Foreigners property investment in Indonesia

foreigners property investment in Indonesia

Many foreigners want to buy property in Indonesia. The country has been one of Southeast Asia’s most popular tourist destinations for years. A lot of people dream about owning property in the tropics of Indonesia. The dream doesn’t have to stop there because foreigners can buy and own land and property in Indonesia, 

foreigners can buy a property in Indonesia

Foreigners can buy property in Indonesia, although it’s more challenging than many hope. It’s important to know that the right of fully owning land or property in Indonesia is called Hak Milik (HM), which only Indonesian passport holders can obtain. In English, Hak Milik means ‘right to own’ and applies to land or real estate structures.

The Indonesian government wants its residents to benefit from the growing economy by protecting the housing market from extensive foreign investors. That’s why owning land or property entirely is possible when you have an Indonesian passport. Still, there are a few ways to own property in Indonesia.

Indonesian nominee

One way foreigners can buy property in Indonesia is by using an Indonesian nominee, as Indonesians can acquire real estate through Hak Milik, the highest form of property ownership in Indonesia. This means that the Indonesian person officially owns the property on paper. At the same time, there is an agreement between the foreigner and the Indonesian nominee that states the foreigner is the actual owner.

Still, regardless of any agreements, the Indonesian nominee remains the legal property owner according to Indonesian real estate law. In fact, using an Indonesian nominee is illegal. Nominees can be used for business purposes, not to bypass the foreign land ownership ban. If the government finds out, they may reclaim the property.

Buy property through a PT PMA

PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a foreign-owned company that may own property. Foreign investors can establish a PT PMA and acquire freehold or leasehold property using it. Most foreigners use this option, which is closest to ownership. Setting up an Indonesian PT PMA takes about ten weeks and costs between IDR 15 million ($1,005) and IDR 35 million ($2,345). Notaries and real estate agents can assist in creating a PT PMA.

You may need multiple land certifications before using, building, or renting PT PMA-purchased property:

Hak Guna Bangunan (HGB) certificate allows you to build a property on freehold and leasehold land. This means acquiring land through leasehold and building a house you legally own is possible.

Hak Pakai (HP) is needed to use the building yourself. This certificate divides foreigners who buy property to live in Indonesia from foreigners who buy the property for rental purposes.

Leasehold through a PT PMA

It’s also possible to buy Indonesian real estate through a leasehold agreement. Many foreigners use a PT PMA to acquire land through leasehold and build their own house with Hak Guna Bangunan. In most cases, a leasehold agreement is valid for 30 years and can then be extended for another 30-year and 20-year period. Hak Guna Bangunan is also valid for 30 years and can be extended for another 30-year and 20-year period. Buying a property through leasehold instead of freehold can be smart, as this option may be cheaper. Click here to read our guide on how to build property on leased land.