How to buy land in

Indonesia

Intro to

Indonesia

Indonesia is the fourth most populous country in the world. A country of some 18,000 islands! It has significant international tourism appeal, abundant natural resources, a young population, growing middle class purchasing power and a strong and maturing economy. If Indonesia prioritizes the green energy transition and the protection of its natural environment then its future looks very promising. Since COVID Bali has boomed, however its rapid and opportunistic development has been carried out poorly, harming paradise and liveability, and the beautiful environment and local culture that made it special in the first place. Indo Surf Land hopes to influence others to tread carefully and with respect.

How to

Start

Once you have made the decision to go ahead, we sign an initial land agreement and you pay the deposit (for example 20%). Following payment of the deposit, the transaction is transferred to a notary (an independent Indonesian legal advisor) who handles the transaction and legalities. The notary prepares the formal Sale and Purchase Agreement (PPJB), among other things. The notary handles the payment of the remaining amount by you and the signing of the formal agreement, after which you pay the fees and taxes to the notary and the title transfer is processed and a new certificate issued (assuming it is a sale rather than a lease). The title transfer process can take some time.

transaction

FEES

In Indonesia there is a 5% Buyer’s tax payable by you. There are notary fees to be paid by you. We pay the Seller’s tax and the cost of the land splitting fee (if it is a subdivision). If the land is being purchased by a company (a PT) then the title needs to be in Hak Guna Bangunan (HGB) form. If the title is already in HGB form, then there is no HGB fee to be paid. However if the title is in local freehold form (SHM / Hak Milik) then your company will need to pay a fee to convert the title to HGB.

structure

options

If you are Indonesian, then you can buy the freehold title personally in Hak Milik (freehold) form, or via an Indonesian company in Hak Guna Bangunan (HGB) form. If you are from another country, you have three purchase options: (1) Purchase in HGB form via a foreign-owned Indonesian investment company (PT PMA), (2) Purchase via a local trusted nominee, or (3) lease the land. HGB is the “right to build” title. It is essentially the equivalent of freehold land ownership for companies. It is initially granted for 25 years with extensions available for 30 years, then another 25 years, to total 80 years (with small tax and administrative fees payable on each extension). It is expected that, when the time comes, the Indonesian Government will enact regulations to allow HGB to exist for longer than the 80 years.

Your Company

PT PMA

Purchasing via a PT PMA is more secure than using a local nominee, as the nominee system is open to abuse of trust. A PT PMA is an Indonesian company that is owned by foreigners. If you set up a PT PMA then you must comply with various requirements, including ongoing accounting and compliance requirements. A PT PMA may be 100% foreign owned, and generally requires shareholders to fill company positions of Director and Commissioner. If you set up a PT PMA then you can also obtain an Investor Kitas visa, which allows you to work and live in Indonesia (subject to various conditions).