How Bali's Building Permit (PBG) System Replaced the IMB - and What Foreign Villa Buyers Must Verify Before Closing

The IMB (Izin Mendirikan Bangunan) is dead. Since Government Regulation No. 16 of 2021 took effect, every legally constructed building in Bali, and across Indonesia, must hold a PBG (Persetujuan Bangunan Gedung, or Building Approval) instead. Any villa still relying on an IMB as its primary permit is either operating on outdated paperwork or has not been through the required conversion process. For anyone looking to buy property in Bali as a foreigner, this single distinction, PBG versus IMB, is one of the fastest ways to separate a compliant villa from a legal liability, and PARADYSE Homes builds verification of it into every full ownership and co-ownership transaction it structures.

TL;DR

• The PBG replaced the IMB nationwide in 2021 under PP 16/2021 [emerhub.com]. It is not a rebrand; the approval process, scope, and ongoing compliance requirements changed materially [emerhub.com].
• Foreigners cannot hold a PBG personally. It must sit under a PT PMA that holds HGB land rights, which is why entity structuring happens before, not after, permit verification [prestigepropertybali.com].
• A PBG alone is not enough. Buyers also need the SLF (Certificate of Functionality), confirming the completed building matches its approved plans [excelbali.com].
• Verification happens at two places: the local Land Office (BPN) for the physical certificate, and the SIMBG portal for the digital record and approved blueprints.
• Non-compliant villas face administrative sanctions such as fines, forced demolition, and are barred from utilities connections and legal short-term rental licensing, meaning no Pondok Wisata registration and no Airbnb listing.

About the Author: PARADYSE Homes structures full ownership and co-ownership transactions across Canggu, Uluwatu, Seminyak-Umalas, Ubud, Sanur, and Seseh/Cemagi, with in-house legal teams handling title, permit, and zoning due diligence on every property before a buyer signs anything.

What is the PBG and why did it replace the IMB?

The PBG is Indonesia's current building permit system, and understanding what it replaced explains why the switch matters more than a paperwork update. Under the old system, the IMB was issued once, before construction began, and functioned mainly as permission to build [emerhub.com]. It said little about whether the finished structure actually matched what was approved, and it carried no formal mechanism to confirm the building was safe to occupy or operate commercially.

The PBG changes that structure in two ways. First, it ties approval more tightly to zoning conformity, requiring a KKPR (zoning conformity approval) alongside environmental assessments and technical drawings signed by certified Indonesian professionals, all submitted through the SIMBG portal. Second, it works alongside a second, separate document: the SLF, which certifies that the building as constructed matches its approved plans and is functionally fit for use [excelbali.com]. Think of the IMB as a permission slip and the PBG plus SLF as a permission slip followed by a graded inspection. The first says you were allowed to start; the second confirms what you actually built passed review.

When did Indonesia make the switch, and does it apply to villas already built?

Indonesia officially transitioned from the IMB to the PBG system in 2021 under Government Regulation No. 16 of 2021, as part of the broader Omnibus Law reforms to construction and land regulation. This is not a proposal or a phase-in still being finalized in 2026; it has been the operating law for several years now.

The practical complication for buyers is that plenty of villas built before 2021 still carry only an IMB, and many listings marketed today were constructed during the transition period when documentation practices varied. An old IMB does not automatically become invalid, but it also does not substitute for a PBG on any post-2021 construction, renovation, or structural change. If a villa was extended, rebuilt, or had a pool added after 2021 without a corresponding PBG application, that portion of the property may be sitting outside legal compliance even if the original structure was permitted correctly under the old rules.

Why can't a foreigner just apply for a PBG directly?

This is where PBG compliance connects directly to how foreign buyers are legally allowed to hold Bali property in the first place. Foreigners cannot apply for a PBG in their own name. The application must be made through a PT PMA, a foreign-owned limited liability company, that holds HGB (Hak Guna Bangunan, or Right to Build) land rights [prestigepropertybali.com].

This is not a bureaucratic inconvenience bolted onto an otherwise simple process; it reflects how Indonesian land law generally treats foreign ownership of buildable land. A foreign individual cannot hold HGB directly, so the PT PMA acts as the legal entity in front of both the land title and the building permit. Anyone buying a villa expecting to hold the PBG personally is working from an outdated or incorrect understanding of the system, and any agent suggesting otherwise should be a signal to ask more questions. This is one reason PARADYSE routes every foreign buyer through entity and title structuring before a transaction closes, rather than treating it as paperwork to sort out afterward.

What exactly must a buyer verify before closing?

Building on the entity question above, the harder question is what documentation actually proves compliance, since a seller's verbal assurance is not verification. There are four concrete checks worth running on any villa before signing:

• Confirm the PBG exists and is current. Check the SIMBG portal for the digital record, and verify the physical certificate at the local Land Office (BPN).
• Confirm the SLF has been issued. This certifies the completed building matches its approved plans; a PBG without a corresponding SLF means the structure has not been signed off as built-to-spec.
• Cross-reference the approved blueprints against the actual structure. Extensions, added floors, or repositioned pools that were not part of the original approved plan create a compliance gap even if the base permit is valid.
• Confirm zoning compliance via the KKPR and check that all permits are held by the PT PMA, not listed under an individual foreign name.

