving infrastructure, making it one of the most balanced options.
Sumba: Low Cost, Long-Term Investment Focus
Property and Rental Costs
Sumba remains one of the most affordable regions:
- Low land acquisition costs
- Long lease terms available
- Limited competition for prime locations
Labor and Operations
- Very low labor costs
- Limited availability of skilled professionals
- Higher logistics costs due to remoteness
Business Outlook
Sumba is suitable for:
- Luxury eco-resorts
- High-end niche tourism
- Long-term, capital-backed projects
While affordable, Sumba requires strong planning and patience.
Labuan Bajo: Rising Costs with Strong Government Backing
Property and Rental Costs
Labuan Bajo has seen rapid cost increases:
- Land prices rising due to government focus
- Limited supply driving higher rents
- Premium pricing in tourism zones
Labor and Operations
- Moderate labor costs
- Increasing demand for skilled workers
- Logistics costs remain higher than Bali and Lombok
Business Outlook
Labuan Bajo benefits from:
- “Super Priority Destination” status
- Heavy infrastructure investment
- Strong tourism growth potential
Affordability is declining, but growth prospects remain strong.
Cost Comparison Overview
| Region |
Property Cost |
Labor Cost |
Operational Cost |
Overall Affordability |
| Bali |
High |
High |
High |
Low |
| Lombok |
Medium–Low |
Low |
Low |
High |
| Sumba |
Low |
Very Low |
Medium |
Medium–High |
| Labuan Bajo |
Medium–High |
Medium |
Medium–High |
Medium |
Which Region Is the Most Affordable?
There is no single answer for all investors:
- Lombok offers the best balance between cost, infrastructure, and scalability
- Sumba is the cheapest in terms of land and labor but requires long-term commitment
- Labuan Bajo is becoming more expensive but benefits from strong government support
- Bali remains premium-priced with limited cost efficiency
The “most affordable” region depends on business model, capital strength, and growth horizon.
Conclusion
Indonesia’s eastern regions offer real opportunities, but affordability must be evaluated strategically, not emotionally.
Foreign investors who align:
- Cost structure
- Market timing
- Regulatory readiness
will gain a competitive advantage in 2026 and beyond. Choosing the wrong location can lock your business into high costs for years.
Indoned Consultancy helps foreign investors with:
- Regional cost comparison and feasibility studies
- PMA setup and licensing
- Tax and operational structuring
- Long-term investment planning
Contact Indoned Consultancy today for a free consultation and identify the most cost-efficient region for your business in Indonesia.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
