Can Investors buy and own land in Indonesia?
The investors can buy and own land in Indonesia for a specified period of time by means of the following rights:
- The Right of Exploitation (Hak Guna Usaha or HGU) is granted for a period of not longer than 25 years and could be renewed for 25 years. To an enterprise/ a corporate bodies that needs a longer period, HGU for not longer than 35 years may be granted.
- The Right of Building (Hak Guna Bangunan or HGB) is the right to build and to own buildings on land which is not ones property for a period of not longer than 30 years and can be extended by a period not longer than 20 years.
- The Right of Use (Hak Pakai) is the right to use and/ or to collect the product, from land directly controlled by the state, or land owned by the other persons which gives the rights and obligations stipulated in the decision upon granting his right by the authorized official, or in the agreement to work the land, as far as it is not conflict with the spirit and the provision of the law.
HGU, HGB, and The Right of Use can be held by Indonesian citizen, foreigner residing in Indonesia, corporate bodies that are established under Indonesian Law and are based in Indonesia, and foreign companies that have a representative office in Indonesia.
The ownership of HGU and HGB is allowed to change during the validity of contract period. Meanwhile, The Right of Use of land can be transferred to another party with approval of relevant government official.
The Right of Use of land belonging to individuals can also change hands.
The title of the plantation land is The Right of Exploitation (HGU) for agricultural, fishery or animal husbandry purposes. You may buy and own the land, but the status of the land is state-owned land and the HGU is only valid for certain period of time.
PT. PMA who is a property developer may buy a land in Indonesia to develop the property. The status of the land is The Right of Building (HGB) which will be split to small lots accordingly. Later on, the buyer of the property could apply to change the status of the land lots to The Right of Ownership (Hak Milik) which is allowed only for Indonesian citizen.
Can foreigner or PT. PMA purchase a property in Indonesia? Yes, it depends on the type of property:
- For a landed building (house, office, factory) it is only allowed for a foreigner or PT. PMA and the status of the land is The Right of Building (HGB) or the Right of Use. Regarding the ownership of landed house, recently the Government of Indonesia has revealed the new Government Regulation No. 103 of 2015 on House Ownership of Foreigners Residing in Indonesia. This regulation allows foreigners to buy a landed houses under the Right of Use category for a period up to 80 years (an initial period of 30 years and can be extended twice by 20 years and a further 30 years).
- For a condominium or apartment and office space, the foreigner or PT. PMA can own it as long as it isnt a part of a government-subsidized housing development and the land status of the building is strata title status under the Right of Use.Still based on the same regulation, regarding apartments, foreigner allows to purchase an apartment under the Right of Use category and this is only involves luxurious apartments priced over IDR 10 billion.