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Invest with Confidence:
Land & Property Solutions for Foreign Businesses

property-investors

Investing in land or property in Indonesia can offer strategic advantages, but foreign investors may face unique regulatory limitations. Indonesian law restricts direct land ownership for foreigners, and recent developments regarding the expiry of traditional land documents have increased the importance of legal certainty in property matters. Without proper guidance, businesses risk disputes, invalid titles, or operational interruptions.
Putranto Alliance provides comprehensive support for foreign investors, ensuring land and property usage is compliant, secure, and aligned with business objectives.

Business Challenges

Foreign investors may encounter several challenges when acquiring or using land and property in Indonesia:

  1. Regulatory Restrictions on Ownership:
    Foreigners cannot hold full ownership of land in Indonesia. Legal options are limited to usage or building rights, which require careful structuring to ensure compliance with Indonesian law.
  2. Risks of Nominee Agreements:
    Foreign nationals restricted from direct land ownership may use nominee arrangements. Nominee agreements are not legally recognized under Indonesian law and may expose foreign investors to loss of property rights. These arrangements carry high legal and financial risks, including ownership disputes or potential nullification of property rights.
  3. Abandoned or Idle Land Repossession:
    Indonesian government is actively reclaiming unused land, especially under Right to Build (Hak Guna Bangunan/HGB) or Right to Cultivate (Hak Guna Usaha/HGU). Land classified as “abandoned” may be seized by the authority, creating risks for investors who fail to maintain productive land use.

Businesses Considerations

In addition to the business challenges outlined above, foreign investors are advised to seek professional guidance on property matters, including:

  1. Extension of Rights and Certificates:
    Timely renewal of Sertifikat Hak Guna Bangunan (SHGB) ensures ongoing legal usage rights and continuity of operations on land or property.
  2. Tax Compliance During Transactions:
    Property transactions must comply with PPh (Income Tax) and BPHTB (Land and Building Acquisition Duty) obligations. Avoid non-compliant schemes, such as delaying tax payments through preliminary payment agreements (PPA), which can result in penalties.
  3. Planning for Special Properties:
    Coastal zones, small islands, and other high-value areas are subject to strict legal boundaries. Proper due diligence and legal structuring are important for securing ownership or usage rights and avoiding failed transactions or fines.
  4. Expiry of Traditional Land Documents:
    Traditional documents of land ownership, such as girik, petok D, letter C, or landrente, will lose legal validity after 2 February 2026. Landowners relying solely on these documents risk losing legal recognition of their property rights.

Ownership Options for Foreign Investors

The available land ownership for foreign Investors is described below:

  1. Right to Build (Hak Guna Bangunan/HGB):
    Right to create a building and use the land for commercial purposes.
  2. Right to Cultivate (Hak Guna Usaha/HGU):
    Right to use land for agricultural, plantation, or industrial activities.
  3. Right to Use (Hak Pakai):
    Right to use land or existing property building for residence or business without full ownership.

Recent legal developments provide broader opportunities for foreign nationals:

  1. Government Regulation (Peraturan Pemerintah, PP) Number 18 Year 2021 concerning Management Rights, Land Rights, Apartment Units, and Land Registration
  2. Minister of Agrarian Affairs / Head of the National Land Agency Regulation (Permen ATR/BPN) Number 18 Year 2021 concerning Procedures for Establishing Management Rights and Land Rights

These allow foreign nationals to obtain the Right to Use (Hak Pakai) over single houses (Rumah Tunggal) or apartment units (Satuan Rumah Susun) under certain conditions. The policies allow expatriates to legally purchase homes for personal residence, not just corporate investment, provided they comply with the specified rules.

Land & Property Services for Foreign Investors

Foreign investors can leverage professional services to secure, manage, and maintain their land and property rights in Indonesia:

  1. Advisory & Structuring:
    Provide legal guidance, due diligence, and contract structuring for purchasing or leasing a property.
  2. Transaction Documentation:
    Prepare Preliminary Binding Sale and Purchase Agreements (Perjanjian Pengikatan Jual Beli/PPJB) and execute Land Sales and Purchase Deeds (Akta Jual Beli/AJB) through allied notaries to ensure legal enforceability.
  3. Property Compliance:
    Manage land certificates, registrations, and usage rights (e.g., HGB, HGU, Hak Pakai), while advising on zoning, permits, and regulatory compliance.
  4. Risk Mitigation & Special Properties:
    Advise on preventing repossession of idle land or ensuring compliance for coastal or high-value properties.

Overcoming The Challenges

Putranto Alliance supports foreign investors in securing legal certainty and operational confidence in property matters:

  1. Comprehensive Guidance:
    Assess property requirements, identify legal options, and ensure compliance with Indonesian land laws.
  2. Document Management:
    Verify, maintain, and update property documents to protect usage rights.
  3. Structuring Legal Ownership & Usage:
    Tailor land rights structures to match business objectives while adhering to regulatory limitations.
  4. Ongoing Advisory:
    Monitor regulatory changes, assist with transactions, and prevent disputes through proactive guidance.

Build Your Property Strategy in Indonesia

Investing in land or property in Indonesia requires strategic planning and legal expertise to ensure a successful outcome. Foreign investors can minimize risks and optimize property assets for business sustainability by utilizing suitable usage rights, adhering to compliant documentation, and leveraging professional advisory services.

Putranto Alliance is committed to helping foreign clients navigate the complexities of Indonesian property law, providing end-to-end services for secure, compliant, and strategic property investments.

Contact us today to secure your property investments in Indonesia with confidence and compliance.

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