setting up a hotel / resort business in indonesia

I'm interested at some point in the future in moving to Indonesia to start a business. If I wanted to open a homestay / small hotel business what would be the minimum amount of capital that I could get away with investing in order to be granted a visa? I read on the Indonesian embassy's website that there is no minimum investment amount required. In reality is this really the case? Does anyone know how much Mimpi manis for example cost to set up or any other small homestay/ small hotel businesses? The location I have in mind is in Sumatra, off the tourist track at present, in a rural area,but it won't be off the tourist track for long, and land is pretty cheap, I would have no problem in my Indonesian wife owning the land. I would want to set up a second business at the same time as reliance on tourism can be risky.

Any constructive comments would be great, I've lived in Indonesia before so I'm aware of the risks.

Hi Chris

It would be very difficult for me to say how much Mimpi Manis cost to set up as we built the business step by step. Over a period of a few years and I never really kept records of what I spent. I would go to Uk for a few months work, come back and build until the money ran out, then furnishing, etc. Also we are taling about 10 years ago since we started work on Mimpi Manis and costs have gone up a lot since then. Back then we were paying 75,000 for a truck of stone, or sand etc. I think it was about 17,000 for sack of cement.

I would say that even then what it cost in Lombok, was a hell of a lot lower than what I was seeing people were paying in Bali. I think a way to keep costs down is if you can be there to manage the building, not to do a "drop" price or contract for the whole job. Do it for the workers if you must, but personally having built our house on "drop price" and paying the workers on everything else a daily rate I would opt for the latter. I found that with a drop price they were anxious to get the work done as quickly as possible, to get paid and move on, not taking as much care as they should. Many jobs I had to get them to redo. When paying a daily rate they are more inclined to take their time and do it properly but they may drag the work out longer than needed. If you are around keeping an eye on things that is okay though. But the biggest thing is purchasing the materials yourself. We bought all the bricks, cement, stone, sand, iron, etc ourselves. the workers were paid just for their work.

Although that is not giving you any idea of costs that you were looking at I hope it is a help.

Gemma

Hello

At present Sasak people (not foreigners) pay around 400 juta for a nice house with ceramic and windows. It was about half this price 5 years ago and I am afraid it will be much more when the resort-building-rush will start after the opening of the international airport.

These are Lombok local prices, were economy is expected to boom. May be different in other parts of Indonesia, especially in remote areas (with the cost of transport).

Quote :

At present Sasak people (not foreigners) pay around 400 juta for a nice house with ceramic and windows

Sorry Lolo I don't know where you are getting that price from but it is crazy!

Most sasak people will not see 400 juta in their life time. (Approx$40,000)

I have done quite a lot of building in Lombok and can tell you the costs are a fraction of that.

My family has been building a small house on land they already own in Mataram for the past year or so- it has one bedroom (they will extend later), small living area, small mandi, "kitchen" (tiled bench and sink), and a verandah. It is about half the size of my 2 bedroom flat in Australia. It has tiled floors, no ceiling (yet), no plaster on walls (yet), glass windows, concrete verandah, shares power from the main house next door, and they have done much of the labour themselves. So far the cost has been around 70 Juta. Once it's finished it might be another 20 Juta, so approx 90 Juta all up. Suitable for a young Sasak couple with one small child.

Edit : I should mention that some of the materials have also been used fixing up another small house on the same land, maybe tiles, windows and new pan for the mandi.

Hello all !

Well I did not see this house so I don't know how beautiful it is ! But there seem to be rich people from Mataram moving near the sea. I will see in June
Another point of consideration is that "my place" is not really Lombok Here economy is very good and people have much more money than "Sasak standard".... Every year I come back and I see new nice houses instead of huts...

Anyway thank you Freogirl to give me this very important information. When time to build will start for me, I will make a survey about building costs in different areas of Lombok.

My friend house (not hut), built 4 ago, with 4 rooms and nice roof was priced around 40-50 Juta. Last year he built toilets and kitchen for 2 Juta, this year he added windows and veranda for 18 Juta, so we are far from these 400 Juta... But building hotel and building sasak house is not same, this is why I gave this reference of price

Hi Lolo
I guess it depends on what sort of place the OP was thinking of building. If he was going for traditional huts with basic but comfortable rooms similar to say Santai Beach Inn, or some of the places on the Gilis, then the building cost can still be pretty low. The more 'western' the room has to be, the more expensive. Start adding air-con, hot water, power metres to handle , and so on and it starts to add up. I wonder what the bungalows cost Beach Club Senggigi to build? That is pretty recent and they are really nice - mix of traditional but with the mod cons.
Freo

Hello Freogirl

Yes, you are right ! The only problem with Sasak house is that they are too dark, so large windows are very important, especially when you have a good panorama

Anyway you give me some hope that building a small resort may not need for me to save money during so many years... For sure I will study carefully the prices of building later (now I finish to pay my land first )