Overview of Real Estate Law in Indonesia for Foreigner or Foreign Entity

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The real estate law in Indonesia is mainly governed in the Law No. 5 of 1960 on Principle Provisions of Agrarian (the “Agrarian Law”).

Under Agrarian Law, there are certain types of land, among others that are related in this regard are as follows:

Right to Own (Hak Milik);

Right to Build (Hak Guna Bangunan);

Right to Cultivate (Hak Guna Usaha);

Right to Use (Hak Pakai);

Right to Rent (Hak Sewa).

Under implementing regulations of Agrarian Law, we also recognize Right to Manage (Hak Pengelolaan). This right is specifically granted to the governmental bodies or governmental companies so that they can manage and determine the use of some plots of lands in their region.

Currently in Indonesia, there is no limitation for the foreigner or foreign entity to establish an Indonesia legal entity, fully owned by foreigner or foreign entity, which has main business in property development/investment sector. This matter is regulated under the Presidential Regulation of the Republic of Indonesia Number 77 of 2007 on List of Business Fields Closed and Open with Conditions to Investment as amended by Regulation of President of the Republic of Indonesia Number 111 of 2007 on Amendment to Presidential Regulation of the Republic of Indonesia Number 77 of 2007 on List of Business Fields Closed and Open with Conditions to Investment.

As it is said earlier above, the Right to Build can be owned by Indonesia legal entity. A PMA company is also regarded as an Indonesia legal entity. Further, for property development/investment sector, there is no limitation for a foreigner or foreign entity to establish a PMA company. Therefore, a foreigner or foreign entity, through a PMA company, can own a property or a strata title building which is built over the land of the Right to Build.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Eddy Leks | Attorney Advertising

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