Before answering this question, it’s helpful to take a moment to highlight the different types of land ownership rights regulated in Indonesia. Indonesia has the following types of land rights[1]:
- Ownership Rights (Hak Milik)
- Right to Cultivate (Hak Guna Usaha)
- Building Rights (Hak Guna Bangunan)
- Right of Use (Hak Pakai)
- Rental Rights
- Right to Open Land
- The Right to Collect Forest Products
We’ll provide a short explanation of the first four land rights below. We will discuss the other rights (5-7) in another article in the future.
Overview of Rights
Of the rights mentioned above, ownership rights (“Hak Milik”) are the strongest and most complete set of rights on land in Indonesia. However, Hak Milik rights may only be granted to Indonesian citizens and are not available to legal entities.
The right to cultivate[2] (“Hak Guna Usaha” or “HGU”) constitutes the right to cultivate land that is directly controlled by the State for agricultural, fishery or livestock companies. This right is granted for a period of up to 35 years and which can then be extended for up to 60 years[3]. The HGU right may only be granted to an Indonesian citizen or a local legal entity established under Indonesian law and domiciled in Indonesia. HGU rights can only be granted by the Ministry of Agriculture.
The right to build (“Hak Guna Bangunan” or “HGB”) is the right to erect structures on land that is not owned by the builder. HGB rights are granted with a maximum term of 30 years which is extendible for another 20 years. HGB rights are available to Indonesian citizens and local legal entities established under Indonesian law and domiciled in Indonesia (local PTs and PT PMAs are eligible). HGB rights can be granted on both state land or private land[4].
The right of use (“Hak Pakai”)[5] is the right to use and benefit from land owned by someone else. Hak Pakai rights are available for Indonesian citizens, foreigners domiciled in Indonesia, local legal entities established under Indonesian law and domiciled in Indonesia, and foreign legal entities with local representation in Indonesia. Hak Pakai rights can be granted for a period of up to 30 years and may be extended for an additional 50 years (for a total of 80 years).
Practical Considerations for Foreigners Land Ownership
When it comes to land ownership rights for foreign individuals, in 2015 and 2016 the Indonesian government has issued additional regulations clarifying the legal rights available[6]. We’ve summarized these rights in the table below.
Table 1: Legal Rights Related to Land Ownership for Foreigners in Indonesia
Note: There is a discrepancy between the regulations released in 2015/2016 and the regulations released by the Ministry of Agriculture in 1996 with respect to the duration that foreigners can own Hak Pakai rights. In our experience the 2015/2016 rights outlined in Table 1 above are accepted and adhered to; note however that the Indonesian government’s interpretation of these rights can change at any time.
As discussed in Table 1, there are minimum price restrictions for foreigners purchasing real estate in Indonesia. Table 2 outlines the minimum price restrictions for single homes vs. apartments in various parts of the country:
Table 2: Minimum Price Restrictions for Foreigners by Location
Conclusion
That’s all the overview and practical consideration about land ownership for foreigners in Indonesia. If you have a questions about this particular matter, feel free to contact us by filling this form or send us an email via anita@permitindo.com. Our team will reach you after.
Endnotes:
[1] Based on Article 16 of the Basic Agrarian Law No. 5 1960
[2] Based on Article 28 of the Agrarian Law
[3] According to the Ministry of Agriculture Regulation No. 7 of 2017
[4] Based on Agrarian Law and Government Regulations No. 40 of 1996
[5] Based on Agrarian Law and Government Regulations No. 40 of 1996
[6] These rights were outlined in two sets of regulations, the first is Government Regulation No. 103 of 2015 concerning Ownership of Residential Houses or Occupancy by Foreigners domiciled in Indonesia, and the second is Government Regulation No. 103 of 2015 concerning Ownership of Residential Houses or Occupancy by Foreigners domiciled in Indonesia
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