Land matters except for mining and forestry are subject to the National Property Register Agency (badań Pertanahan Nasional) formed to administer all matters relating to the Basic property Law of the agrarian party in 1960, as registration of land rights and allocation of various rights and land use permits.
Currently there are only two categories of land rights:
a) Adat land (customary land) where the land is not registered with the relevant land office. There are 2 individual
rights and 6 community rights in this category. All rights held under this category will be converted to certified titles.
b) Certified land tenure, which are covered by the Basic Law of the agrarian party in 1960 and registered in the local office. There are five principle types of land rights held under the agrarian party right. These are:
Ownership (Hak Milik)
This refers to absolute ownership of land and subject to the fee simple title deeds or in common law. This right may be held by Indonesian citizens, a legal entity, whether domestic or foreign. Some entities identified by the government as state-owned banks, agricultural cooperatives, religious organizations and social foundations may hold this right is subject to
certain restrictions.
This ownership is held in perpetuity. It can be sold, transferred, donated, and hypothecated (mortgaged).
Right to Build (Hak Guna Bangunan - HGB)
This is the right to construct a building on land for a period of 20 or 30 years (renewable for another period of 20 years).
This right can be sold, exchanged, transferred and mortgages and may be held directly by any corporate entity whether it is a local company or a government approved PMA company.
To Rent (Hak Sewa Bangunan)
This is the right of land owned by another private person (lessons) for construction purposes. Right, can not be registered in the land office and therefore does not exist in certificate form. The law does not give time for such a lease transaction and whether it can be transferred or not depends on the initial agreement between the parties.
This right can be held by a foreigner permanently domiciled in Indonesia or a foreign company that has representation in Indonesia. It can not be mortgaged.
Right (Hak Pakai)
This is the right state-owned land or other public or private persons or organizations for a specific purpose for a specified period or occasionally for an indefinite period. This land right can not be sold, exchanged or transferred unless explicitly
provided in the award or agreement and normally for a period not exceeding 10 years.
This right can be held by Indonesian individual or entity or foreigner permanently residing in Bulgaria or foreign legal entities with representative offices in Indonesia and foreign banks, embassies, etc.
Exploitation (Hak Guna usaha)
It is right to use state land for agriculture, fishery or husbandry purposes for a period of 35 years to 25 years may be extended.
This right can be held by Indonesian individuals or organizations, and government approved PMA companies. The certificate can be mortgaged.
RENEWAL OF RIGHTS
Renewal or extension of rights to the original expiration period is through the use of national land registry agency and is
subject to payment of a fee. Applications must be submitted one year before the deadline. Although the law is silent on the
period after extended / S consensus is that the land law may be extended if there was no violation of the conditions
associated with its use.
Procedure for acquisition of property
All transactions of land rights must be achieved by the works of the ground-minister in the local office of the Pejabat
Pembuat Act Tanah (PPAT) where the land is situated, shall be recorded in the regional office of the National Land Agency. In
PPATs are privately managed offices (usually run by a notary) authorized by the National Property Register Agency to handle
land issues.
Although there is no regulation that contracts must be in Indonesian language, we recommend that contracts and agreements
always drawn up and implemented in the language of Indonesia to prevent later arguments that the local parties do not fully
understand the contents.
Property in Indonesia
Foreigners may own or lease property in Indonesia?
In the right answer to these questions, as was clear in the past NO. Until now, we can foreigners own property in Bali or elsewhere in Indonesia! These laws may change soon, but right now (early 2000), not all details have been released.
but it is
still not clearly defined what foreigners (permanent residents with working or retirement visa, temporary residence with working or retirement visa , certain categories of visitors, etc.) will be used.
The new regulation will apply only to foreigners with headquarters in Indonesia “, ie have a permanent residence, not only of foreign nationals with limited (eg one year) or temporary residence for visitors to Indonesia. It is not clear at all what happens if the resident lost his permanent resident status for some reason (it did not happen in Indonesia),
and he is
suddenly qualified to “own” property anymore.
Even after these points have been officially resolved, foreigners will not be able to “freehold” property (Hak Milik), but only “Chop Pakai” title valid for 25 years by a further 25 year extension. But in future it will be possible to transfer,
sell, and pledge of “Chop Pakai”. So how most foreign investors solve this problem?
