Can foreigners buy land in Bali?
In Indonesia, foreigners are not able to directly purchase land; however, there are some alternatives that can be considered. One of these alternatives is through a contractual setup, often referred to as a nominee structure. In this setup, an Indonesian citizen holds the title for the foreigner. This option is not without risk, as there is a chance of legal complications arising, which is why it is not recommended.
Instead, there are other options such as leaseholds, long-term rentals, and other contractual agreements that are safer and more secure. Malaysia is the only exception in Southeast Asia, where foreigners are allowed to purchase land, although this is not the case in Singapore, as land acquisition is practically impossible unless you are a local citizen or permanent resident.
1. Buying land with the help of an Indonesian nominee
For foreigners looking to purchase land in Indonesia, one common choice is to use an Indonesian nominee as a way to facilitate the transaction. This involves having a local nominee – such as a friend, family member, or another Indonesian citizen – purchase the plot of land on your behalf. However, it is important to be aware that this option carries risks, and therefore it is important to have the necessary agreements in place to protect yourself.
For example, once the plot of land is transferred from the seller to the Indonesian nominee, a loan agreement should be established to clarify that the loan is being provided by you. Additionally, a power of attorney should be signed to give you the right to mortgage, sell, or lease the property, and a permanent right of use agreement should be agreed on to ensure that you have the right to use and occupy the land.
The loan agreement will state that you’ve lent money to the Indonesian nominee that buys the property.
Power of attorney:
The power of attorney will give you the right to mortgage, sell, or lease the property.
Permanent right of use agreement:
This agreement will give you the right to use and occupy the land.
2. Buying Bali property with a PMA company
If you want to buy property in Indonesia, you may want to consider opening a PMA (Penanaman Model Asing) company, which is registered in the foreign direct investments (FDI) category. Doing this is more beneficial than using a local nominee structure as it will offer you more protection.
To open a PMA, you’ll need to provide a business plan and work actively in Indonesia, as well as deposit money into a local Indonesian bank account. Once you’ve gone through the necessary steps, you’ll be able to take advantage of several benefits.
For example, you’ll be protected by internationally recognized contracts under commonwealth law and the Indonesian Investment Coordinating Board (BKPM) will regulate, check, and audit the entity. You’ll also have a verifiable tax number (NPWP) and the ability to settle disputes in international courts.
In addition to the above, PT PMA allows for:
- Foreign companies and investors can be shareholders
- Assign a Director and Commissioner which can be either foreign or Indonesian National
- Own or lease assets within the company
- Multiple assets can be added into a PT PMA, not limited to a single property or asset as with the Hak Pakai
- Hold HGB title over property allowing for development/construction, leasing property and sell any interest in the property offshore
- Shareholder agreement can be arranged to your requirements
- All shareholders, directors and commissioners are eligible for work permits. Foreigners can apply for KITAS to work and live in Indonesia under company sponsorship.
- Can receive income into the company legally
- Pay salaries to KITAS holders
- Pay dividends to shareholders
- Take offshore into Singapore structure to rent out properties to take income in Singapore
By owning property through a PMA company, you’ll have greater protection and peace of mind that your investments are secure.
3. Leasing property in Indonesia.
Real estate leasing in Indonesia is possible through acquiring a property with a Hak Sewa title. This title enables you to lease villas, condos, and apartments for up to 25 years, with the possibility of extension depending on the contract. To ensure that the leasehold period is extended, it is important to include this condition in the contract.
We are not qualified to offer legal advice, and any information we provide should be taken only as a general guideline. If you require more in-depth advice, we suggest you reach out to a qualified legal professional such as a lawyer or notary. They will be able to provide you with the answers to any questions you may have.