What hurdles for starting a business that will hire locals

You'll probably have to start a PT PMA company - think the minimum investment is about Rp10  billion or about Aus$ 978,000

Thanks Fred,

I thought I read that elsewhere. AUD $1 Million startup equity is out of my reach.  I have heard of some places that have started quite small and worked it up over a few years...

Are there other options?

Not that I'm aware of but I've never seriously looked past the PT company investment and that was only in order to answer a question on this forum some time ago.
It's done to protect local workers and local small business owners, the idea being, if a company is viable, it should be run by an Indonesian.

You might be better off consider a partnership with an already existing dive operation in eastern Bali interested in expanding to Lombok, or to keep your eye out for an existing dive operation that might be for sale. 

As a suggestion, you might consider contacting John Huxley at Eco Dive in Amed.  He's been around since 1997, and he is a GREAT guy who is always willing to help others out.   

Believe me, there is NOTHING easy about starting a new company here in Indonesia...even when 100% of the staff is going to be locals.   

Good luck.