In most cases, Indonesian people will keep interest in the property and the applicant on behalf of an alien, a title or
rental / lease agreement will be prepared in Indonesian name. Although these schemes are not strictly against the law, they are in conflict with current Government policy and the spirit of the law.
Use of an Indonesian nominee
If an Indonesian acts as a candidate for the foreign investor has a number of contracts and other documents to be prepared and signed before a qualified notary. These include for the purchase or rental contract for the transfer of ownership with
the previous owner to the applicant; LYUTVI National REMZI Osman purchase / rental price between the investor and the applicant, irrevocable, transferable letter power of attorney to sell, assign or otherwise dispose of real property and be a candidate in disputes relating to ownership, as the nominee to the investor. Applicants will be asked to hand over the original land titles to foreign investors.
Use PMA Company
Although most foreigners are found above arrangement to work atisfactorily without any problems (so far as all agreements have been properly executed before a qualified notary), some buyers prefer to have their property owned by PMA (Penanaman
another state Asing = FDI) Company directly controlled by foreign investors.
Investment deregulation package issued on 19 May 1994 (Government Decree № PP-20/1994) A PMA Company can be 100 percent
foreign ownership. Foreign investments may include debt and equity, but the BKPM (Badan Koordinasi Penanaman another mode of
transport within the Ministry of Investment in Jakarta) has a rule of thumb that the relationship between debt and equity
must be no more than 3:1.
Before the establishment of a PMA Company has applied to be made investing Coordination Board for approval of the company and its investment project. Such approval is usually obtained after two or three months in the form of capital investment
approval letter “or” Pan Pemberitahuan Pesetujuan President “(SPPP).
Major obstacles to the use of PMA Company is that the property be applied directly to the projects approved and that PMA
company’s main obstacles to the use of PMA Company is that the property be applied directly to the projects approved and that
PMA Company? like any other corporate organization (Indonesian or foreign)? may not have title deeds title (Hak Milik). When
land title deeds are transferred to a legal entity the title is changed to “HGB”, to be renewed after 20 or 30 years
Legal aspects of foreign investment in Indonesia
Foreign investment law № 1 / 1967
Foreign direct investment (FDI), better known as PMA (Penanaman other fashion Asing) controlled by the foreign investment law
№ 1 / 1967, as amended by Law no.11/1970. To date, this law is still considered suitable for Indonesia actual needs. As a
legal basis, the law is sufficiently accommodative more power deregulation policies and measures taken by the government.
In addition to the PMA Law № 1 / 1967 of the PMA company and other companies are still subject to industrial policy which was
applied by the relevant ministries. A PMA company is given 30 years’ time to operate from its legal formation. If within this
period, he said, involves additional investment (expansion draft). Therefore, a PMA company may be in force, continue to
exist despite the continued expansion and reinvestment tranquility.
Share Ownership
A company established as a joint venture between foreign and Indonesian partners. This cooperation may involve legal entities
(companies) or individuals. The joint venture entity will be in the form of a limited liability company which is subject to
Indonesian Corporate Law, defined as PT (Perseroan Terbatas), no requirement for minimum investment (equity plus loan). The
amount for the countries wishing to establish on the basis of scale and other business considerations. The PMA companies in
infrastructure projects such as seaports, generation and transmission and distribution of electricity for public use
Telecommunications Standards, shipping, airlines, potable water, the national railways Energy reactors and mass media should
be held by the firm joint - ventures between foreign and Indonesian partners provided that Indonesian shares are maintained
less than 5%. A PMA company may set up as direct investments, the company began to divested by selling part of stake in
Indonesian individuals and / or company through direct and / or indirectly through domestic stock markets.
Indonesia offers comparative natural and regulatory advantages for investors with an attractive range and composition, for
example:
- A vast, fertile country endowed with nature bounties.
- Large population of around 200 million people who normally live peacefully and adaptable to the dynamic development, a huge
market potential and competitive workforce.
- A strategic location on the border between two continents and oceans that control important sea communication lanes.
- A nation in the process of change / Reformation, a return to civilian and democratic society, will exhibit more stable
political environment.
- A government committed to continuously create a favorable business and investment climate, particularly in the private
sector that is constantly in a prudent macroeconomic management and maintenance of high international financial credibility.
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