Did It Just Get Easier For Foreigners To Own Land In Indonesia?
he Indonesian Government has been making strong efforts in recent years to improve the investment climate in the country and the latest update is around Foreign Ownership Structures when it comes to buying property.
In short, Indonesia wants to make it easier for foreigners to invest into Indonesia by giving them a clearer path as to what structures they can use to legally acquire land and property.
Until now, foreigners, who are called ‘Orang Asing’ in Indonesian (a term which literally means ‘Aliens’) have been able to buy property under two types of structure:
- Hak Guna Bangunan (Right to Build)
- Hak Pakai (Right to Use)
However, there have been limitations to both of these structures, such as having to have a registered company for an HGB and needing a KITAS (temporary stay permit) for Hak Pakai.
A straight Leasehold structure (Hak Sewa) has also been available but people can argue this is not ‘Ownership’ in its truest sense as you are only ‘Leasing’ the land, while with HGB and Hak Pakai you are actually buying a freehold title and converting that to a Right to Build and Right to Use title.
I’d like to briefly look at the HGB title and the latest news coming from the government around this as it could dramatically change things for foreigners who want to invest in land and property in Indonesia.
The hot topic right now is the revision of Law Number 5, Year 1960 concerning Basic Agrarian Regulations, which is being discussed in the House of Representatives as we speak. And it concerns HGB for foreigners.
The Minister of Agrarian Affairs Sofyan Djalil has said that giving HGB to foreigners is important because it can provide more legal certainty when it comes to property and land ownership and this is important when it comes to boosting property investments in the country.
At the moment foreigners can own Hak Pakai but this is restricted to just one property per individual and can only be for residential usage, even it follows the HGB length and process.
If the law is changed and if foreigners can get HGB titles without having to own a company we believe it will really help to boost the property market here. We’ll keep our ears open and let you know if we hear any updates.
Please note that in every case we still advise our clients to seek professional legal advice when it comes to purchasing property in Indonesia.