Property law in Indonesia:
Every thing you need to know in order to own a property in Bali.
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PROPERTY LAW IN BALI - INDONESIA
Land matters except for mining and forestry are under the jurisdiction of the
National Land Agency (Badan Pertanahan Nasional) formed to administer all matters
relating to the Basic Agrarian Law of 1960 such as the registration of land rights
and the granting of rights and various permits to use the land. There are currently
only two categories of land rights:
a) Adat land (customary land) where the land is not registered with the relevant
land office. There are 2 individual rights and 6 community rights in this category.
All rights held under this category will eventually be converted to certified
titles.
b) Certified land, the title to which is governed by the Basic Agrarian Law of
1960 and is registered at the local land office. There are five principle types
of land rights held under the Agrarian Law. These are:
Right of Ownership
This refers to absolute ownership of land and corresponds to a fee simple or freehold
title in common law jurisdictions. An Indonesian citizen, not a corporate entity,
can only hold this right whether local or foreign. Certain legal entities designated
by the government, such as State Banks, agricultural cooperatives, religious bodies,
and social foundations may hold this right subject to certain restrictions. This
right of ownership is held in perpetuity. It can be sold, transferred, bequeathed,
and hypothecated (mortgaged).
The Right to Build
This is the right to construct a building on land for a period of 20 or 30 years
(renewable for another term of 20 years). This right can be sold, exchanged, transferred,
and mortgaged, and can be held directly by any corporate entity whether it is
a local company or a government approved PMA company.
Right to Rent
This is the right to use land owned by another private party (the Lessor) for
building purposes. The right cannot be registered at the land office and therefore
does not exist in certificate form. The law does not stipulate a period for such
lease agreements and whether this can be transferred or not depends on the original
agreement between the parties. A foreigner permanently domiciled in Indonesia
or a foreign legal entity having a representative office in Indonesia may hold
this right. It cannot be mortgaged.
Right of Use
This is the right to use State-owned or other land by public or private persons
or entities for a specific purpose for a definite period or occasionally for an
indefinite period. This land right cannot be sold, exchanged or transferred unless
explicitly provided in its grant or agreement and Normally for a period not exceeding
10 years. An Indonesian individual or entity or foreigner permanently domiciled
may hold this right in Indonesia, or a foreign legal entity with a representative
office in Indonesia such as foreign banks, embassies, etc.
Right of Exploitation
This is the right to exploit State-owned land for agriculture, fishery or husbandry
purposes for a period of up to 35 years with a possible 25 years extension. This
right can be held by Indonesian individuals/entities as well as government approved
PMA companies. The certificate can be mortgaged.
INDONESIAN LAW Article 1 (1) RMA 7/96
Article 1 (1) of RMA 7/96 states that "a foreigner whose presence in Indonesia
gives opportunities for national development" may own a house under Hak Pakai;
and Article 1 (2) closes the circle by saying that such a foreigner is one who;
"has and maintains an economic interest in Indonesia by implementing an investment
in the ownership of" that house. In other words, any foreigner who buys a
house in Indonesia is contributing to national development and therefore is entitled
to hold Hak Pakai.
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