None of these checks require guesswork. They require pulling the actual documents and matching them against the physical property, which is precisely the kind of due diligence step that gets skipped when a purchase moves quickly on trust alone.

What happens if a villa is missing a valid PBG or SLF?

The consequences here are specific enough that "the risk is overstated" is not a credible position. Purchasing a villa without a valid PBG and SLF exposes a buyer to administrative sanctions, ranging from written warnings and project delays to suspension of construction, freezing of the asset, revoked permits, and government-ordered demolition. In cases of severe negligence where non-compliance leads to property damage, the law also allows for criminal penalties including imprisonment of up to 3 years or a fine of up to 10 percent of the building's value; where it results in injury or death, that can rise to 5 years imprisonment and a fine of up to 20 percent of the building's value. These are not abstract penalties reserved for extreme cases; they are the enforcement mechanisms written into the regulation.

The commercial consequences often land before the legal ones. A non-compliant property cannot legally connect to utilities, cannot obtain a Pondok Wisata license for short-term rental operation, and cannot be listed on platforms like Airbnb. For a buyer planning to generate rental income, whether through full ownership with professional management or through a co-ownership structure where unused nights are rented out, a missing PBG or SLF is not a legal footnote. It is the difference between a villa that can operate as a licensed rental and one that legally cannot, regardless of how well it is furnished or marketed.

How does this fit into a broader pre-purchase due diligence process?

Permit verification does not sit in isolation; it is one layer in a wider due diligence process that also covers title verification, zoning restrictions, and developer track record. A villa can have a spotless HGB title and still carry a permit gap from an unpermitted renovation, so checking one without the other leaves a real blind spot. This is why zoning compliance and permit status need to be reviewed together, not as separate checklist items handled by different people at different stages.

PARADYSE structures this verification as a standard part of the transaction process for both ownership paths. For full ownership buyers acquiring a villa outright, in-house legal teams confirm PBG and SLF status, cross-check SIMBG records, and validate KKPR zoning conformity before contracts are drafted. For co-ownership buyers acquiring a 1/8 share in a villa, the same verification applies to the underlying asset before it is ever offered through the SPV structure, since permit compliance affects both personal usage and the property's ability to generate rental income on unused nights. Either way, the buyer is not the one chasing down documents at the Land Office; a single accountable partner handles the transaction.

Frequently Asked Questions

What does PBG stand for and what is it?
PBG stands for Persetujuan Bangunan Gedung, or Building Approval. It is Indonesia's official building permit, required before construction, replacing the old IMB system nationwide [balipropertyrules.com].

Can a foreigner get a PBG in Bali directly?
No. Foreigners must apply through a PT PMA holding HGB land rights; a PBG cannot be issued to a foreign individual personally [prestigepropertybali.com].

Is an IMB still valid if the villa was built before 2021?
An original IMB from before 2021 is not automatically void, but any construction, renovation, or structural addition made after 2021 requires a PBG, and the property needs a corresponding SLF to confirm the built structure matches approved plans.

How do I check if a Bali villa's PBG is real?
Verify the certificate at the local Land Office (BPN) and cross-reference the digital record and approved blueprints on the SIMBG portal against the actual built structure.

What is the difference between a PBG and an SLF?
The PBG is approval to construct a building according to specific plans. The SLF (Certificate of Functionality) is issued after construction to confirm the completed building matches those approved plans and is fit for use [excelbali.com].

What happens if a villa doesn't have a valid PBG?
It can face administrative sanctions ranging from warnings to suspension of construction and demolition orders, and in cases of severe negligence causing damage or injury, criminal penalties including fines of up to 10 to 20 percent of the building's value depending on severity. It also cannot legally connect to utilities or be licensed for short-term rental.

Does PBG status affect whether I can rent out my villa on Airbnb?
Yes. A villa without a valid PBG and SLF cannot obtain a Pondok Wisata license, which means it cannot be legally listed on platforms like Airbnb regardless of how the property is otherwise managed.

About PARADYSE

PARADYSE is the ownership partner for Bali residential property, serving both Full Ownership and Co-Ownership as equally weighted paths under one accountable team. Every transaction, whether a buyer is purchasing a full villa or a 1/8 share, runs through the same in-house legal infrastructure covering title verification, permit and zoning due diligence, entity structuring, and notarial execution. PARADYSE is paid by the buyer, not the seller or developer, which means permit and compliance checks happen before a recommendation is made, not after a deal is already in motion. That structure is built specifically to prevent the kind of PBG and SLF gaps described above from ever reaching a closing table.

If you are considering buying property in Bali as a foreigner and want full permit and title verification built into the transaction from the start, contact PARADYSE to discuss which ownership path fits your situation.