Discover Investing in Indonesia
Indonesia is one of the most promising destinations for real estate investment in Southeast Asia, due to its economic stability, consistent growth, and government support in key sectors such as tourism and infrastructure.
With the fourth-largest population in the world and a growing middle class, the country offers a strong domestic market and a growing economy. The growth in international tourism has positioned Indonesia as a key market for real estate, especially in popular destinations like Bali and Lombok.
Property Ownership In Indonesia
If you are interested and plan to invest in Indonesia, before making a decision, it’s important to understand the different types of land ownership in the country. This knowledge will help you make informed decisions and ensure that your investment complies with local regulations.
Types of Property Ownership in Indonesia
In Indonesia, property ownership regulations depending on the type of property and the nationality of the buyer. For foreign (WNA), the most common method of property ownership is through Right of Use (Hak Guna Bangunan – HGB), which grants the right to build and own buildings on land owned by others (e.g., state-owned land) for a period of up to 30 years, with the possibility of extension. However, to purchase property with HGB, foreign nationals must establish a PT PMA (Foreign-Owned Company) for business purposes.
Additionally, foreign nationals can own property under a Leasehold (Hak Sewa) arrangement, which involves leasing land or property for a specific period, typically 25-30 years, with the possibility of extension depending on the agreement. This option offers flexibility but does not provide ownership rights.
Whereas for Freehold Ownership (Hak Milik), it can only be owned by Indonesian citizens (WNI). Freehold Ownership (Hak Milik) grants full ownership rights over land and buildings without any time limitations. This is the strongest form of property ownership, allowing the owner to sell, transfer, or inherit the property.
It’s essential for investors to fully understand the differences in property ownership rights before making a decision. We strongly recommend consulting with legal experts to ensure proper guidance and compliance with Indonesian regulations before proceeding with any property purchase or investment.
Understanding PMA: A Guide for Investors
PT PMA (Foreign-Owned Company) is a legal entity in Indonesia that allows foreign nationals or foreign investors to establish a business for commercial purposes. A PT PMA can be fully or partially owned by foreign investors and is required for those who wish to own property under Hak Guna Bangunan (HGB) or engage in business activities in Indonesia.
Through a PT PMA, foreign investors can purchase property with HGB, which typically lasts for 30 years with the possibility of extension. The PT PMA also provides a platform for foreign investors to run businesses in various sectors in compliance with Indonesian laws and regulations.
Additionally, by establishing a PT PMA, foreign investors can obtain a KITAS Investor (Limited Stay Permit), which allows them to reside and work in Indonesia for a specified period. The KITAS Investor is granted to shareholders or directors of the PT PMA and is usually valid for 1 to 2 years, with the possibility of renewal. This allows investors to manage their business operations in Indonesia without the need for frequent travel in and out of the country.
Setting up a PT PMA requires meeting certain capital requirements and following registration processes. Therefore, it is essential to work with legal or business consultants to ensure proper setup and compliance with Indonesian regulations.
