The safest way for foreigners to acquire property in Indonesia is to register a PT PMA, which enables you to acquire freehold land and properties in the name of your company with the Hak Guna Bangunan (HGB) title. PT PMAs are eligible to hold this title for a maximum of 80 years, and it is the closest a foreigner can get to a lifetime Hak Milik title. Through the PT PMA, you reserve a greater degree of control over the land and property than a regular leasehold.
The difference between HGB and other titles
In a HGB title, the PT PMA is registered as the owner and has full rights to transfer the property throughout the validity period, whereas Hak Pakai and Hak Sewa only grants an individual the right to use the land/property thus he/she cannot transfer the title without the landlord’s consent. Another advantage is that HGB can be converted back to Hak Milik if the land is transferred to an Indonesian national, granting better flexibility when it comes to selling the property.
The HGB title differs from Hak Milik in that it is meant for commercial purposes whereas Hak Milik is for private use. In real estate, HGB is primarily utilized by property developers who develop properties with the intention of selling it again, although it can be used to acquire individual properties as well.
It is possible to purchase any land or property with the PT PMA regardless of the zoning, but nevertheless you should consider the land zoning so you can obtain the permits and business licenses for your property.
How to acquire a property using a PT PMA
First, you’ll have to register a new PT PMA or acquire an existing one, you can set up a 100% foreign-owned PT PMA in the Hospitality Management Consulting category for a short-term villa rental or the Real Estate category for a long-term villa rental. You can acquire property in the name of your PT PMA immediately after the company’s Articles of Association have been approved and the company’s tax card has been issued which usually takes around 2-3 weeks.
An important thing to note, according to Article 12 paragraph (7) of BKPM Regulation 4/2021, companies classified as PMA should have a minimum capital requirement, namely, a minimum Issued/Deposited Capital of IDR 10,000,000,000 (ten billion Rupiah) unless otherwise specified by law.
Once you’ve struck a deal for a property, the next step is agreement signing and title transfer. A Binding Sale & Purchase Agreement (PPJB) will be drafted with the name of your PT PMA, then both parties will sign the agreement. The Land Office will then convert the land certificate from Hak Milik to HGB, and the deal is finalized by signing the Sale and Purchase Agreement (AJB) and paying the tax for the transaction.
Investing in PT PMA does require a considerable amount of time and capital, but it also brings long-term advantages that are unattainable from other options available to foreigners as it not only allows you to acquire freehold properties (which are otherwise off-limits to foreign individuals) but also provides better legal protection over your investment as well as greater flexibility in reselling the property later. Working with a trustworthy agent and legal partners is the key to a secure investment, and you can always contact us for an expert’s advice on any real estate related matter.
Disclaimer: The content of this publication is provided as general information only and does not constitute legal, financial, tax, or other professional advice from Bali Home Immo. Historical results do not guarantee similar outcomes and we do not guarantee that the content of this publication is accurate, complete or up to date.
