A Foreigner Cannot Purchase A Land Outright In Indonesia

Category: Finance, Real Estate.

Located in South East Asia, Indonesia is an archipelago, 000 islands such, with about 17 as Sumatra, Bali, Java, Kalimantan, the Moluccas Islands, Sulawesi, and Irian Jaya. Real estate in Indonesia is a hot sector, with residential units and commercial buildings as well as industrialized plants sprouting all over the nation.

With its diverse landscape, lush green forests, untouched beaches, and volcanic mountains, Indonesia is truly an exotic destination. In other words, Indonesian real estate sector has globally marked its establishment in all respects. Indonesia also boasts of more than 10 billion barrels of oil reserves as well as 150 trillion cubic feet of potential reserves. Low interest rates and robust consumer spending has led to a tremendous economic growth. Further, the innovative measures taken by Indonesia to well organize its natural resources have now caught the attention of many global investors. Perhaps for these reasons real estate in Indonesia is of special significance. People from across the world also flock here for a myriad of other purposes such as for education or employment requirements.

Most of the real estate investments have been found in metropolitan areas like Jakarta. As in the case of other Asian nations, several laws and regulations have been formulated for the acquisition of a real estate in Indonesia. Indonesia provides almost all types of real estate, from luxury villas and homes to guest houses, hotel resorts and land. Different types of titles are associated with the purchase of a land in Indonesia. This type of title could be held only by a national of Indonesia. Foremost is Hak Milik, otherwise freehold title.

Further, property ownership with this title is considered the most complete form of land ownership in Indonesia, and it possesses complete right to exchange, bequeath, sell, or transfer to eligible recipient. A foreigner cannot purchase a land outright in Indonesia. Certain restrictions have been imposed on foreigners to buy a land in Indonesia. However, three options are opened for non- Indonesian to buy or acquire a land in the country, leasehold investment, such as, Indonesian nominee power of attorney agreement, and PMA Foreign Investment Company Structure. Mostly, options would be there for extension. Leasehold investment provides complete protection to a non resident investor during the term of lease agreement, which in turn is prepared for a specific period, usually extending up to 25 years. This agreement is also inclusive of the foreign investor s options regarding the right for the land or building demolishing, or demolishment, renovation.

In the case of Indonesian nominee power of attorney, a foreign investor can enter a legal agreement through a nominee who is a permanent resident of the nation. A land or property acquired through this option holds a kind of title known as Hak Pakai or leasehold title. Al though, this nominee is the registered owner, the foreigner holds the land certificates. Once the power of attorney is signed, all of the nominee s rights with regard to property are waived and the investor is given complete right on the property. On purchasing the property, both nominee and investor sign a legal power of attorney. Accordingly, the investor can build, or lease the, sell property. PMA( Penanaman Modal Asing) Foreign Investment Company Structure is primarily designed for enabling foreign business firms or corporations to purchase a property in Indonesia.

Further, he can even transfer the property. However, property acquisition does not provide complete ownership to the foreign investors. Among the procedures in connection with the buying of property in Indonesia are examination of land certificate at the Land office, payment of transfer tax by salesperson at a commercial bank, payment of tax on acquisition of the land and building by the buyer, filing for company tax registration number with the local tax authorities, execution of sale and purchase of land deed through a legal representative appointed by an executive of the National Land Office, Registration of the Land deed under the name of the buyer with the Local Land Office, and Land Deed at the Tax on Land and Building Office. This type of property acquisition holds the title of HGB( Hak Guna Bangunan. ) In order to conduct a real estate transaction in the country, real estate sales people are not required to hold a license. No matter it is single detached home, apartment, villa, office, a large number, or industrial space of realtors and real estate firms are now there to find and buy your dream property in Indonesia.

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