Property Tips
Like most of South East Asia , Under Indonesian law foreigners are not permitted to have outright title to property here. They can however, legally acquire property in Indonesia and enjoy full beneficial rights by on one of the following methods to the property by leasing, entering into legal contracts with an Indonesian citizen for the freehold or by establishing a Foreign Investment Company.
There are 3 different ways that foreigners can acquire property in Indonesia :
1) The most popular method is to enter into a legal contract with an Indonesian citizen (‘nominee’ as they are referred to), whereby he/she holds freehold title to the property but signs over power of attorney and practical control to the foreign investor.
2) Acquiring the leasehold of a property is the most straight forward approach for a foreigner. However at the expiry of the lease, the property would revert back to the Indonesian owner. This method is popular in commercial property situations where a return on investment can be achieved within the lease period, but less popular with individuals who wish to make longer term investments. Lease periods vary and extensions are often agreed in advance; 20-30 years is a common lease period in Indonesia .
3) Forming a foreign investment company (PMA) is the preferred choice of those intending to operate a business in Bali . Here the foreigner can own 100% of a PMA company and the freehold title of the property will be in the company name. However, there are tax implications to be considered and the Department of Trade will review PMA companies after 25 years so it may be necessary to re-apply for the PMA license