Property Ownership
Ownership options for foreigners in Indonesia
For foreigners, there are essentially three options to legally acquire property in Indonesia:
Indonesian Nominee / Power of Attorney Agreement
PMA / Foreign Investment Company
Leasehold / Investment Option
Which option to choose? That depends on your personal situation.
Indonesian Nominee Power of Attorney Agreement
Foreigners are not entitled to hold 'ownership rights', known in Indonesia as the Right of Ownership (Hak Milik). Therefore it is important to have good connections with an Indonesian resident! Should you not have contacts, we will be happy to help you with that.
Required Documents
The Indonesian nominee must sign four documents with the foreign investor:
- Loan Agreement: This confirms that the foreigner has lent the purchase price of the land to the nominee.
- Right to Use Agreement: This enables the foreigner to use the land.
- Declaration Letter: Whereby the Nominee acknowledges the loan and the foreigner's intention to own the land.
- Power of Attorney: The nominee signs an irrevocable power of attorney that gives the foreigner full authority to sell, mortgage, lease or otherwise act on the land.
Founding a PMA (Penanaman Modal Asing)
The most important change in Indonesian investment laws came in 1997 when the government introduced the PMA (Penanaman Modal Asing or Foreign Investment Company). This allows foreign investors to set up a company in Indonesia, without having Indonesian partners.
The PMA can be 100% owned by the foreign investor. PMA companies may hold the right of ownership for a period of 25 years and must be renewed by the government.
What do you need to establish a PMA?
- Draw up the detailed business plan.
- Open a business environment: the request to investment in terms of foreign skills, expertise and novelty.
- Make your appropriate cash deposit at an Indonesian bank. The amount of a credit is based on the business and what capital is required.
- Show the real estate investment as an asset of the company.
Process Details
Your company and representations managed by you, your foreign directors, 2 permits in the first year after the company is established.
Leasehold Investment
A foreigner can obtain a leasehold title (Hak Pakai) with a title that lasts 25 years. This title can be extended by 30 years for a maximum of 55 years after which the leasehold returns to the original owner (landlord).
Lease Period
Fees / Taxes
Legalization of your transactions
We recommend that you seek total purchase and legal advice to fully verify all land rights, ownership/business matters and payment agreements, and to have all documentation for transfer of purchase or ownership drawn up by a reputable legal notary.
Our office in Lombok has extensive experience in ensuring that you receive all the answers to the best problems and legal advice!