On Monday, January 20, 2024, PARQ Ubud formally ceased operations after receiving temporary closure notices in November 2024. This decision was reached by local authorities following a detailed investigation.
Illegal Development: The ROOT of the Problem
PARQ Ubud, once a popular residential and creative center, faced closure due to its illegal development. The complex was found to be constructed in violation of various local and national business, construction, and environmental laws.
Andrej Frey: The Target
Andrej Frey, a German national and the founder of PARQ Developments, was arrested on January 24, 2024. He stood behind PARQ Ubud, one of the most prominent properties in the complex.
High Stake of Land Ownership
The documents revealed that Frey owned 34 certificates of ownership for the plots making up the PARQ Ubud site, which covered 1.8 hectares. Indonesian law classifies this area as Zone 1 Protected Rice Field Land (LSD) and Sustainable Food Agriculture Land (LP2B), Zone 3 as plantation land, and designated it a tourism zone.
The Bali Police and Their Investigation
Bali Police Chief, Daniel Adityajaya, spoke at a press conference, confirming Frey’s illegal transfer of land functions. According to him, parts of the site, including villas, spa centers, and animal farms, were under construction without the required permits and environmental impact assessments.
“In the P1 zone, there are villas, spa centers, and animal farms that are still under construction. After being excavated, it turns out that the land is a transfer of sustainable agricultural land,” stated Adityajaya.
Environmental Impact and Lost Productive Land
The implications of Frey’s actions extend beyond the mere closure of PARQ Ubud. He was held responsible for converting critical agricultural land into a commercial project.
The Gianyar Regency Government reported a significant loss of productive land due to Frey’s actions. The area initially designated for rice cultivation and agriculture turned into a tourist attraction, leaving 1,845 hectares out of a total of 1,752 hectares unproductive.
Frey had held multiple directorial positions in the companies associated with the development, including PT Parq Ubud Partners, PT Tomorrow Land Development Bali, and PT Alfa Management Bali. The legal framework of Bali is stringent, and foreign companies are gradually falling under its scrutiny. The development’s illegal expansion was first detected by immigration officials in April 2023, when they suspected visa misuse by residents. However, the initial inspection did not result in any legal action. The legal investigation gathered momentum in November 2024, following which closure notices were issued. Despite numerous stages of inspection and warnings, the project’s proponents continued to ignore regulations. The closure and arrests have underscored the ongoing conflict between hypothetical real estate developments and local regulations in Bali. The island, famed for its natural beauty, faces growing pressure to protect its agricultural lands and ecosystems. PARQ Ubud’s closure may set a precedent for how local authorities handle foreign-owned projects in the future. With an aim to curtail rapid urbanization and conserve valuable agricultural resources, authorities are likely to scrutinize the regulatory compliance of other developments. The arrests and subsequent closures indicate a broader crackdown on non-compliant international investments. Planning, zoning, and construction laws are being enforced more rigorously, potentially leading to similar actions against other developments. This trend comes as part of a wider initiative to preserve Bali’s natural beauty and sustainable resources, ensuring that the island remains a desirable destination not just for tourism, but also for other economic activities. PARQ Ubud was colloquially known as the ‘Russian Village,’ attracting a significant number of Russian investors. While this nickname highlighted the investment demographics, it also underscored the complex’s dependency on foreign capital. The nickname also serves as a cautionary tale, emphasizing the need for international investment to adhere to local laws and regulations to ensure sustainable growth. The decision to close PARQ Ubud and arrest its director has garnered mixed reactions in the local community. While some welcomed it as a step towards preserving agricultural lands, others expressed concerns about job losses and the potential impact on local businesses. The complex housing a 103-room hotel, residences, co-working spaces, gyms, restaurants, and event venues will likely cause disruptions in the community. The arrests and shutdown of PARQ Ubud signal the authorities’ commitment to enforcing regulations. Cok Ace’s comments reflect ongoing efforts to level the playing field for local businesses and protect the environment. Bali’s regulatory frameworks, including the Public Order and Public Order Regulation No. 15 of 2015 require all businesses to obtain necessary permits and pay taxes, ensuring fair competition and sustainable development. The closure of PARQ Ubud and the arrest of its director serve as a significant milestone in Bali’s efforts to regulate and protect its natural resources from unauthorized development. As the island continues to grow as a tourist destination, such actions will likely become more common. For international investors, it underscores the necessity of understanding and adhering to local laws to ensure the longevity and profitability of their projects. Share your thoughts on this development and its implications for the future of tourism in Bali. Join the conversation below or subscribe to our newsletter for more updates on Bali’s regulatory changes and sustainable initiatives.
The Legal Hurdles
Investigational Journey
Typical Real Estate Conflicts
Implications for International Investors
Potential Wave of Closures
The Local Nickname: ‘Russian Village’
Community Reaction
Ensuring Compliance in Bali
Final Thoughts
