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How can a foreigner own real estate in Bali Indonesia?
How can a foreigner own property / real estate in Indonesia ?
There are 3 options for foreigners to own property in Indonesia.
A) Using a person with a name of Indonesian nationality.
As the title of land ownership for life can only be registered under the name of an Indonesian citizen, a foreigner can obtain this title through a name loan. However, in such a case, foreigners may protect their rights to the property by making the following arrangements with the Indonesian nominated person:
The Indonesian person will sign with the foreigner four documents at a lawyer to know:
– A loan agreement: a document stating that the foreigner has lent the designated person a sum of money corresponding to the purchase price of the land.
– A right of use: which allows foreigners to use the land.
– A letter of attestation: where it is stipulated that the person with Indonesian name recognizes that the foreigner has loaned him money for the purchase of the said land and that the last one is the ‘fictitious owner’.
– The Power of Attorney: The person with the Indonesian name will sign an irrevocable power of attorney which will give the foreigners full authorization to sell, mortgage, rent or otherwise use the land.
B) Using a PMA (Foreign Company)
The only way that a foreigner can legally invest in Indonesia is to establish a company called PMA (Penanaman Modal Asing). The activation is simple and allows the various partners of this company to have an anonymous type company either on their own behalf or on behalf of a group, if necessary.
An LDC can acquire land by buying and requesting an HGB (see above). This title is valid for 30 years, can be extended for 20 and renewable for another 30 years. A foreigner can more simply rent land in the name of the PMA or buy using a loan name Indonesian and rent this land to the PMA.
To establish an LDC, you need:
– Submit the detailed plan of your business project.
– Build a Company that will give added value to Indonesia in terms of foreign technical capacity, in terms of employment and benefits for the environments.
– Depositing own funds in a bank in Indonesia. The amount will vary and will be calculated based on the capital used for the business.
– Take home the clean investment as the company’s asset.
The implementation will take approximately 3 to 4 months as soon as the file is complete. The company can apply for a work permit for foreign managers, ie 3 licenses for the first year of operation.
C. Buy real estate under an agreement (Hak Pakai)
For foreigners who do not like the system of arrangement with a ready name, the land can be rented for a fixed term. The maximum period of the legal lease (certified in front of notary) is 25 years, although it is common in practice in Bali to have 2 bales of 25 years each, both carried out at a few days intervals accompanied by an option 25 years old on the second lease. That’s really equivalent to a 75-year lease.
For more detailed information about this option, please consult a notary.
For the purchase of any real estate in Indonesia, it is important that prospective buyers take their precautions, that they ensure that the owner has the certificate of ownership and that the latter is original and undeniable. It will be up to the buyer to verify that the land can be used for his project (private or commercial). Each region will follow local bylaws to inquire.
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