A new government regulation has been implemented and has promised a legal breakthrough that would allow foreigners to own property in Indonesia, albeit restricted to condominiums only. In the past, efforts to open the property market to foreigners were hampered by the prohibition on land ownership, which would remain intact as demanded by existing laws.
Foreigners could hold Property for 60 years with the possibility of extending them by another 60 years, “There is a good chance for extending the certificate for another 60 years, Under present rules, foreigners may lease property for 25 years that can be extended for further periods of 25 years and 20 years, or 70 years in total. Unlike the right to lease, this Certifacate can change hands and can be traded.
There are three common practices open to foreigners for buying in Indonesia:
A. Nominee Agreement through an Indonesian representative
It is common practice to have an Indonesian representative acquire land for the foreign buyer. Ownership of land must be transferred from the previous owner to the Indonesian representative. For the foreign buyer's security, three agreements must be entered into with the Indonesian representative such as :
1. Loan Agreement.
2. Irrevocable Power of Attorney.
3. Permanent Right of Use Agreement.
B. Property Acquisition Through Foreign Company ( Penanaman Model Asing (PMA)
PMA is a “status of doing business” in Indonesia. A PMA company has 30 years to operate after formation. It can be granted additional 30 years, and another 30 years, if it expands its project through additional investment. This can be 100% controlled by a foreigner.
The Right to Build (Hak Guna Bangunan – HGB) is available to PMA companies. The right to build or construct on land is valid for 30 years. This can be extended for an additional 20 years, and even for another 30 years after that.
To set up a PMA company you will be required to:
Submit a detailed business plan.
Minimum capital required is US$ 300,000
Operate in a business environment that adds value to Indonesia in terms of foreign skills, employment and environmental benefit.
The process takes approximately 1 to 2 months and once completed the company can apply for work permits for the foreign directors, Foreign Employees in the first year of operation. The cost of setting up is around US$ 4,000.
C. Leasehold
It is important to hire the services of an Indonesian lawyer and Surveyor to assist with the transaction. The land transactions must take place at the Public Notary's office. There are registered and unregistered lands in Indonesia. The Basic Agrarian Law of 1960 governs certified land, which is registered at the local land office. Unregistered land, Adat land, is community-owned. An examination of the land certificate being bought is important. The whole process of registering property involves seven procedures and takes around 35 days to complete. We will assist you and will DO ALL THE DUE DILIGENCE FOR YOU AND GAURANTEE YOU GET WHAT YOU WERE PROMISED.
