If you're considering purchasing property in Indonesia, it's essential to have a clear understanding of how real estate ownership works in the country. In this article, we will delve into the process of property ownership in Indonesia, including the various types of ownership available and the steps involved in acquiring land and villa properties.

Types of Property Ownership in Indonesia

Freehold Ownership: Freehold ownership, also known as "hak milik," is the most comprehensive form of ownership in Indonesia. It allows individuals to hold the property indefinitely and transfer ownership through sale or inheritance. However, it's important to note that freehold ownership is generally restricted to Indonesian citizens, with limited exceptions for foreign investors who have obtained the necessary permits.

Right of Use (Hak Guna Bangunan - HGB): The HGB title provides a preferred and secure option for foreign investors to own properties in Indonesia. With the HGB title, foreigners gain full ownership rights over the land and any buildings on it. This offers them control, security, and the ability to utilize the property according to their needs. Additionally, HGB title holders have commercial rights, allowing them to operate businesses, rentals, and generate income. Obtaining HGB title also enables investors to pay taxes as a legal entity, ensuring compliance with Indonesian tax regulations. Notably, the HGB title does not require the involvement of an Indonesian nominee, simplifying the ownership process for foreign investors.

*The HGB title is our most common used way we recommend for foreigners to invest.

Leasehold (Hak Sewa): Leasehold ownership, known as "Hak Sewa," provides a flexible option for both residential and long-term sublease commercial purposes. This type of leasehold can have a duration of up to 80 years, depending on the terms agreed upon in the lease agreement. Hak Sewa offers individuals the benefits of a long-term lease while maintaining flexibility. Residential leases provide a comfortable living arrangement, while commercial leases allow for subleasing options based on agreed terms. The duration of Hak Sewa is determined through negotiation and mutual agreement between the lessor and lessee, providing tailored lease periods to suit their specific requirements. It's important to note that Hak Sewa does not grant full ownership rights over the property but offers a secure and agreed-upon tenancy period with obligations and rights for both parties involved.

Understanding the different types of property ownership in Indonesia is crucial when considering property investments. It's recommended to consult with legal professionals who specialize in Indonesian real estate to ensure compliance with regulations and make informed decisions throughout the acquisition process.

To buy property in Indonesia, you do not necessarily need a specific visa solely for property ownership. However, there are visa options available that can facilitate property ownership and long-term residence in the country. Here are a few visa types commonly used by foreign individuals interested in purchasing property in Indonesia:

1. Tourist Visa: A tourist visa allows foreigners to enter and stay in Indonesia for a limited period, typically up to 30 or 60 days. This visa type is suitable for those exploring property options or engaging in short-term property transactions. However, a tourist visa does not provide long-term residence or property ownership rights.

2. Social Visa (Index 211): A social visa enables foreigners to stay in Indonesia for up to six months with the purpose of visiting family, conducting business activities, or participating in educational or cultural programs. While a social visa provides an extended stay, it does not grant property ownership rights.

3. Investor KITAS: The Investor KITAS (Limited Stay Permit Card) is a visa specifically designed for foreign investors who wish to engage in business activities, including property investment, in Indonesia. This visa requires the establishment of a local Indonesian company and meeting certain investment criteria. The Investor KITAS allows for longer-term residence and facilitates property ownership under specific conditions.

4. Retirement Visa: The Retirement Visa, also known as the Retirement KITAS, is available for foreign individuals aged 55 or older who wish to retire in Indonesia. This visa permits long-term residence and property ownership for the purpose of retirement.

5. Working KITAS: If you intend to work in Indonesia, obtaining a Working KITAS through employment with a local company can provide long-term residence and facilitate property ownership as a resident.

It's important to note that visa requirements and regulations in Indonesia can change, so it is advisable to consult with an immigration lawyer or an Indonesian embassy/consulate for the most up-to-date information regarding visas and property ownership eligibility. Additionally, working with a reputable notary or legal professional specializing in Indonesian real estate can provide guidance on property transactions and legal requirements.

PMA stands for Penanaman Modal Asing, which translates to "Foreign Investment" in Indonesia. PMA refers to a business entity that involves foreign capital investment in Indonesia. The Indonesian government encourages foreign investment in various sectors to promote economic growth and development in the country.

*The Mango Season Developments team can guide you through the entire setup of a PMA. We will diligently handle the steps outlined below for you and help you invest safely.
A PMA setup is priced at +- €1200 and takes about 1 month to complete.

To establish a PMA company in Indonesia, foreign investors need to meet certain requirements and follow specific procedures. These include:

1. Investment Plan: Foreign investors must create an investment plan that outlines the proposed activities, capital investment, and other relevant details. The investment plan should comply with the Indonesian government's regulations and align with the designated business sector.

2. Minimum Capital Requirement: PMA companies are subject to a minimum capital requirement, which varies depending on the industry sector. The minimum capital is typically higher for certain sectors, such as manufacturing, infrastructure, or finance.

3. Investment Approval: The investment plan needs to be submitted to the Indonesia Investment Coordinating Board (BKPM) or relevant local investment agencies for approval. The BKPM evaluates the plan based on various criteria, including the potential economic impact, job creation, and technology transfer.

4. Company Establishment: Once the investment plan is approved, the PMA company can be established. This involves registering the company with the Indonesian government, obtaining necessary licenses and permits, and fulfilling any sector-specific requirements.

5. Business Licenses: Depending on the nature of the business, PMA companies may need to acquire additional licenses and permits from relevant government ministries or agencies. These licenses can include business licenses, operational permits, and other sector-specific permits.

6. Tax Obligations: PMA companies must comply with Indonesian tax regulations and fulfill their tax obligations, including corporate income tax, value-added tax (VAT), and other applicable taxes.

PMA companies enjoy various benefits and incentives provided by the Indonesian government to promote foreign investment. These can include tax incentives, simplified import-export procedures, and facilitation services.

It is advisable for foreign investors to consult with legal and investment professionals who specialise in PMA regulations to ensure compliance with Indonesian laws and to navigate the complexities of establishing and operating a PMA company in Indonesia.

The steps to invest in Indonesia as a Mango Season investor:

Step 1:

A sales & purchase agreement is made between MSD and the client. In this contract, we outline the general terms and conditions, property details, safety and security measures, and payment terms of the deal. We only require a 10% down payment to secure your property and initiate the process.

Our payment plan is structured as follows:

10% to secure the deal at signing of the agreement.

40% at construction start (and PT PMA company setup completion).

40% at structural phase completion (approximately 8-12 months into construction).

10% at key handover.

Note: For legal compliance reasons, payments have to be made in Indonesian Rupiah. We recommend our clients use Wise.com for transfers from their home currency to IDR to save on transfer fees.

Step 2:

PT PMA company setup and construction start.

If you are investing as a foreigner, we recommend working with the HBG title under a PT PMA company.

Our team will assist you in the PT PMA company setup.

The cost of a PT PMA setup is approximately €1200 and takes 3-4 weeks.

As soon as the paperwork is completed, the official sales contract will be signed under your company name to hold the property.

At this point, 40% of the payment is made either if the property is under construction or if construction is starting.

Step 3:

Construction and follow-up.

Our team will send you updates on the construction of your property.

The structural phase of most developments is estimated at around 8-12 months.

As soon as the structural phase is completed, the next tranche payment of 40% is required.

Step 4:

Key handover.

Upon completion of your property, your final 10% payment is required.

You can now begin renting out your property.