There are many questions commonly asked by interested buyers when it comes to foreign ownership in Indonesia. So let’s clear some of these up, it’s now much simpler and safer than it once was.
Purchasing land in any foreign country can initially be a daunting experience, particularly when the laws and systems within that country are not always straight forward or easy to navigate. At Selo Group we only sell land that has undergone the strictest legal due diligence process to ensure clear title and certainty of boundaries. We have undergone many years of research, due diligence and certifying the legal process before we began on-selling land to our purchasers, with over 100 successful transactions to date.
When it comes to purchasing property in Indonesia, land law is quite different to laws that apply in most Western or develop countries, so foreigners wishing to purchase land need to be aware of these differences. The good news – in December 2015, to support Indonesia’s domestic economic growth and attract private foreign investors within the property sector, the government set new requirements and procedures to allow foreigners to own property.
There are several types of land titles and rights over the land, however the three most relevant for foreign investors are the Right to Use (Hak Pakai), the Right to Build (Hak Guna Bangunan)). The land titles, ‘Hak Milik’ (Right to Own) and ‘Hak Guna Bangunan’ (Right to Build) are certainly more advantageous, but these are not available to foreigners on their own as independent persons. This is where a PMA comes in for right to build.
A PMA (Penanaman Modal Asing) translates as a foreign-owned limited liability company registered in Indonesia which is 100% foreign-owned and controlled with you as the Director and shareholder. The advantages of this type of company are that it gives the foreign investor full control over the direction of the company and reduces the risk in finding a suitable local partner. Upon establishment, the PMA can then own land with the Land Title Deed in the company’s name which enables the foreigner to acquire the Right to Build License and a Right to Use.
The valuers in Indonesia value the Right to Build (HGB) as freeholder title, this is because the title can be sold to Indonesians who can transfer it to Hak Milik (right to own).
A PMA is very secure, this is how most of the foreign-owned 5-star hotels in Bali own their titles. The Indonesian Government has recently streamlined this structure making it the most secure form of ownership, as well as the most tax-effective.
In recent years the government released a new regulation, No. 24 of the Year 2018, which made the incorporation process in Indonesia more open. Previously, you were required to obtain a prior approval in order to set up a PMA, it was expensive and took over 6 months. The new regulation, however, eliminated this requirement and businesses can now start investing immediately, it much cheaper and takes approximately 3 weeks to set up. Selo Group can guide you through this entire process and help arrange assistance with the annual requirements.
Things are changing rapidly in Indonesia and the government are focusing on increasing its number of foreign arrivals to support its economic growth policies. The reality is that Bali alone cannot accommodate millions more new tourists, and projects are therefore underway to establish 10 new tourist hubs in the archipelago, in what the Indonesian government is marketing as its ‘Ten New Bali’ project, thus providing a bridge of opportunity for individual investors.
With Indonesia now rated 4th in the 10 best countries to invest in post-COVID, the world’s largest archipelago has compelled entrepreneurs to focus their gaze on this “Paradise for Investors” and Selo’s land and villas in the spectacular South Lombok are being snapped up.
2021 is to be a defining moment for Lombok with the Moto GP being a key driver. Referred to as “A Hidden Gem”, Lombok is emerging as one of the top investment destinations in Asia. Located near the famous Island of Bali but trading at significant discounts blessed with beautiful beaches and clear blue waters, it is well known for some of the world’s best surf locations.
If you would like information on any of Selo’s project offerings, visit https://selogroup.co/investment-opportunities/.
About Selo Group
The Selo Group co-founders began their journey in South Lombok, Indonesia in 2009 and are proud to have a proven track record of building quality award-winning luxury resorts and villas on time and on budget, to the highest international standards. Our experienced international team oversee the areas of Design, Property Sales & Marketing, Construction, and Hotel and Resort Operations.
Selo Group provides a diverse suite of development, construction, operations and management services, overseeing projects from beginning to end with a strong commitment to sustainability. Through vertical integration the group captures efficiencies in the design, sales and construction verticals that dovetail into operating resorts. Selo’s green technology and design goes beyond typical motherhood statements and green marketing, we demonstrate a commitment to sustainability principles in our construction methods, our internal operations and our engagement with local communities and the natural environment.
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For more information, or interview/photo requests, please contact:
Head of Marketing
Phone: +61 0424 186 756