An Examination of the Economic and Political Factors That Influence the Success of Foreign-owned Businesses in Bali

Abstract

Globalization made easier for foreigners to establish a business in a more attractive country with higher returns and with wider accessibility. Emerging countries need foreign capital to grow and they attract foreign entrepreneurs with incentives and a business-friendly environment, while foreign entrepreneurs look for a suitable developing country, where their business could positively grow. Indonesia, and in particular Bali, is a destination for many foreigners who wish to set up a successful business there. The factors, which play a role in the success of these businesses, analyzed prior to the research shows that they are identified in the same factors present in the PESTEL Analysis, hence the political, economic, social, technological, environmental, and legal factors. These factors are validated through semi-structured interviews with the chief operating officer of a business consulting company, and with foreign business owners settled in Bali. The data analyzed, through a thematic research analysis, showed that many are the determinants of foreign businesses success in Bali: monetary incentives, taxation benefits, a low-risk political climate, culture, market size, and geographical location. Other conflicting factors present in the data show that Bali is going through issues related to foreigners which might impact foreigners settled in Bali in the future. Though, the positive results outweigh the uncertain negative ones, showing that Indonesia, and Bali, is a business-friendly country favored by its economic and political factors that bring success to foreign businesses. Keywords: globalization, foreign investment, emerging markets, Bali, Indonesia, PESTEL analysis, business success, political stability, cultural factors, economic incentives