There
are a number of different types of title in
Indonesia:
Hak Milik (Freehold) is the type
of title that can only be held by an Indonesian
citizen.
Hak Pakai (essentially leasehold
title) and other forms of title can be held
by a P.T. or PMA Company (Foreign Investment
Company).
A non-Indonesian citizen cannot own land
in Indonesia. However a foreigner can acquire
a leasehold title to a building - almost the
same as a strata title except that the title
lasts only for 25 years with an extension
of 30 years for a maximum of 55
years and then reverts to the original
owner (lessor).
B. SOLUTION
There
are 2 ways for foreigners to own the land in
Indonesia:
1. Using the Nominee
The Nominee will sign four documents with
the foreigner as follow:
A Loan agreement: acknowledges
that the foreigner has lent to the Nominee
the purchase price of the land.
A Right of Use agreement: allows
the foreigner to use the land.
A Statement Letter: where the Nominee
acknowledges the foreigners loan and intention
to own the land.
Power of Attorney: The nominee signs
an irrevocable Power of Attorney giving
the foreigner the complete authority sell,
mortgage, lease or otherwise deal in the
land.
2. Using the PMA
The most significant change in Indonesian
investment law came in 1997 when the government
introduced the PMA (Penanaman Modal Asing
or Foreign Investment Company). This allows
foreign investors to set up a company in Indonesia,
without having to have Indonesian partners.
The PMA can be 100% owned by the foreign
investor. PMA companies are allowed to
own the title of the property for a period
25 years and have to be renewed by
the government.
To set up a PMA, you will be required to:
Submit the detailed business plan.
Operate in a business environment that
adds value to Indonesia in terms of foreign
skills, employment and environmental benefit.
Make an appropriate cash deposit in an
Indonesian based Bank. The amount varies
and is calculated from the capital employed
in the business.
Show the property investment as an asset
of the company.
The process takes approximately 3 to 4 months
and once its completed; the company can apply
for work permits for the foreign directors,
3 permits in the first year of operation.
The cost of setting up the PMA is between
IDR 30 to 40 Million or equivalent
with USD 4,500.
C. FEES
Notary: 1% - 1.5% of the value of the transaction.
Vendor Tax & Purchaser Tax: Both the vendor and purchaser pay 5% tax on the value
of land and property sales.
Mortgage Certificate: 2% of value of mortgage.
If you need help or have any question regarding
owning property in Bali, please do not hesitate
to contact us.
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