F.A.Q LEGAL ASPECTS of LAND FOREIGN OWNERSHIP IN INDONESIA
Q: I am a non-Indonesian citizen. Can an individual foreigner own a land in Indonesia ?
A: Yes. According to Land Regulations, an individual foreigner can own a land in Indonesia with status of Hak Pakai (Rights of Usage) or through leasehold. The Hak Pakai can be released over either from government land or Hak Milik (Rights of Ownership) land. It is only an Indonesian citizen that can own land with the status of Hak Milik.
Q: Is Hak Pakai similar to leasehold?
A: The difference between leasehold and Hak Pakai is that leasehold is pretty straightforward that is between the foreigner and the land owner through registered lease agreement by the notary but it is not registered in the land office. Hak Pakai based on government land or Hak Milik land is considered not being obtained from lease agreement but rather a certain right is released . Therefore, Hak Pakai can be registered in the land office. With this registration, the land office will bestow a land certificate under the foreigner's name.
Q: How long can I retain the Hak Pakai of the land?
A: By regulation you can retain the Hak Pakai over government land for up to 25 years with an option to extend it. However, if you retain Hak Pakai over Hak Milik then after 25 years what you need is to renew it (and not extend it) through the notary. You may submit for a renewal upfront when you purchase the land. Our legal team will be happy to assist you on how this can be done.
Q: How about if I want to secure the land through a company? What should I do?
A: According to Land Regulations a company that is established in accordance to Indonesian law and is situated in Indonesia and/or a foreign company that has its representative in Indonesia can own a land and is granted a certain title that is Hak Guna Bangunan (Rights of Usage of the Buildings) over government land or Hak Milik land. Therefore, you need to set up a foreign direct investment company in Indonesia ( Penanaman Modal Asing /PMA) to secure the land. So, you need to set up a PMA company first in order to obtain the land.
Q: So, what is Hak Guna Bangunan ?
A: Hak Guna Bangunan is rights to established buildings on particular land. The Hak Guna Bangunan can be obtained based on government land or Hak Milik land. With Hak Guna Bangunan status is also can be registered in the Land Office which in turn will provide you with a certificate of Hak Guna Bangunan with the company's name.
Q: How long can I retain the Hak Guna Bangunan of the land?
A: Hak Guna Bangunan over government land is up to 30 years with an option for extension. Hak Guna Bangunan over Hak Milik status is up to 30 years and is renewable. This can also be done upfront at the time of the transaction. Again, our legal team will be happy to assist you on how this can be done.
Q: Can I as an individual foreigner have the Hak Guna Bangunan rights?
A: An individual foreigner cannot own land with Hak Guna Bangunan status; however, you still can own it with Hak Pakai . According to Land Regulations it is only Indonesian citizen or a company established in accordance to Indonesian law and is situated in Indonesia can own land with Hak Guna Bangunan status.
Q: So, what is the most secured way to own land for a foreigner?
A: Depends on individual needs. If you plan to purchase land with a consortium of friends, then the most secure way is through Hak Guna Bangunan , therefore, you and your friends need to set up a PMA company. However, you and your friends can also own individually without the PMA, but with the Hak Pakai status especially if the size of the land is big enough to be sub-divided. If you purchase the land by and for yourself then the Hak Pakai is the go. Both statuses are the safest, and again, it is up to individual needs.
Q: Is that mean if I want to have Hak Pakai or Hak Guna Bangunan over Hak Milik I still need an Indonesian citizen name's on the actual Hak Milik certificate?
A: Yes, you need an Indonesian citizen's name in the Hak Milik certificate since only an Indonesian citizen that can have Hak Milik status. However, this can be done through certain legal documents to secure your investment. Therefore, although the Hak Milik certificate is under the Indonesian name but he/she does not the rights to utilize the land in any form because he/she have released all the Hak Milik rights of the land in the form of Hak Pakai or Hak Guna Bangunan. Again, our legal team will be able to assist you in elaborating this further.
Q: Is the individual Indonesian has to provide me with specific document in order to secure my investment?
A: Yes, indeed. The fact that it is you that actually buy the land then there will be a transfer of ownership from the seller to the buyer, however, since you are a foreigner that cannot own a land with Hak Milik status, then you need an Indonesian to receive the Hak Milik status. This can be done through several legal mechanisms. Again, our legal team will be able to assist you in this matter.
Q: Are both rights is negotiable to the bank? I mean to mortgage it?
A: Yes, you can mortgage the land with both statuses as the Land Office engenders certificates. Please be informed your bank might have different policy, but, yes, it is acceptable for most banks in Indonesia .
* All explanations above are solely for general legal information only and not constituted a solicitation for other aspect of any specific regulation.