- July 20, 2018
- Posted by: Hilda Saputra
- Category: Uncategorized
Based on the Basic Law of Agrarian of Republic Indonesia no. 5 year 1960, primary land title are categorized as follow:
Right of Ownership
(Hak Milik/ HM)
|The absolute land ownership in Indonesia. This land title can be passed down and transferred to another party. The right of ownership may only be held by Indonesian citizen or entity.|
Right of Build
(Hak Guna Bangungan/ HGB)
|The right of a party to establish and use the building on the land which is not count as the party’s property, with a maximum period of 30 years. At the request of the right holder and keeping in mind the necessity and condition of the building, the period referred to in may be extended by a maximum of 20 years. The Right to Build can be transferred to another party.|
Right of Use
|The Right to use and collect the proceeds of the land from the state-owned land or individual owned land. The Right of Use gives the rights and obligations stipulated in the decision upon granting his right by the authorized official, or in the agreement to work the land. The duration of The Right of Use can be granted for up to 80 years.|
Right of Land Cultivation
(Hak Guna Usaha)
|The right to cultivate land directly with control by the State for agricultural enterprises, fisheries or farms. The right of land cultivation is granted for a maximum period of 25 years. For companies that require longer periods of time may be granted the right to use for time maximum 35 years.|
As it stated above, not all the rights can be held by foreign entities or individual in Indonesia. Rights of land and Right of Ownership of a property can only be granted to Indonesian citizen or Indonesian entities. Therefore, foreigners and foreign entities can only buy land under The Right of Build (HGB) and The Right of Use.
PT PMA are entitled to The Right of Building (HGB) and The Right of Use for a landed building. The landed building includes house, office and factory. According to BKPM, PT PMA whose business line is a property developer can buy a land with the purpose of developing the property in Indonesia under the Right of Building. After the properties is sold to the buyer, the property can be changed to the Right of Ownership (Hak Milik). However, it is important to take note that the right of ownership of the property can only be applied if the buyer is an Indonesian Citizen.
PT PMA is also entitled to own high rise property (such as office space) under The Right of Use. As for Foreign Representative offices, they are only entitled to hold The Right of Use or Hak Pakai.
Under the new Government Regulation no. 103 of 2015 on House Ownership of Foreigners Residing in Indonesia, foreigner, whose existence provides benefits, conducts business, works, or investing in Indonesia are entitled to buy a landed houses under The Right of Use for a periods of 30 years. The period can be extended to 20 years and later up to 30 years.
A foreign individual is also entitled to own condominium or apartment under the Right of Use, as long as the condominium or apartment is not a part of housing development that is subsidized by the government.